Pediatric Services OF America (NASDAQ:PSAI)
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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.