CMAA test success - Certified Merger and Acquisition Advisor (CM and AA) Updated: 2023

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Hospitals and health systems have been under extreme financial pressure since 2022, when median operating margins remained in negative territory for the full year. And while the picture has improved somewhat this year, these challenges spurred about a third of the hospital and health system merger and acquisition activity in the third quarter.

That's according to a new Kaufman Hall analysis, which found that 39% of the announced transactions in Q3 were spurred at least in part to financial distress.

For many smaller to medium-sized health systems, the upward reset in fixed costs – including both labor and nonlabor expenses – is an especially acute problem. Their relative size constrains their ability to spread these costs across a larger number of facilities and services.

The analysis found continued activity among systems with annual revenues in the range of $250 million to $750 million that have sought a partner. What is new in accurate quarters is the number of larger systems – those with annual revenues of $1 billion or more – that also are citing financial distress as a driver for their decision to partner.

Transaction activity remained high during the quarter, continuing the trend of returning to pre-pandemic levels. Eighteen transactions were announced in the quarter, eight more than Q3 2022 and 11 more than Q3 2021.

WHAT'S THE IMPACT?

With only one "mega merger" transaction – a transaction in which the smaller party has annual revenues above $1 billion – both the average size of the seller and total transacted revenue were below accurate quarters, in which a smaller number of total transactions and a higher percentage of mega mergers drove these metrics up. Despite that, the Q3 figures still remain well above historical levels.

The average size of the seller or smaller party, as measured by annual revenues, was $453 million. This was closer to – but still above – pre-pandemic historical year-end averages, which ranged from $272 million to $409 million from 2017 through 2019.

Total transacted revenue was $8.2 billion, which is on the higher side of accurate historical numbers for Q3. This figure was down significantly from Q2 2023, which had $13.3 billion in total transacted revenue, driven primarily by the three announced mega mergers in Q2, compared to just one in Q3.

When removing the mega mergers from each quarter, the average revenue in Q3 was actually significantly higher than that of Q2, at $243 million and $159 million respectively, demonstrating a significant uptick in activity in sizable independent hospitals seeking out partnerships with larger organizations.

Nonprofit health systems were the acquiring party in 14 of Q3's 18 transactions, with for-profit systems acting as the acquiring party in the remaining four transactions. Of the 14 nonprofit acquirers, seven were academic or university-affiliated organizations and one was a religiously affiliated organization.

The four transactions in which a for-profit system acted as acquirer focused primarily on smaller, financially distressed organizations: three of the four acquired organizations were financially distressed.

A accurate analysis of Kaufman Hall National Hospital Flash Report data showed a median inpatient occupancy rate of 70% at academic health centers, compared to a 53% occupancy rate at acute-care hospitals generally.

THE LARGER TREND

While partnership, merger and acquisition activity is returning to pre-pandemic levels, regulatory scrutiny of these transactions is also increasing. New proposed merger guidelines were issued by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in July.

While the guidelines determine a merger's effect on competition in industries ranging from food and agriculture to healthcare, they are expected to impact the latter as health system M&A continues to climb back to pre-pandemic levels.

Since 1968, the DOJ and FTC have issued and revised merger guidelines several times, including in 1982, 1984, 1992, 1997, 2010 and 2020. 

In January 2022, the agencies announced a broad initiative to evaluate potential updates and revisions to the Horizontal Merger Guidelines, issued in 2010, and the Vertical Merger Guidelines issued in 2020.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com

Perspective Financial Group has expanded with the acquisition of firms based in Yorkshire and the South East, bringing its 2023 deal tally to 19.

The acquired companies are Accord Financial Management in Worthing and RPG Financial in Rotherham. 

Chorley-headquartered Perspective, which snapped up four businesses in October, now has £7bn of assets under management for clients, and has exchanged contracts on a further seven deals. 

In total, the group has made 75 acquisitions since being established 16 years ago, bringing its total UK offices to 37, with 125 financial planners and 460 staff.

Paul Roper and Jason Bant, directors of Accord Financial Management, said: "We launched our business in 1999 and since then have experienced tremendous growth due to numerous recommendations from existing clients and professional connections, for which we are immensely grateful.

"To sustain and grow the business further, we knew we needed the support of a larger partner including access to the next generation of financial planners, and also assistance with the ever increasing regulatory burden.

"We are delighted to become part of Perspective as they clearly share our ethos, ethics and client- focused approach. This move will provide long term security to the provision of financial advice to our clients and career security for our staff."

