Attorneys and Counselors
| 2001 Bryan Street, Suite 3900 | (214) 922-4120 | |
| Dallas, Texas 75201 | Fax (214) 922-4170 | |
| (214) 953-0053 | bhallett@hallettperrin.com | |
(214) 922-4142 Fax www.hallettperrin.com |
June 2, 2011
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
| Attn: | Jeffrey Riedler |
Assistant Director, Division of Corporation Finance
| Re: | USMD Holdings, Inc. (the “Company”) |
Registration Statement on Form S-4 (333-171386)
Dear Mr. Riedler:
At the request of the Staff, we are furnishing additional information regarding our prior response to Staff comment no. 19 (February 16, 2011). That letter set forth an estimated initial trading price of $14.20 per share for the Company’s common stock, resulting in an estimated public float of $8.5 million. The calculation of initial trading price was derived by dividing the net enterprise value of the Company (based upon an independent valuation of the Company’s business units) by the number of shares of common stock outstanding. The estimated public float was derived by multiplying the number of shares of common stock to be owned by non-affiliates of the Company as of the closing date by the estimated initial trading price.
Since the date of that response, the Company has updated its calculation for (i) changes in the net enterprise value of the Company (based upon an updated independent valuation of the Company’s business units), (ii) changes in working capital and levels of indebtedness, (iii) an increase in the number of shares to be outstanding at the closing date, and (iv) an increase in the number of shares of common stock to be owned by non-affiliates. As a result, the $14.20 share price has declined to $14.17, and the estimated public float calculation has increased from $8.5 million to $15.6 million. The methodology is set forth in detail on the attached table.
Please contact the undersigned with any questions regarding this matter.
| Very truly yours, |
| /s/ Bruce H. Hallett |
Calculation of Initial Trading Price and Estimated Public Float
| Total Enterprise | Total Subsidiary | Total Enterprise Value Less Subsidiary Level | USMD Corporate | Ventures/UANT Corporate Level | USMD Enterprise Value | Ventures Enterprise Value | ||||||||||||||||||||||||||||||
Entity | Value | Level Debt | Debt | Level Debt | Debt | % Own | $ Value | % Own | $ Value | |||||||||||||||||||||||||||
USMD | ||||||||||||||||||||||||||||||||||||
USMD Arlington | 169,550,000 | (46,320,000 | ) | 123,230,000 | 5.00 | % | 6,161,500 | 22.63 | % | 27,886,949 | ||||||||||||||||||||||||||
USMD FW Hospital | 46,060,000 | (19,660,000 | ) | 26,400,000 | 20.00 | % | 5,280,000 | 10.88 | % | 2,872,320 | ||||||||||||||||||||||||||
USMD Hospital Division | 31,880,000 | 31,880,000 | 100.00 | % | 31,880,000 | |||||||||||||||||||||||||||||||
USMD Cancer Division | 27,450,000 | 27,450,000 | 100.00 | % | 27,450,000 | |||||||||||||||||||||||||||||||
Willowbrook Cancer | 10,870,000 | (4,880,000 | ) | 5,990,000 | 30.00 | % | 1,797,000 | |||||||||||||||||||||||||||||
USMD Litho Division | ||||||||||||||||||||||||||||||||||||
Management | 5,550,000 | 5,550,000 | 100.00 | % | 5,550,000 | |||||||||||||||||||||||||||||||
Minority Partnership Interests | 9,920,000 | (130,000 | ) | 9,790,000 | (7,690,000 | ) | *Varies | 9,790,000 | ||||||||||||||||||||||||||||
