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8-K - FORM 8-K - REHABCARE GROUP INC | d69880e8vk.htm |
EX-99.8 - EX-99.8 - REHABCARE GROUP INC | d69880exv99w8.htm |
EX-99.9 - EX-99.9 - REHABCARE GROUP INC | d69880exv99w9.htm |
EX-99.6 - EX-99.6 - REHABCARE GROUP INC | d69880exv99w6.htm |
EX-99.4 - EX-99.4 - REHABCARE GROUP INC | d69880exv99w4.htm |
EX-99.2 - EX-99.2 - REHABCARE GROUP INC | d69880exv99w2.htm |
EX-99.3 - EX-99.3 - REHABCARE GROUP INC | d69880exv99w3.htm |
EX-99.5 - EX-99.5 - REHABCARE GROUP INC | d69880exv99w5.htm |
EX-99.7 - EX-99.7 - REHABCARE GROUP INC | d69880exv99w7.htm |
EX-99.10 - EX-99.10 - REHABCARE GROUP INC | d69880exv99w10.htm |
EX-99.11 - EX-99.11 - REHABCARE GROUP INC | d69880exv99w11.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
November 3, 2009
November 3, 2009
REHABCARE ANNOUNCES DEFINITIVE AGREEMENT
TO ACQUIRE TRIUMPH HEALTHCARE
TO ACQUIRE TRIUMPH HEALTHCARE
ST. LOUIS, MO, November 3, 2009, RehabCare Group, Inc. (NYSE: RHB) announced today it has entered
into a definitive agreement to acquire Triumph HealthCare, a leading developer and operator of
long-term acute care hospitals (LTACHs) in the U.S., for $570.0 million, subject to adjustment.
Triumphs trailing 12-month revenues through September 30, 2009 were $439.7 million and adjusted
EBITDA (earnings before interest, taxes, depreciation and amortization) was $89.7 million. The
purchase price is approximately 6.2x the trailing 12-month adjusted EBITDA (see attached
reconciliation). The transaction is expected to close on or about December 1, 2009, pending
customary closing conditions, including regulatory approvals. The combined organization will
represent the fourth largest post-acute hospital operator and the third largest LTACH provider in
the country, with 29 LTACHs and six inpatient rehabilitation facilities (IRFs) operating in 13
states, including two LTACHs that will be added in the first half of 2010.
John H. Short, Ph.D, RehabCare President and Chief Executive Officer, said the agreement is a
milestone event for the Company. Our long-stated strategy has been to accelerate the growth of
our hospital operations through acquisitions. This acquisition, our largest to date, will
significantly transform our Hospital division, providing the critical mass to leverage our
infrastructure and expand our capabilities in a fundamental component of the post-acute continuum,
Dr. Short said. It not only gives us immediate scale, increasing our hospital portfolio to 35 in
2010, but allows us to integrate the best practices of Triumph, an industry leader in managing
efficient and profitable LTACHs that deliver superior patient outcomes.
Furthermore, it will rebalance our business portfolio, with managed services representing 53
percent of our revenue stream and owned operations representing 47 percent, on a pro forma basis
for 2009. As a result, the Hospital division will immediately become a major earnings and cash
flow contributor for our stockholders.
Dr. Short said the additional LTACHs also will create a balanced portfolio of post-acute
services in combination with its 116 owned or managed IRFs, 35 managed outpatient therapy programs
covering nearly 100 sites and contract rehabilitation services at about 1,100 skilled nursing
facilities. This transaction builds out our post-acute continuum of care in 11 markets where
there is overlap with our other services, creating opportunities for synergies, improved patient
flow and enhanced care.
MORE
REHABCARE ANNOUNCES ACQUISITION OF TRIUMPH HEALTHCARE | Page 2 |
Founded in 1999 and based in Houston, Texas, Triumph HealthCare currently operates 20
hospitals in seven states, including 11 freestanding and nine co-located LTACHs. The company
employs approximately 3,800 clinical and administrative professionals and specializes in delivering
innovative clinical programming and effective case management for long-term, high acuity patients.