Stephen Dilks, Richard Garner and Richard Pink, directors of RPG Financial, added: "Since we founded RPG Financial 19 years ago, we have enjoyed significant success. However, our attention over the past few years has naturally been drawn towards ensuring the future of the business to enable us to continue to provide high levels of client advice and service.

"After an exhaustive search, Perspective really stood out. From the outset, it was clear they are a genuinely client-centric firm with great professionalism across all aspects of their operation. A key aspect that we required in a larger partner was the reassurance for clients and staff that nothing would change significantly on a day-to-day basis."

Ian Wilkinson, chief executive of Perspective, said: "We are delighted that another two client centric firms have chosen to become part of us. These acquisitions add a further 1,400 households as clients, £390 million in AUM and two new office locations. We welcome everyone from both these firms to the group.

"2023 has been a year of strong and significant progress for us as we continue to deliver our highly selective acquisition strategy, completing a record number of acquisitions. We are over a third bigger than we were a year ago. It's pleasing that the firms we acquire consistently comment on our professionalism and can do attitude.

"Our acquisition pipeline of both large and small firms remains extremely strong and continues to grow month on month. This includes firms we are introduced to, those firms who approach us direct, and those re-engaging with us after terminating discussions with other acquirers, when these other acquirers have been unable to complete their proposed acquisition for various reasons."

Maxim Group analyst Michael Diana has reiterated their bullish stance on EFC stock, giving a Buy rating on October 25.

Michael Diana has given his Buy rating on Ellington Financial’s stock due to a combination of factors. The company’s Adjusted Distributable Earnings (ADE), which is a crucial determinant in setting the dividend level, were $0.33 per share. Despite a lower-than-expected performance in 3Q23, management has assured that the company is on track to cover the dividend with ADE and has no plans to decrease the dividend, which currently yields 14.4%. Diana also maintains the 4Q23 and 2024 quarterly dividend estimates at $0.45, despite lowering the EPS estimates, as he believes that dividend coverage will be achieved in 2024 as the performance of Longbridge Financial, an affiliate of EFC, normalizes.

In addition to this, Ellington Financial’s acquisition of Arlington Asset Investment, at a 15% discount to book value, is another factor contributing to the Buy rating. This acquisition is scheduled to close by the end of 2023 and is expected to be accretive to earnings/EPS starting in the second half of 2024. Ellington Financial’s shares currently trade at 0.87x book value, and Diana maintains a 12-month price target of $15.50, which represents a slight premium to AGNC Investment. Also, noteworthy is the company’s proven expertise in credit assets and a strong track record of preserving book value, especially during downturns, which makes it a top pick in mortgage REITs.

Diana covers the Financial sector, focusing on stocks such as Cullen/Frost Bankers, Ellington Financial, and First Savings Financial Group. According to TipRanks, Diana has an average return of 12.6% and a 51.60% success rate on recommended stocks.

In another report released on October 25, KBW also assigned a Buy rating to the stock with a $14.00 price target.

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Ellington Financial (EFC) Company Description:

Ellington Financial, Inc. engages in the provision of investment services. It manages mortgage-backed assets, securities, loans and real estate debts. The company was founded on July 9, 2007 and is headquartered in Old Greenwich, CT.

Read More on EFC:

LOS ANGELES, CA / ACCESSWIRE / October 23, 2023 / XS Financial Inc. ("XS Financial", "XSF" or the "Company") (CSE:XSF)(OTCQB:XSHLF), a specialty finance company providing CAPEX and equipment financing solutions to cannabis companies in the United States, announced today that it has completed the repurchase and cancellation of certain of its unsecured convertible notes ("Notes") which were originally issued on October 28, 2021 and October 10, 2022 (the "Note Repurchase"). The Notes were originally issued to various holders in the aggregate principal amount of US$43.5 million, together with one share purchase warrant (a "Warrant") for every US$2.00 principal amount of Notes. The Note Repurchase was effected with respect to one Note in the principal amount of US$3,118,926.06 as at September 30, 2023 which was repurchased and cancelled by the Company in consideration of a cash payment by the Company in the aggregate amount of US$2,931,790.50 in satisfaction of all principal and interest due and owing thereunder. Also in connection with the Note Repurchase, an aggregate of 1,500,000 Warrants were cancelled for no additional consideration.

In addition, the Company also announces that it has acquired and cancelled one of its outstanding 10% convertible debentures due September 11, 2024 in the aggregate principal amount of Cdn$140,000 .