USMD Inc Holding Company Debt | (730,000 | ) | ||||||||||||||||||||||||||||||||||
Ventures | ||||||||||||||||||||||||||||||||||||
UANT | ||||||||||||||||||||||||||||||||||||
Cancer | 46,290,000 | 46,290,000 | (9,460,000 | ) | 100 | % | 46,290,000 | |||||||||||||||||||||||||||||
Imaging | 4,730,000 | 4,730,000 | (380,000 | ) | 100 | % | 4,730,000 | |||||||||||||||||||||||||||||
Lab | 7,890,000 | 7,890,000 | 100 | % | 7,890,000 | |||||||||||||||||||||||||||||||
Research | 880,000 | 880,000 | 100 | % | 880,000 | |||||||||||||||||||||||||||||||
Practice | 5,370,000 | 5,370,000 | (3,860,000 | ) | 100 | % | 5,370,000 | |||||||||||||||||||||||||||||
UANT Owned: | ||||||||||||||||||||||||||||||||||||
MetroStone Management | 9,160,000 | 9,160,000 | 88.55 | % | 8,111,180 | |||||||||||||||||||||||||||||||
Dallas Stone Management | 9,030,000 | 9,030,000 | 34.05 | % | 3,074,715 | |||||||||||||||||||||||||||||||
North Texas Stone Management | 5,580,000 | (200,000 | ) | 5,380,000 | 30.00 | % | 1,614,000 | |||||||||||||||||||||||||||||
Waxahachie Surgery Center | 4.51 | % | 41,000 | |||||||||||||||||||||||||||||||||
US Urology | 10.00 | % | 0 | |||||||||||||||||||||||||||||||||
Linked Urology Research Network | 20.00 | % | 0 | |||||||||||||||||||||||||||||||||
UANT Ventures | ||||||||||||||||||||||||||||||||||||
Baylor Carrolton | 1.14 | % | 200,000 | |||||||||||||||||||||||||||||||||
North Texas Hospital | 0.88 | % | 180,000 | |||||||||||||||||||||||||||||||||
Neo - Alliance | 51.52 | % | 0 | |||||||||||||||||||||||||||||||||
UANT Ventures (Corporate Debt) | (1,090,000 | ) | ||||||||||||||||||||||||||||||||||
UANT Lithotripsy (Corporate Debt) | (1,210,000 | ) | ||||||||||||||||||||||||||||||||||
Total | 390,210,000 | (71,190,000 | ) | 319,020,000 | (8,420,000 | ) | (16,000,000 | ) | 87,908,500 | 109,140,164 | ||||||||||||||||||||||||||
Total Gross Enterprise Value |
| 87,908,500 | 109,140,164 | |||||||||||||||||||||||||||||||||
Adjustments: |
| |||||||||||||||||||||||||||||||||||
Deferred Payout Obligations (as defined in Section 1.4(b) of the Agreement) |
| 0 | (186,000 | ) | ||||||||||||||||||||||||||||||||
Working Capital Adjustment (as defined in Section 1.4(b) of the Agreement) |
| 3,270,000 | (3,294,000 | ) | ||||||||||||||||||||||||||||||||
Approved Capital Expenditures (as defined in Section 1.4(b) of the Agreement) |
| 0 | 0 | |||||||||||||||||||||||||||||||||
Adjusted Net Enterprise Value (Purchase Price) |
| 91,178,500 | 105,660,164 | |||||||||||||||||||||||||||||||||
Less: Indebtedness (columns F and G) |
| (8,420,000 | ) | (16,000,000 | ) | |||||||||||||||||||||||||||||||
Holdings Note (as defined in Section 1.4(c) of the Agreement) |
| (30,000,000 | ) | |||||||||||||||||||||||||||||||||
Value of Contribution to Holdings |
| 82,758,500 | 59,660,164 | |||||||||||||||||||||||||||||||||
Total Net Enterprise Value |
| $ | 142,418,664 | |||||||||||||||||||||||||||||||||
Total Number of Shares Outstanding |
| 10,050,000 | ||||||||||||||||||||||||||||||||||
Estimated Initial Trading Price |
| $ | 14.17 | |||||||||||||||||||||||||||||||||
Number of Shares Held by Non-Affiliates |
| 1,100,312 | ||||||||||||||||||||||||||||||||||
Estimated Public Float |
| $ | 15,592,534 | |||||||||||||||||||||||||||||||||