DaVita Inc. (NYSE: DVA) isn’t usually on the sell-side of dialysis deals. In fact, the company hasn’t announced a sale from its renal care division in the past five years. But in late March, the Federal Trade Commission ordered DaVita to divest its ownership in seven dialysis clinics.
That order was part of a settlement resolving charges that DaVita’s $358 million acquisition of Renal Ventures Management, LLC would be anticompetitive. At the time of that deal’s announcement in August 2015, Renal Ventures operated 36 dialysis clinics in six states. The company’s two divisions, Multispecialty Physician Partners and Physician Venture Partners, operated infusion and vascular centers, respectively, in three states.
The acquisition expanded DaVita Kidney Care to 2,210 clinics in 46 states, and helped make DaVita the second largest provider of outpatient dialysis services in the United States. Renal Ventures ranks as the seventh largest.
DaVita will sell the seven clinics–five in New Jersey and two in suburban Dallas, Texas–to PDA-GMF Holdco, LLC, a joint venture between Physicians Dialysis and GMF Capital LLC. Physicians Dialysis, based in North Miami Beach, Florida, was founded in 1990 and currently operates several outpatient dialysis clinics. Financial terms were not disclosed.
Under the terms of the settlement, DaVita must obtain agreements from the medical director of each divested clinic to continue providing physician services after it transfers ownership to PDA-GMF Holdco. It must also obtain consent from the relevant landlords to transfer leases for the facilities to the buyer, and provide the buyer an opportunity to interview and hire employees from the divested clinics.
DaVita is also barred from contracting with the medical directors of the seven clinics for three years, and must provide transition services for up to 24 months. The FTC will be monitoring to ensure DaVita’s compliance.
The FTC vote to issue the administrative complaint that led to this settlement was 2-0. The agreement will be subject to public comment for 30 days, ending on April 27, 2017.