About XS Financial
Founded in 2017, XS Financial specializes in providing CAPEX financing solutions to cannabis companies in the United States, including cultivators, processors, manufacturers, and testing laboratories. In addition, XSF has partnered with over 250 original equipment manufacturers (OEM) through its network of Preferred Vendor partnerships. This powerful dynamic provides an end-to-end solution for customers which results in recurring revenues, strong profit margins, and a proven business model for XSF stakeholders. The Company's subordinate voting shares are traded on the Canadian Securities Exchange under the symbol "XSF". For more information, visit: www.xsfinancial.com.

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For inquiries please contact:

Forward-Looking Information
This press release contains "forward-looking information" and may also contain statements that may constitute "forward-looking statements", collectively "forward-looking information", within the meaning of applicable Canadian securities legislation. Such forward-looking information is not representative of historical facts or information or current condition, but instead represent the beliefs and expectations regarding future events about the business and the industry and markets in which XS Financial operates, as well as plans or objectives of management, many of which, by their nature, are inherently uncertain. Generally, such forward-looking information can be identified by the use of terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". Forward-looking information contained herein may include but is not limited to, any additional leasing opportunities and the ability to capitalize on such and the timing thereof. Forward-looking information is not a guarantee of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Accordingly, readers should not place undue reliance on forward-looking information, which are qualified in their entirety by this cautionary statement. XS Financial Inc., does not undertake any obligation to release publicly any revisions for updating any voluntary forward-looking information, except as required by applicable securities law.

Neither the Canadian Securities Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE: XS Financial

View source version on accesswire.com:
https://www.accesswire.com/795662/xs-financial-announces-acquisition-cancellation-of-debentures

LOS ANGELES, CA / ACCESSWIRE / October 23, 2023 / XS Financial Inc. ("XS Financial", "XSF" or the "Company") (CSE:XSF)(OTCQB:XSHLF), a specialty finance company providing CAPEX and equipment financing solutions to cannabis companies in the United States, announced today that it has completed the repurchase and cancellation of certain of its unsecured convertible notes ("Notes") which were originally issued on October 28, 2021 and October 10, 2022 (the "Note Repurchase"). The Notes were originally issued to various holders in the aggregate principal amount of US$43.5 million, together with one share purchase warrant (a "Warrant") for every US$2.00 principal amount of Notes. The Note Repurchase was effected with respect to one Note in the principal amount of US$3,118,926.06 as at September 30, 2023 which was repurchased and cancelled by the Company in consideration of a cash payment by the Company in the aggregate amount of US$2,931,790.50 in satisfaction of all principal and interest due and owing thereunder. Also in connection with the Note Repurchase, an aggregate of 1,500,000 Warrants were cancelled for no additional consideration.

In addition, the Company also announces that it has acquired and cancelled one of its outstanding 10% convertible debentures due September 11, 2024 in the aggregate principal amount of Cdn$140,000 .

About XS Financial
Founded in 2017, XS Financial specializes in providing CAPEX financing solutions to cannabis companies in the United States, including cultivators, processors, manufacturers, and testing laboratories. In addition, XSF has partnered with over 250 original equipment manufacturers (OEM) through its network of Preferred Vendor partnerships. This powerful dynamic provides an end-to-end solution for customers which results in recurring revenues, strong profit margins, and a proven business model for XSF stakeholders. The Company's subordinate voting shares are traded on the Canadian Securities Exchange under the symbol "XSF". For more information, visit: www.xsfinancial.com.

For inquiries please contact:

Forward-Looking Information
This press release contains "forward-looking information" and may also contain statements that may constitute "forward-looking statements", collectively "forward-looking information", within the meaning of applicable Canadian securities legislation. Such forward-looking information is not representative of historical facts or information or current condition, but instead represent the beliefs and expectations regarding future events about the business and the industry and markets in which XS Financial operates, as well as plans or objectives of management, many of which, by their nature, are inherently uncertain. Generally, such forward-looking information can be identified by the use of terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". Forward-looking information contained herein may include but is not limited to, any additional leasing opportunities and the ability to capitalize on such and the timing thereof. Forward-looking information is not a guarantee of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Accordingly, readers should not place undue reliance on forward-looking information, which are qualified in their entirety by this cautionary statement. XS Financial Inc., does not undertake any obligation to release publicly any revisions for updating any voluntary forward-looking information, except as required by applicable securities law.

Neither the Canadian Securities Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE: XS Financial

View source version on accesswire.com:
https://www.accesswire.com/795662/xs-financial-announces-acquisition-cancellation-of-debentures