NEW ORLEANS, October 2 /PRNewswire/ -- Ramsay Health Care, Inc.
(Nasdaq: RHCI) and Ramsay Managed Care, Inc. (Nasdaq: RMCR) today jointly
announced the signing of a definitive agreement and plan of merger pursuant to
which Ramsay Managed Care will become a wholly owned subsidiary of Ramsay
Health Care.
    Under the terms of the merger, each share of Ramsay Managed Care common
stock will be exchanged for one-third (1/3) of a share of Ramsay Health Care
common stock, and each share of Ramsay Managed Care convertible preferred
stock (each of which is convertible into 30 shares of common stock) will be
exchanged for one share of Ramsay Health Care convertible preferred stock
(each of which is convertible into 10 shares of common stock).  At September
30, 1996, Ramsay Managed Care had outstanding approximately 6.4 million shares
of common stock and 100,000 shares of convertible preferred stock (convertible
into an aggregate of 3 million shares of common stock).  Ramsay Health Care,
which at September 30, 1996 had approximately 8.3 million shares of common
stock outstanding and approximately 142,000 shares of convertible preferred
stock outstanding (convertible into an aggregate of approximately 1.4 million
shares of common stock), will issue approximately 2.13 million shares of
common stock and 100,000 shares of convertible preferred stock (convertible
into 1 million shares of common stock) in connection with the transaction.
The merger has been approved by the boards of directors of Ramsay Health Care
and Ramsay Managed Care following recommendations by a special committee of
each company's board of directors.
    "The acquisition of Ramsay Managed Care will extend the ability of Ramsay
Health Care to offer a broader range of mental health care services in order
to compete effectively," said Bert Cibran, President of Ramsay Health Care.
Mr. Cibran continued, "the accelerating trend toward a health care system
organized around integrated providers of mental health care services affirms
the reasons for the merger of the two companies.  We are excited about the
prospects for the combined companies."
    "The merger with Ramsay Health Care will give us the support that we need
to compete effectively as competition in the health care industry
accelerates," said Martin Lazoritz, M.D., Executive Vice President of Ramsay
Managed Care.  Dr. Lazoritz continued, "The combination of Ramsay Managed Care
with Ramsay Health Care will enable us to continue to develop our managed care
and outpatient provider business."
    The merger is subject to the approval of the holders of a majority of
outstanding shares of common stock and convertible preferred stock (voting
together as one class) of Ramsay Managed Care and is also subject to the
approval of the holders of a majority of the shares of common stock and
convertible preferred stock (voting together as one class) of Ramsay Health
Care voting at a meeting of stockholders.  Affiliates of Paul J. Ramsay, the
Chairman of the Board of Ramsay Health Care and Ramsay Managed Care, hold an
approximate 69% voting interest in Ramsay Managed Care and an approximate 35%
voting interest in Ramsay Health Care.  These affiliates have indicated that
they will vote their shares of capita stock of each company in favor of the
merger.  The merger is also subject to other various conditions, including the
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act, the receipt of applicable lender and other
consents, and the declaration of effectiveness by the SEC of a registration
statement to be filed by Ramsay Health Care.  Subject to the satisfaction of
these conditions, it is expected that the merger will close by the end of
March, 1997.
    To enable Ramsay Health Care's and Ramsay Managed Care's stockholders to
consider the merger transaction, each company will call a special meeting of
stockholders on a date and at a place to be announced.
    Ramsay Managed Care became a publicly held company in April, 1995 when
Ramsay Health Care distributed the shares of common stock of Ramsay Managed
Care held by it to the holders of its common stock and preferred stock.  In
announcing the merger, the companies stated that the combination of the
companies was designed to heighten their competitiveness and increase
stockholder value at a time when their respective business strategies were
converging and not diverging as had been expected at the time of the
distribution of Ramsay Managed Care.
    Ramsay Health Care, Inc. is one of the largest behavioral health services
companies in the United States, operating inpatient, outpatient and management
services in 15 states.
    Ramsay Managed Care, Inc. is engaged in the management of mental health
services and substance abuse programs on behalf of self-insured employers,
health maintenance organizations (HMOs) and governmental agencies in various
states and also operates HMOs in Louisiana, Mississippi and Alabama.  As
previously announced, Ramsay Managed Care continues to pursue selling its HMO
division.

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