Printer Friendly


 BEREA and INDEPENDENCE, Ohio, Sept. 13 /PRNewswire/ -- Providence Health Care, Inc. (NASDAQ: PHCI) and NuMED Home Health Care, Inc. (OTC: NUHH) jointly announced today that Providence acquired a 40 percent interest in NuMED and NuMED acquired a 20 percent interest in Providence. Providence also obtained warrant rights entitling it to increase its ownership in NuMED to 50.1 percent at any time during the next 22 months.
 In exchange for 3,350,500 shares of NuMED common stock, Providence issued 925,000 shares of its own common stock and paid $375,000. Providence also paid $125,000 to acquire the warrant rights, which entitle the company to purchase an additional 10.1 percent of NuMED common stock for approximately $3 million, subject to certain adjustments. The equity interest obtained by Providence does not include NuMED's surgical/medical products division, which NuMED plans to spin-off to its other shareholders.
 The Providence board of directors was expanded to five, and Mr. Jugal K. Taneja, chairman and chief executive officer of NuMED, was appointed a director of Providence. Providence also obtained the right to designate four directors on NuMED's board, which will be expanded from seven to eleven members to accommodate the Providence designees. Both companies agreed to a standstill arrangement whereby neither will increase ownership positions in the other before the exercise of the warrant rights. Both companies also obtained registration rights for their shares if the warrants are not exercised.
 "We are extremely pleased with this acquisition of a significant interest in NuMED, making our company NuMED's single largest shareholder," said Lawrence Cummings, Providence's CEO. "This transaction follows several months of discussions with NuMED's management and may lead to the acquisition of a majority share of NuMED. We have structured the transaction to permit Providence the opportunity to work together with NuMED management to expand both businesses before we determine whether to acquire 50 percent or more of the company."
 "We are very impressed with NuMED's management and the future prospects for its business. We look forward to developing a closer relationship with the NuMED organization in the months ahead. Home health care is one of the most rapidly growing segments of the health care field and represents a logical strategic expansion of Providence's nursing home business. If Providence elects to acquire a greater interest in NuMED, we expect that NuMED would contribute significantly to our revenues and profits."
 Mr. Taneja stated, "We join industry experts and Providence in the belief that home health care will receive substantial funding as a result of the Clinton health reform proposals. Furthermore, we see substantial operating synergies between nursing care and home health care. The combined companies would enjoy an ideal strategic position for the balance of the 1990s."
 As part of the agreement, Providence will make available a $1.0 million line of credit to NuMED for use in acquisitions approved by Providence. Separately, Providence and NuMED agreed to explore the formation of a joint venture to expand home health care operatons throughout Ohio. Providence would provide up to $500,000 in working capital for the joint venture and take up to a 75 percent interest.
 Prior to approval of the transaction, Providence's board of directors took action to redeem the company's shareholders rights plan, while reserving the possibility of adopting a new rights plan.
 For the fiscal year ended March 31, 1993, NuMED achieved net revenues of $4.3 million, of which approximately $3.9 million was derived from home health services. This reflected more than a doubling of revenues over the prior year. NuMED reported a net loss of $316,000 for the 1993 fiscal year ended March 31 (of which $123,000 relates to the surgical/medical products division) and a loss from continuing operations of $251,000. Included in NuMED's reported net loss is $65,000 pertaining to the loss on disposal of a segment as well as depreciation and amortization charges of $273,000, of which $43,000 relates to the surgical medical products division. For the first quarter of fiscal 1994, NuMED reported health care revenues of $1.7 million, which compares with health care revenues of $328,000 for the same period in fiscal 1993.
 NuMED provides home health care services, including a private duty, staff relief and Medicare reimbursed assistance, NuMED acquired three home health care operations in Florida during the past year, and its health care division currently operates in three states.
 Providence Health Care, Inc. was formed in February 1989 and acquired Northwestern Service Corporation, a nursing home operator, in June 1989. The company operates 15 long-term care facilities, 13 in Ohio and one each in Vermont and Virginia, with an aggregate 1,245 beds. Of these, 1,184 are nursing care beds and 61 are assisted-living beds. In addition, the company manages a 175 bed facility in Cleveland. Through Northwestern, which was merged into Providence in December 1992, the company has been engaged in the nursing home business since 1970 and since 1983 has grown significantly through selected acquisitions and internal development. All of the company's Ohio facilities are located within approximately 150 miles of the company's headquarters in Berea, Ohio, a Cleveland suburb.
 -0- 9/13/93
 /NOTE TO EDITORS: Following is additional information about Mr. Jugal K. Taneja, Providence's new board member and NuMED's chairman and chief executive officer: Mr. Taneja, 49, is also chief executive officer of Bancapital Financial Corporation and its subsidiary, A.T. Brod & Company, a full-service broker/dealer and member of the New York Stock Exchange. Before his association with Bancapital and NuMED, Mr. Taneja was senior vice president of Union Commerce Bank and Huntington National Bank in the loan division from 1979 to 1983./
 /CONTACT: Daniel H. Burch or Stanlay J. Kay of MacKenzie Partners, Inc., 212-929-5748/

CO: Providence Health Care, Inc.; NuMED Home Health Care, Inc. ST: Ohio IN: HEA SU:

WB-TS -- NY020 -- 1188 09/13/93 10:11 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Sep 13, 1993

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters