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MEDNAX Inc. has agreed to sell its MedData business to Seattle-based Frazier Healthcare Partners.

MedData is a provider of technology-enabled management services for hospitals, health systems and health care providers, serving hundreds of millions of patients across numerous medical specialties. The Brecksville-based MedData currently serves more than 10,000 physicians with a network of more than 3,000 facilities and 20 regional offices across the U.S.

“We are excited to be partnering with MedData’s 2,000 dedicated employees to continue to provide best-in-class patient financial and advocacy services to the company’s broad base of customers,” Frazier Managing Partner Nader Naini said in a statement. “As part of our growth strategy, we are committed to bringing additional resources to accelerate and enhance its offerings to help our customers reduce costs, recover revenue and optimize their operations.”

MEDNAX Executive Vice President and CFO Stephen D. Farber added: "This agreement is an important step forward in MEDNAX’s ongoing transformation. The sale of MedData will better position MEDNAX, both financially and strategically, for long-term shareholder value creation by allowing it to focus on its core physician services business and significantly reducing the Company's leverage and future capital expenditures. This transaction also aligns MEDNAX, a key customer of MedData’s, to participate in the success of that organization under Frazier’s ownership.”

Last November, Sunrise, Florida-based MEDNAX announced the initiation of a process to divest MedData to allow the company to focus on its core physician services business. In connection with the divestment, the company classified MedData as discontinued operations beginning in the first quarter of 2019.

Under the terms of the purchase agreement, MEDNAX will receive cash consideration of approximately $250 million at closing, as well as economic consideration of up to $50 million that is contingent on both short and long-term performance of MedData. MEDNAX also anticipates certain cash tax benefits from the transaction in the coming quarters. Finally, in connection with the transaction, MEDNAX has entered into a long-term services agreement with MedData, effective as of the closing, and will be one of MedData’s largest customers following the closing of the transaction.

As previously announced with the initiation of the sale process, MEDNAX expects to use net proceeds from the sale for debt repayment, share repurchases and strategic acquisitions.

The transaction is subject to customary closing conditions and is expected to close during the fourth quarter of 2019.

Barclays and Guggenheim Securities LLC are serving as financial advisers and Cleary Gottlieb Steen & Hamilton LLP and McDermott, Will & Emery LLP are serving as legal counsel to MEDNAX on the transaction. Goodwin Procter LLP is serving as legal counsel to Frazier Healthcare Partners.