June 14--FORT MYERS21ST CENTURY ONCOLOGY ISN'T SAYING WHEN IT WILL RENEW ITS LAUNCH OF AN INITIAL PUBLIC OFFERING OF STOCK AFTER POSTPONING IT IN MAY, But. in the meantime Moody's Investor Services has given the Fort Myers company a ratings upgrade. -- 21st Century Oncology isn't saying when it will renew its launch of an initial public offering of stock after postponing it in May, but in the meantime Moody's Investor Services has given the Fort Myers company a ratings upgrade.
Formerly known as Radiation Therapy Services, the company operates 150 radiation treatment centers in the United States and another 35 centers in Latin America.
On May 7, the company announced in a press release that it would be issuing 13.3 million shares of common stock at a price range of $14 to $16. It also announced an offering of 1.5 million shares of preferred stock at $50 a share.
The intent was to use the proceeds to pay down debt but 21st Century announced May 21 that it was postponing its initial public offering because of unfavorable market conditions.
Moody's issued its most recent rating on May 30 after the postponement.
"The B3 rating reflects the company's aggressive financial policy including a debt financed growth strategy that is expected to continue to stress 21st Century's highly leveraged capital structure and ability to generate free cash flow," Moody's stated. "At the same time, the rating positively reflects the company's ability to manage its costs, integrate acquisitions, and drive average daily treatment volume increases at its centers."
21st Century officials aren't allowed under federal policy to comment during this so-called quiet period since they filed documentation with the U.S. Securities and Exchange Commission about the initial public offering.
According to first quarter financial reports, 21st Century had total revenue of $242 million compared with $174 million in revenue in the same quarter of 2013. But the company reported a net loss of $29 million in the first quarter this year, while its net loss was $19.4 million the first quarter of 2013.
Since 2008, 21st Century has run radiation therapy services in Collier County for the NCH Healthcare System at Lutgert Pavilion East near NCH Downtown Naples Hospital. NCH officials don't expect anything to change with its relationship with 21st Century because of the company going public again.
The company was privately held for years until it went public in 2004 for $13 a share. Four years later in 2008, the private equity group, Vestar Capital Partners, paid $32.50 a share in a $1.1 billion deal to take the company private in a leveraged buyout. Vestar is a leading international private equity firm specializing in management buyouts and growth capital investments targeting companies in the U.S. valued in the $100 million to $5 billion range.
"Since they were previously a publicly traded company, we wouldn't anticipate that 21st Century becoming a publicly traded company again will have any impact on how they provide care," NCH spokeswoman Debbie Curry said in a statement.
The Lee Memorial Health System also has a relationship with 21st Century to provide inpatient radiation therapy services.
Lee Memorial officials also say they don't expect anything to change when 21st Century becomes a publicly traded company again.
"They are leaders in radiation oncology nationally and internationally and are impressive in their responsiveness to patients, families and referring-consulting physicians," said Mary Briggs, Lee Memorial spokeswoman. "(The company) had been a publicy traded company previously and there was no difference in our relationship with them. We expect business as usual."
Edward Morton, managing partner of Wasmer, Schroeder investment advisers in Naples and the retired chief executive officer of NCH, said 21st Century is likely looking at its growth strategies, which is fitting because the baby boom generation is aging and the need for radiation therapy will only increase. Morton said he has no direct contact with anyone at the company.
"I think people view the future of cancer care as a growing industry," he said, adding that 21st Century is advanced in its use of technology.
The downside is that once a company becomes publicly traded after being private, there is a loss of a local connection.
"Publicly traded companies tend to have fewer local roots and the local charities tend to suffer," he said.
21st Century Oncology has been a strong supporter of providing charity care to patients in Southwest Florida through the We Care program in Lee County, which coordinates medical care for needy uninsured residents.
The company also has been expanding. It completed the acquisition of a 65 percent controlling interest in South Florida Radiation Oncology, a leading cancer care provider in South Florida. It's also entered into a strategic relationship with Care New England Health System and CharterCare Health Partners, which together operate five acute care hospitals in Rhode Island.
In January, the company purchased a 69 percent interest in a radiation oncology center in Guatemala City.
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