Genesis Health Ventures to Acquire Vitalink Pharmacy Services, Inc. Establishing a $900 Million Integrated Pharmacy Services Business.KENNETT SQUARE, Penn.--(BW HealthWire)-- April 27, 1998--Genesis Health Ventures, Inc. (NYSE NYSE See: New York Stock Exchange :GHV GHV Genesis Health Ventures, Inc. GHV Gross Heating Value (relationship between volume and corresponding amount of energy for gas) ), a leading provider of eldercare eld·er·care n. Social and medical programs and facilities intended for the care and maintenance of the aged. services in the eastern and mid-western United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , today announced that it has entered into a definitive agreement to acquire Vitalink Pharmacy Services, Inc. (NYSE:VTK VTK Visualization Toolkit VTK Vlaamse Technische Kring (Flemish Technical Circle; student organisation) VTK Vampyres.tk (website) VTK Vertical Track Distance VTK Visualization Tool Kit ), for approximately $600 million plus the assumption of approximately $90 million of indebtedness for a total consideration of approximately $690 million. Genesis will merge Vitalink with its NeighborCareSM pharmacy operations to create a combined integrated pharmacy services business with revenues of approximately $900 million. The transaction has been unanimously approved by the Boards of Directors of both companies. Genesis will offer $22.50 per share to acquire all of Vitalink's outstanding shares in a cash election merger. Vitalink shareholders will be permitted to elect to receive either $22.50 per share in cash or $22.50 per share in a dividend yielding convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". with the preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to account for 50% of the total consideration. Manor Care, Inc. (NYSE:MNR MNR Ministry of Natural Resources MNR Metro North Railroad (New York, NY) MNR Manor MNR Mouvement National Républicain (French: National Republican Movement) ), the holder of approximately 50% of the shares of Vitalink, has agreed to elect to exchange all of its Vitalink shares for the preferred stock. The form of Manor Care's consideration will be prorated to the extent that other Vitalink shareholders elect to receive preferred stock. The preferred stock will have a face value of approximately $300 million and an initial dividend of 5.9375% and generally will not be transferable without the consent of Genesis. The terms of the transaction call for the preferred stock to be convertible into Genesis common shares at $37.20 per share and it may be called for conversion after three years, provided Genesis' stock price reaches certain trading levels. After the fourth year, if Genesis' stock price has not reached specified trading levels, the preferred stock may be called for conversion by Genesis subject to a market-based call premium provision. "The acquisition of Vitalink is consistent with our stated goal to significantly expand the specialty medical and community-based services components of our business in fiscal 1998 and will be accretive to earnings per share," commented Michael R. Walker, Genesis Chairman and Chief Executive Officer. "Vitalink adds approximately 172,000 beds and 57 pharmacies to NeighborCare, with approximately 75% of the revenues and cash flows in or adjacent to Genesis' existing markets. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, our NeighborCare pharmacy and medical equipment/supply business will account for approximately 47% of Genesis' consolidated revenues," Walker noted. "Together, our more than 100 institutional and community-based pharmacies will serve more than 260,000 long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. beds, 80% of which are located in or adjacent to our five regional market concentrations in the eastern and mid-western United States," he said. "In addition, we will be well positioned to pursue the community-based opportunities that we expect will fuel market growth and expansion in the coming years," Walker added. Stewart Bainum, Jr., Chairman and Chief Executive Officer of Manor Care, commented, "The combination of Vitalink and NeighborCare will be a powerful force in the institutional pharmacy business. This transaction enhances Manor Care's pharmacy investment, providing the Company with a stronger platform for improved returns." Bainum continued, "The convertible preferred stock that we anticipate receiving as consideration for our interest in Vitalink will provide current cash flow to Manor Care on a tax-efficient basis for investment in our high growth assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. business." Following the sale, Manor Care will continue to purchase from the Vitalink operations all of its pharmacy services and related pharmacy consulting services. Manor Care has provided Genesis with an irrevocable proxy to vote its Vitalink shares in favor of the merger. Upon closing of the transaction, it is anticipated that Manor Care will own approximately 18% of Genesis' pro forma diluted shares outstanding assuming the Vitalink shareholders other than Manor Care elect to receive cash for their shares. Manor Care will be subject to certain voting and standstill agreements and will have one representative on the Genesis Board of Directors. The combination of the equity to be issued in this transaction through the convertible preferred stock along with expected deleveraging events in the range of $200-$250 million will assist Genesis in achieving a 50% debt to total book capitalization ratio. The transaction is subject to regulatory and shareholder approval of both companies as well as receipt of financing and is expected to close in late fiscal year 1998. The above statements include forward-looking statements. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. Numerous factors exist which, in some cases have affected, and in the future could cause results to differ materially from these expectations. These statements involve risks and uncertainties concerning the implementation and interpretation of healthcare reform legislation and other factors as detailed from time to time in the Company's filings with the Securities and Exchange Commission. Vitalink provides medications, consulting, infusion and other ancillary services to customers with 172,000 institutional beds in 36 states as well as to home infusion patients. Manor Care, Inc., founded in 1959 through a corporate predecessor, is the industry leader in Alzheimer's disease Alzheimer's disease (ăls`hī'mərz, ôls–), degenerative disease of nerve cells in the cerebral cortex that leads to atrophy of the brain and senile dementia. management and one of the largest long-term care providers in the United States. The Company operates 171 nursing facilities containing 24,124 beds and 37 assisted living facilities with 3,875 units in 29 states. Manor Care owns approximately 50% of Vitalink Pharmacy Services, Inc. and holds a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in In Home Health, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :IHHI IHHI In Home Health, Inc. IHHI Ishikawajima-Harama Heavy Industries Company IHHI I Have Had It ). Genesis Health Ventures, Inc., a recognized innovator in the healthcare industry, was founded in 1985 to redefine how America cares for the elderly and is dedicated to helping older adults live a Full LifeSM as independently as possible in their later years. The Company, which consolidated its businesses under the brand name Genesis ElderCareSM in 1996, has established Genesis ElderCare(SM) Networks in five regional markets in the eastern United States and currently serves more than 150,000 customers daily. CONTACT: Investors: Genesis George V George V, king of Great Britain and Ireland George V (George Frederick Ernest Albert), 1865–1936, king of Great Britain and Ireland (1910–36), second son and successor of Edward VII. . Hager, Jr. Senior Vice President and Chief Financial Officer 610-444-6350 or Vitalink Scott T. Macomber Senior Vice President and Chief Financial Officer 630-245-4800 or Manor Care Leigh C. Comas Vice President, Finance and Treasurer 301-979-4000 or Media: Genesis Jeanne Moore Director Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most 410-494-8978 |
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