Fresenius Medical Invests $600 Million in Sound Physicians

By Neetha Mahadevan

FRANKFURT--Fresenius Medical Care AG & Co. KGaA (FMS) said Friday it will be become a majority shareholder in Sound Inpatient Physicians Inc after investing $600 million in U.S-based healthcare service provider, as part of a recapitalization of Sound.

"This investment in Sound's inpatient expertise is a significant step forward in our care coordination strategy," Chief Executive Ron Kuerbitz said in a statement.

Earlier this week, the Wall Street Journal reported that TowerBrook Capital Partners will sell a majority stake in Sound Inpatient to the German dialysis provider, after which TowerBrook and Sound's management will retain minority interests in the company.

Upon completion, the deal will allow TowerBrook to exit part of its investment in Sound. The firm initially invested in the business in 2005, providing additional equity about two years later.

Fresenius Medical expects Sound Inpatient Physicians to generate about $500 million in revenue in the next 12 months and expects the investment to be accretive to operating earnings within the first year after closing.

It will fund the investment through available cash and credit facilities, supplemented by additional debt financing, the company said.

Earlier this year, Fresenius Medical said it will invest in care coordination around dialysis. Care coordination is an extension of the company's renal care for its patients. It expects revenue from care coordination to grow about 18% by 2020 from 3% in 2013.

The transaction, which is subject to customary closing conditions, is expected to close within the next 10 days.

Write to Neetha Mahadevan at [e-mail]

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