Not a sale but mgmt agreement see attached - wbASSETt
part of business was sold to another unit i.e. C. Murphy
Integrated Health Services to Operate NovaCare''s Contract Rehabilitation Division
OWINGS MILLS, Md., May 28 /PRNewswire/ -- Integrated Health Services, Inc. (NYSE: IHS) announced that effective June 1, 1999 it will operate, through a management agreement, NovaCare, Inc.'s (NYSE: NOV) long-term care contract rehabilitation division which was sold to a newly formed company. The transaction will enable IHS to increase the market density of its existing contract rehabilitation division called RehabWorks.
Under the terms of the agreement, Chance Murphy, Inc. a newly formed company will acquire the long term care contract rehabilitation business from NovaCare for a nominal amount. Chance Murphy, Inc. has hired IHS to manage the business under a comprehensive long term management agreement whereby the management fee will equal substantially all of the cash flow of the operations. The management agreement is initially for 10 years with extensions up to an additional 40 years and IHS has a purchase option. The transaction as structured affords IHS protections against unknown liabilities.
For the three months ended March 31, 1999, NovaCare's long term care division had annualized net revenues of approximately 275 million. However, subsequent to March 31, NovaCare exited a number of markets and facilities which were characterized by insufficient scale. The business being sold currently has contracts with 1,200 long-term care facilities and annualized revenues of approximately 163 million.
Integrated Health Services' contract rehabilitation division had contracts with over 1,100 facilities at March 31, 1999 and annualized revenues of approximately 168 million for the first quarter 1999.
There is a strong geographic overlap between NovaCare and RehabWorks. Over 90 of NovaCare's customer facilities are in markets served by RehabWorks.
"This transaction will enable us to increase our market density and achieve economies of scale in our contract rehabilitation division," said Robert N. Elkins, Chairman and CEO of IHS. "There has been a substantial reduction in revenues and earnings of contract rehabilitation businesses throughout the country as a result of the Balanced Budget Act of 1997. We believe our market density and operating model will better position us to adapt to the new environment."
NovaCare, Inc. is a national leader in physical rehabilitation and employee services.
Integrated Health Services is a highly diversified health services provider, offering a broad spectrum of post-acute medical and rehabilitative services through its nationwide healthcare network. IHS's post-acute services include home respiratory services, subacute care, long term care and contract rehabilitation services. Supporting the full continuum of healthcare needs, IHS currently operates over 1,500 post-acute service locations in 47 states throughout the U.S.
Statements in this press release concerning the Company's business outlook or future economic performances, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under the Federal Securities Laws. Any forward-looking statements are estimates, reflecting the best judgment of IHS based upon currently available information and involve a number of risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Risks, uncertainties and factors which could affect the accuracy of such forward looking statements are identified in the public filings made with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of the Company should be considered in light of those factors. There can be no assurance that these or other factors will not affect the accuracy of such forward looking statements.
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Contact:
Robert N. Elkins, M.D., Chairman & CEO, or Marc B. Levin,
Executive Vice President, of Integrated Health Services, 410-998-8400
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