Transformative Transaction Creates Premier Facilities-Based
Healthcare Provider with Industry Leading Behavioral Health Platform
KING OF PRUSSIA, Pa. & FRANKLIN, Tenn., May 17, 2010 (BUSINESS WIRE) --Universal Health Services, Inc. (NYSE: UHS) ("UHS") and Psychiatric
Solutions, Inc. (NASDAQ: PSYS) ("PSI") announced today that they have
reached a definitive agreement whereby UHS will acquire PSI for a price
of $33.75 per share in cash, or approximately $2.0 billion. Including
the assumption of approximately $1.1 billion in PSI net debt, the total
transaction consideration is approximately $3.1 billion.
UHS's acquisition of PSI is a highly strategic transaction that brings
together two complementary companies to create a premier
facilities-based healthcare provider with an industry-leading presence
in the behavioral health care services sector. PSI is the largest
standalone operator of owned or leased freestanding psychiatric
inpatient facilities with 94 facilities in 32 states, Puerto Rico, and
the U.S. Virgin Islands. Today, UHS owns or operates 25 acute care
hospitals and 102 behavioral health care facilities and schools located
across 32 states, as well as in Washington, D.C. and Puerto Rico.
The 2009 combined revenue and EBITDA (as defined below) of UHS and PSI
was more than $7.0 billion and approximately $1.1 billion, respectively.
On a combined basis, in 2009 the company had approximately 6.2 million
patient days in 221 heath care facilities across 37 states and
territories. As a result of this combination, UHS's revenue from the
behavioral health care business will represent approximately 45% of
combined 2009 revenue and approximately 54% of combined 2009 EBITDA,
before the allocation of UHS's corporate overhead costs.
"This transformative transaction is very compelling for shareholders,
patients and employees of both companies, and we are excited to add
PSI's assets to our portfolio," said Alan B. Miller, Chief Executive
Officer and Chairman of the Board of UHS. "The combination with PSI will
further strengthen our behavioral health division, which has already
grown substantially through capacity expansion and strategic
acquisitions. Importantly, the combined company will have ample
opportunities for further growth in both the acute care and behavioral
health care sectors."
Mr. Miller continued, "UHS is proud of its more than 30-year record of
commitment to high quality healthcare and achieving outstanding
financial performance, and this transaction - which we expect to be
significantly accretive to earnings - will help us continue to deliver
strong results and increased shareholder value."
"On behalf of the Special Committee of the board of directors of PSI, we
are pleased to have reached an agreement that will enable us to deliver
significant and certain value to our shareholders," said Christopher
Grant, Jr., Chairman of the PSI Special Committee. "After conducting a
thorough review of strategic alternatives and potential partners, we are
pleased that PSI will become an important part of an established and
highly respected industry leader."
The combination is expected to generate approximately $35-45 million in
annual cost synergies within three years following close, with the
majority occurring in years one and two. Excluding one-time costs
related to the acquisition, the transaction is expected to be
significantly accretive to UHS's earnings per share. In 2009, PSI's
revenue was $1.8 billion with EBITDA of approximately $330 million.
The transaction was unanimously approved by the Board of Directors of
UHS. PSI's Board of Directors, acting on the unanimous recommendation of
the Special Committee, has approved the agreement and recommend that PSI
shareholders approve the merger.
The transaction has fully committed debt financing to be provided by
JPMorgan Chase Bank N.A. and Deutsche Bank AG. UHS expects to complete
the transaction in the fourth quarter of 2010, subject to customary
closing conditions, including regulatory approvals and clearance under
Hart-Scott-Rodino Act, as well as approval by PSI's shareholders.
J.P. Morgan Securities Inc. is acting as financial advisor to UHS.
Cravath, Swaine & Moore LLP is acting as legal advisor to UHS.
Goldman, Sachs & Co. is acting as financial advisor to the Special
Committee of the Board of Directors of PSI. Shearman & Sterling LLP is
acting as the Special Committee's legal advisor.
