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HEALTHSOURCE ANNOUNCES SIGNING OF DEFINITIVE AGREEMENT TO ACQUIRE REMAINING INTEREST IN SOUTH CAROLINA PLAN

 CONCORD, N.H., Dec. 18 /PRNewswire/ -- Healthsource, Inc., (NASDAQ: HLTH) (NYSE: HS), a leading operator of health maintenance organizations (HMOs) and managed health care services, announced today that it has signed a definitive agreement with Physicians' Health Systems, Inc. (PHS), the holding company for Healthsource South Carolina, Inc. (HSC), whereby Healthsource will acquire through a merger the remaining 70 percent interest in PHS in exchange for Healthsource shares. PHS shareholders would receive approximately 738,000 shares, as previously announced in the letter of intent and adjusted for the 50 percent Healthsource stock dividend paid Dec. 15, 1992. This share total will be proportionately adjusted if the Healthsource, Inc. share price at closing is below $23.33 or above $35.50 per share so that the value of the transaction will equal the respective limit values.
 In connection with the merger, Healthsource will cash out existing PHS option arrangements at an estimated cost of $1.2 million. The transaction is contingent upon receipt of regulatory approvals, approval by the shareholders of PHS and certain other conditions. The closing of the merger is currently planned for mid-February 1993.
 PHS is an HMO holding company that Healthsource formed in 1986 together with approximately 240 Charleston, S.C., physicians; Healthsource currently owns 30 percent of the stock of PHS. PHS had fiscal 1991 revenues and net earnings of $21.4 million and $2.6 million, respectively. PHS revenues and net income for the nine months ended Sept. 30 were $24.4 million and $2.9 million, respectively. PHS had a net worth at Sept. 30, 1992, of $10.1 million.
 Healthsource South Carolina now has more than 24,000 members, up 44 percent over the third quarter 1991 and approximately $33 million in estimated revenues for 1992. Healthsource believes the South Carolina plan is poised to expand rapidly in membership and revenue growth in 1993 due to the recent completion of health care delivery systems in the Greenville, Spartanburg and Columbia, S.C. regions.
 Healthsource, Inc. sponsors or manages HMOs in New Hampshire, Maine, South Carolina, North Carolina, Tennessee, Indiana and New York and owns EBPA, the largest third-party claims administrator in New England. Healthsource also provides utilization review services and preferred provider networks primarily to self-insured employer plans and Blue Cross and Blue Shield of Vermont.
 -0- 12/18/92
 /CONTACT: Thomas Congoran, chief financial officer, and Tracey Turner, shareholder relations, 603-225-5077, both of Healthsource; or Kerry Thalheim, 212-661-8030, or Kathy Waller, 312-266-7800, at the Financial Relations Board, Inc./
 (HLTH HS)


CO: Healthsource, Inc. ST: New Hampshire IN: HEA SU: TNM

TM -- NE004 -- 8187 12/18/92 11:51 EST
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Publication:PR Newswire
Date:Dec 18, 1992
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