OKLAHOMA CITY, OK, May 15, 2012 (MARKETWIRE via COMTEX)—Graymark Healthcare, Inc., the nation's second largest provider of diagnostic sleep services and an innovator in comprehensive care for obstructive sleep apnea, has signed a non-binding letter of intent to combine with Foundation Surgery Affiliates, LLC and Foundation Surgical Hospital Affiliates, LLC, together known as Foundation Healthcare, in an all-stock transaction valued at $1.10 per common share. The aggregate transaction value is approximately $52.5 million.

Foundation has equity interests in and manages 21 outpatient surgery centers and surgical hospitals in seven states. In 2011, Foundation generated approximately $44 million in revenues and on a pro forma basis, Graymark and Foundation would have produced more than $62 million in revenues and employed over 1,000 employees.

At closing, Graymark will issue a combination of common stock and preferred stock to Foundation, as well as a separate series of preferred stock with a stated value of approximately $14 million. In addition, Graymark will issue warrants covering 4 million shares of its common stock exercisable at $1.50 per share. This is intended to reward Foundation to the extent that there is shareholder value driven by a substantial increase in the share price from current levels. Graymark Healthcare would be the surviving entity name upon the closing of the transaction, which is expected in the third quarter of 2012.

"This combination is a game-changer for both Graymark and Foundation, as it immediately creates a powerful platform in the highly fragmented and complementary industries of sleep medicine and outpatient surgery," said Stanton Nelson, CEO of Graymark Healthcare. "Foundation brings powerful synergies to our existing sleep business, such as the integration of centralized functions and provider-based billing, as well as leveraging SG&A costs across a much larger organization. We expect the acquisition to be accretive in 2012."

Graymark's board of directors has approved the combination which is subject to customary closing conditions, including the completion of due diligence, negotiation and execution of a definitive purchase agreement and consent of lenders.

"Graymark shares our commitment to comprehensive patient care and industry innovation," said Thomas A. Michaud, CEO of Foundation Surgery Affiliates. "This combination will allow both companies to achieve their growth goals and provide complementary health care resources to our patients across the country."

About Foundation Surgical Hospital Affiliates and Foundation Surgery Affiliates

Foundation Surgical Hospital Affiliates, LLC was formed in 2008 from the success of the outpatient surgery company, Foundation Surgery Affiliates. Thomas A. Michaud, founder of both entities, created the Foundation Surgical Hospital company to focus on the development and management of surgical hospitals and the inclusion of ancillary service lines. These additional service lines, such as hyperbarics, sleep labs, intraoperative monitoring, imaging and robotic surgery, truly make the Foundation specialty hospital environment unique.

Foundation Surgery Affiliates, LLC is an industry leading ASC management and development company focused on partnering with physicians and employees to create an outstanding patient experience, while maximizing partner and shareholder value. Foundation is a leader in offering turnkey management and development solutions for physician partners, as well as creating an optimal experience for the patients we serve. You can visit Foundation at

About Graymark Healthcare

Headquartered in Oklahoma City, Okla., Graymark Healthcare, Inc. is the nation's second largest provider of sleep management solutions. In addition to diagnosing and treating over 80 sleep disorders, the company specializes in comprehensive care for Obstructive Sleep Apnea (OSA). Graymark offers its services through 105 sleep laboratories primarily in the Midwest, including standalone or IDTF facilities, therapy facilities, rural outreach hospital sites and urban hospital management agreements. For more information, visit

Important Cautions Regarding Forward-Looking Statements This press release contains forward-looking statements that are based on the Company's current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the Company's expectations, forecasts and assumptions. These statements include, among others, the anticipated timing of the proposed combination with Foundation Healthcare, the expected benefits from the proposed combination, and the expected impact on Graymark's results of operations. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the risk that a definitive agreement with respect to the proposed combination may not be reached, that the proposed combination may not be completed on the terms described in this release or at all, the possibility of not satisfying the closing conditions to complete the proposed combination, the ability to successfully integrate the businesses following the closing of the combination, and other risks and uncertainties, including those enumerated and described in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and other filings with the Securities and Exchange Commission, which filings are available on the SEC's website at . Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE: Graymark Healthcare, Inc.