Surgical Care Gets A Rosy Second OpinionStephanie Anderson Forest
Over 11 years, Joel Gordon has quietly built Surgical Care Affiliates Inc. into the nation's second-largest operator of outpatient surgery centers. So his unsolicited offer on Oct. 25 to acquire market leader Medical Care America Inc. caught investors by surprise. The hostile bid, a stock deal valued at nearly $1 billion, seemed all the more unusual coming in the normally chummy health-care industry.
No apologies from Gordon. After getting chilly responses to two private overtures, Surgical Care's CEO says he had to force the issue by approaching Medical Care's shareholders directly. "I've always taken a conservative approach," he says, "but this was so compelling and made so much sense that we had to make a move. We weren't getting anywhere with [Medical Care's] management."
He may now. Medical Care shareholders say they want the deal to happen. Indeed, Medical Care shares gained $5, to $24, on the announcement. Says one of the big holders: "Medical Care is still floundering. We would feel much more comfortable with SCA's management running things." Surgical Care has posted record profits for 30 consecutive quarters; Medical Care's earnings, hurt by troubles in its home-infusion therapy unit, dropped 35% in this year's first half.