Pediatric Services of America, Inc. Announces Agreement to Sell Pharmacy Business
October 10 2005 - 4:30PM
Business Wire
Pediatric Services of America, Inc. (Nasdaq:PSAI) today announced
that it has entered into a definitive agreement to sell selected
assets of its Pharmacy reportable segment to Accredo Health,
Incorporated, a wholly-owned subsidiary of Medco Health Solutions,
Inc. (NYSE: MHS). PSAI expects to receive approximately $72 million
in cash for the vast majority of its Pharmacy business, though the
Company will retain the assets of its Pensacola, Florida unit dose
pharmacy. The transaction is subject to regulatory approval and
customary closing conditions. Daniel J. Kohl, President and CEO of
PSAI said, "This agreement with Accredo represents a strategic
milestone for PSAI that will allow us to focus on bringing about
crisper execution of our strategic goals, simplify our message to
customers, and make it easier for investors to understand who we
are and what we do. We also believe that Accredo possesses both the
size and influence required to best serve our patients and
customers." "The divestiture of our Pharmacy business streamlines
our Company and allows us to more effectively leverage our core
competency, pediatric private duty nursing. In addition, this
agreement provides us with the financial flexibility to further
grow our Nursing business through start-ups and strategic
acquisitions. We are also going to continue concentrating our
efforts on maximizing profitability for the Respiratory Therapy
Equipment Services business through continued improvement in
operating efficiencies. While supporting our pediatric mission, we
intend to grow the adult, high-tech respiratory share of our
Respiratory Therapy Equipment Services business," added Mr. Kohl.
As part of the transaction, the parties will execute a Transition
Services Agreement that will provide for the collection of
outstanding accounts receivable and other items. PSAI anticipates
exit costs to include transaction related costs, including, but not
limited to, professional service fees, income tax liabilities,
compensation and benefit costs, facility closure, and contract
termination costs. The Company will provide an estimate of these
exit costs when they become fully measurable, likely as part of its
pro forma financial information at Closing. In addition, PSAI
intends to use some of the proceeds of the transaction to retire
its $20.35 million, 10% Senior Subordinated Notes due 2008. Raymond
James & Associates served as financial advisor to PSAI in this
transaction. The Company will host a conference call to discuss the
transaction on Tuesday, October 11, 2005, at 11:00 a.m. Eastern
Time. The dial-in number for all Participants is 800-374-1702. To
join the Q&A session, please press * followed by 1. If you are
unable to listen to the live broadcast, replays of the conference
call will be available until October 23, 2005 by dialing
800-642-1687. To connect with a replay of the conference call,
please refer to the Pediatric Services of America, Inc. Conference
Call, Passcode: 1379122#. PSAI provides comprehensive pediatric
home health care services through a network of over 120 branch
offices in 21 states, including satellite offices and branch office
start-ups. Through these offices PSAI provides a combination of
services, including pediatric private duty nursing, pediatric day
treatment centers (PPECs), pharmacy services and home medical
equipment. Additional information on PSAI may be found on the
Company's website at http://www.psakids.com. NOTE: This press
release contains certain forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995)
relating to future financial performance of Pediatric Services of
America, Inc. (the "Company"). When used in this press release, the
words "may," "targets," "goal," "could," "should," "would,"
"believe," "feel," "expects," "confident," "anticipate,"
"estimate," "intend," "plan," "potential" and similar expressions
may be indicative of forward-looking statements. These statements
by their nature involve substantial risks and uncertainties,
certain of which are beyond the Company's control. The Company
cautions that various factors, including the factors described
hereunder and those discussed in the Company's other filings with
the Securities and Exchange Commission, as well as general economic
conditions, industry trends, the Company's ability to consummate
the sale of its Pharmacy business, the financial implications of
the sale of its Pharmacy business, the Company's anticipated uses
of the proceeds from the transaction, the Company's ability to
collect for equipment sold or rented, assimilate and manage
previously acquired field operations, collect accounts receivable,
including receivables related to acquired businesses and
receivables under appeal, hire and retain qualified personnel and
comply with and respond to billing requirements issues, including
those related to the Company's billing and collection system, nurse
shortages, competitive bidding, HIPAA regulations, Average
Wholesale Price ("AWP") reductions, adverse litigation, workers'
compensation losses, availability and cost of medical malpractice
insurance and reduced state funding levels and nursing hours
authorized by Medicaid programs, and the impact of changes
resulting from the recently enacted Medicare Act, could cause
actual results or outcomes to differ materially from those
expressed in any forward-looking statements of the Company made by
or on behalf of the Company. Any forward-looking statement speaks
only as of the date on which such statement is made, and the
Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of an unanticipated event. New factors emerge from time
to time, and it is not possible for management to predict all of
such factors. Further, management cannot assess the impact of each
such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
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