Universal Health Services acquires Psychiatric Solutions in $3.1B deal
Universal Health Services, Inc. will acquire Psychiatric Solutions, Inc. in a deal that includes $2 billion to purchase PSI at $33.75 a share, and $1.1 billion to assume its debts, the two companies announced.
Franklin, TN-based PSI is the nation's 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. UHS owns or operates 25 acute care hospitals and 102 behavioral healthcare facilities and schools in 32 states, Washington, DC, and Puerto Rico.
The 2009 combined revenue and EBITDA of UHS and PSI was more than $7 billion and approximately $1.1 billion, respectively. On a combined basis, in 2009 the company had approximately 6.2 million patient days in 221 heathcare facilities in 37 states and territories. With the acquisition, King of Prussia, PA-based UHS' revenue from the behavioral healthcare business will represent approximately 45% of combined 2009 revenue and approximately 54% of combined 2009 EBITDA, before UHS' corporate overhead costs.
"The combination with PSI will further strengthen our behavioral health division, which has already grown substantially through capacity expansion and strategic acquisitions," said Alan B. Miller, CEO/chairman of UHS. “Importantly, the combined company will have ample opportunities for further growth in both the acute care and behavioral healthcare sectors."
The acquisition is expected to generate approximately $35-45 million in annual cost synergies within three years, 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' 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, acting on the unanimous recommendation of a special committee, approved the agreement and recommended that PSI shareholders do so as well.
UHS expects to complete the transaction in the fourth quarter of 2010, subject to customary closing conditions.