Conference Call and Webcast Information:
UHS will hold a conference call for investors and analysts at 10:00 a.m.
eastern time on May 17, 2010. The dial-in number is 1-877-648-7971. A
digital recording of the conference call will be available two hours
after the completion of the conference call on May 17, 2010 and will
continue through midnight on May 31, 2010. The recording can be accessed
by calling 1-800-642-1687 and entering the conference ID number
76218999. This call will also be available live over the internet at our
web site at www.uhsinc.com.
There will be a slide presentation that will accompany the conference
call. The presentation will be available on the home page and the
investor relations page of our website.
About Universal Health Services, Inc.
UHS is one of the nation's largest hospital companies operating, through
its subsidiaries, acute care hospitals, behavioral healthcare facilities
and ambulatory centers located throughout the United States and Puerto
Rico. UHS acts as the advisor to Universal Health Realty Income Trust, a
real estate investment trust (NYSE: UHT). For additional information on
the Company, visit our web site: http://www.uhsinc.com.
About Psychiatric Solutions, Inc.
PSI offers an extensive continuum of behavioral health programs to
critically ill children, adolescents and adults and is the largest
operator of owned or leased freestanding psychiatric inpatient
facilities with more than 11,000 beds in 32 states, Puerto Rico and the
U.S. Virgin Islands. PSI also manages freestanding psychiatric inpatient
facilities for government agencies and psychiatric inpatient units
within medical/surgical hospitals owned by others.
This press release may contain "forward-looking statements".
Forward-looking statements may be identified by words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates",
"will" or words of similar meaning and include, but are not limited to,
statements about the expected future businesses of UHS and PSI resulting
from and following the proposed acquisition. These statements are based
on the current expectations of UHS and PSI and are inherently subject to
uncertainties and changes in circumstances. Among the factors that could
cause actual results to differ materially from those described in the
forward-looking statements are factors relating to the fulfillment of
certain closing conditions to the proposed acquisition, and changes in
global, political, economic, business, competitive, market and
regulatory forces. UHS and PSI undertake no obligation to revise or
update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise. Please refer to UHS's and PSI's filings with
the SEC, including its most recent Annual Report on Form 10-K, for more
information on additional risks that could cause actual results to
differ from the forward-looking statements made herein.
This communication may be deemed to be solicitation material in respect
of the proposed acquisition of PSI by UHS. In connection with the
proposed acquisition, UHS and PSI intend to file relevant materials with
the SEC, including PSI's proxy statement on Schedule 14A.
INVESTORS AND SECURITY HOLDERS OF UHS AND PSI ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING PSI'S PROXY STATEMENT,
WHEN IT BECOMES AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED ACQUISITION.
Investors and security holders will be able to obtain all such
documents, when they become available, free of charge through the
website maintained by the SEC at www.sec.gov,
or by directing a request to Investor Relations, Universal Health
Services, Inc., Universal Corporate Center, 367 South Gulph Road, P.O.
Box 61558, King of Prussia, Pennsylvania 19406 (610-768-3300). Such
documents are not currently available.
UHS and certain of its directors and executive officers and other
persons, and PSI and its directors and certain executive officers, may
be deemed to be participants in the solicitation of proxies from the
holders of PSI common stock in respect of the proposed acquisition.
Information regarding such persons and a description of their interests
in the transaction will be contained in the proxy statement when it is
"EBITDA" is defined as earnings before interest, income taxes,
depreciation, amortization, stock-based compensation expense and income
attributable to non-controlling interests.
SOURCE: Universal Health Services, Inc.
Steve G. Filton, 610-768-3300
Chief Financial Officer
Sard Verbinnen & Co.
Drew Brown & Renée Soto, 212-687-8080
Brent Turner, 615-312-5700
Executive Vice President, Finance and Administration
Joele Frank, Wilkinson Brimmer Katcher
Steve Frankel & Jamie Moser, 212-355-4449