LEWISVILLE, Texas, May 1 /PRNewswire/ -- Horizon Health Corporation
(Nasdaq: HORC) and Coral Gables, Florida based Ramsay Health Care, Inc.
(Nasdaq: RHCI) announced today that they have signed a definitive agreement
under which Horizon Health Corporation will acquire FPM Behavioral Health,
Inc., a wholly-owned subsidiary of Ramsay Health Care, Inc. The definitive
agreement contemplates a stock purchase in which Horizon will acquire all the
issued and outstanding capital stock of FPM Behavioral Health, Inc. The
purchase price is $20,000,000 payable in cash, subject to certain post-closing
adjustments. As a result of the transaction, FPM Behavioral Health, Inc. will
become a wholly-owned subsidiary of Horizon.
FPM conducts all of Ramsay Health Care's managed behavioral health care
business and provides employee assistance programs and other related
behavioral health care services to health maintenance organizations and self-
insured employers. At February 28, 1998, FPM had 46 contracts covering
approximately 1,135,000 lives in 9 states. FPM provides its services both
through health care professionals employed by FPM and through independent
health care professionals that have contracted with FPM on a fee-for-service
basis. At April 1998, the FPM provider network consisted of over 2,000
providers.
For the nine months ended March 31, 1998, FPM revenues were $19.0 million
and pretax income was $2.0 million.
Horizon and Ramsay anticipate closing the transaction in June 1998.
However, the closing of the transaction is subject to the fulfillment of
various conditions contained in the definitive agreement.
Although the addition of FPM to Horizon is expected to provide additional
cash flow to Horizon, because the purchase will result in nearly $20.0 million
of intangibles being added to the Horizon balance sheet, the amortization of
these intangibles may possibly result in the acquisition being dilutive during
the first year after the closing.
James Ken Newman, Chairman of Horizon said, "The FPM acquisition
represents another addition to the employee assistance programs and other
behavioral health care services offered by Horizon. This acquisition will
further expand our capabilities in this business area and enhance our position
for further growth. With the FPM acquisition, Horizon through its
subsidiaries will have approximately 200 contracts for employee assistance
programs and other behavioral health care services covering nearly 2.0 million
lives. This acquisition also continues the diversification of our business
operations consistent with our overall business plan."
Ramsay Health Care Chairman of the Board, Paul J. Ramsay, stated, "We are
very pleased with this transaction. We feel Horizon is an excellent long-term
partner for FPM Behavioral Health because it shares our commitment to
excellence in clinical care, patient and provider satisfaction and meeting the
needs of its employees." Mr. Ramsay added, "This transaction is also very
important to us because it reaffirms our commitment to Ramsay Health Care,
Inc.'s new strategic direction which focuses on the Youth Services Industry."
Statements contained herein that are based on future expectations rather
than on historical facts are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995 that involve a number of
risks and uncertainties. Factors that could cause actual results to differ
materially from those in any such forward-looking statement include, but are
not limited to, Horizon's ability to close the FPM transaction, to retain
FPM's existing contracts, to successfully integrate the operations of FPM on a
cost-effective basis, and various other risks as outlined in Horizon and
Ramsay's Securities and Exchange Commission fillings.
Ramsay Health Care, Inc. is a provider and manager of specialized programs
and services for at-risk and troubled youth. The Company through its
subsidiary, Ramsay Youth Services, Inc., operates residential youth
facilities, group homes and a juvenile assignment center. In addition, the
Company's managed behavioral care division (FPM) provides and manages the
delivery of behavioral healthcare services. Ramsay Health Care, Inc. also
operates psychiatric facilities and manages the delivery of behavioral
healthcare programs on behalf of acute care hospitals and community mental
health centers.
Horizon Health Corporation is a leading contract manager of clinical
programs offered by general acute care hospitals in the United States. At
February 28, 1998, Horizon had management contracts with 184 hospitals in 37
states.
SOURCE Ramsay Health Care, Inc.
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