Charles L. Allen, Chairman and Chief Executive Officer of Triumph HealthCare said,
RehabCares acquisition of Triumph brings together two organizations with similar missions of
growth, financial strength and delivering the highest quality care for critically injured or ill
patients. We expect the integration of our two organizations will benefit our patients and have a
long-term positive impact on our hospitals and the communities we serve.
Following the close, Brock Hardaway, Triumphs President and Chief Operating Officer, will
oversee operations of RehabCares LTACH business under the direction of Kevin Gross, RehabCares
Senior Vice President of Hospital Operations. Hardaway has over 21 years experience in the
healthcare industry, spending more than 16 in the LTACH sector. Prior to joining Triumph in 2005,
he was responsible for the operations of over 30 hospitals for Select Medical Corporation.
RehabCare expects the acquisition to be meaningfully accretive to diluted earnings per share
attributable to RehabCare in 2010, including expected synergies. In the fourth quarter of 2009,
the Company expects to incur one-time expenses related to closing the transaction of approximately
$9.0 $10.0 million on a pre-tax basis. The combined organization is expected to more than double
the Companys cash flow from operations.
The transaction will be financed through a combination of committed bank financing, equity
and/or seller financing in the form of convertible preferred stock of RehabCare and cash on hand.
BofA Merrill Lynch, Royal Bank of Canada and BNP Paribas have provided a commitment for a new
senior secured credit facility consisting of a $500.0 million term loan B facility and a $125.0
million revolving credit facility, which is expected to be substantially unfunded at the close of
the transaction. BofA Merrill Lynch is acting as financial advisor to RehabCare in connection with
this transaction.
RehabCare management will discuss the transaction during its third quarter earnings conference
call today at 5:00 p.m. Eastern. Listeners may access the call by dialing 800-640-9765,
confirmation number 25516586, or in a listen-only mode through the Companys website at
http://www.rehabcare.com/investors/webcasts.html. A replay of the call will be available beginning
at approximately 7:00 p.m. Eastern today by dialing 877-213-9653, confirmation number 25516586. An
online archive of the conference call will remain on the Companys website through January 4, 2010.
With more than 25 years experience, RehabCare (www.rehabcare.com), a St. Louis-based company,
is a leading national provider of physical rehabilitation services in conjunction with over 1,250
hospitals and skilled nursing facilities in 41 states. The Company also owns and/or operates
freestanding rehabilitation and long-term acute care hospitals across the country. RehabCare is
included in the Russell 2000 and Standard and Poors Small Cap 600 Indices.
MORE
REHABCARE ANNOUNCES ACQUISITION OF TRIUMPH HEALTHCARE | Page 3 |
This press release contains forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, the Companys statement that it expects its acquisition of Triumph
HealthCare to be meaningfully accretive to diluted earnings per share attributable to RehabCare in
2010, the statement that the combined organization is expected to more than double the Companys
cash flow from operations, and other statements about the proposed benefits of the acquisition, the
combined companys plans, objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based on the Companys current beliefs and expectations and
are subject to significant risks and uncertainties. Actual results could differ materially from
those set forth in the forward-looking statements.
Factors that could cause actual results to differ from those set forth in the forward-looking
statements include, but are not limited to, the ability to obtain regulatory approvals to
consummate the acquisition within the expected timeframe or at all, the possibility that the
expected synergies of the proposed acquisition will not be realized in the amount or as and when
budgeted, the possibility that transaction costs associated with the proposed acquisition may be
greater than anticipated, the possibility that adjustments will be required in the purchase price
allocation for the proposed merger, the risk that the businesses will not be integrated
successfully, disruption from the acquisition that makes it more difficult to maintain business,
customer and operational relationships and the possibility that the acquisition does not close, the
risks that the Company fails to achieve revenue and margin targets for 2010, whether as a result of
the impact of additional limitations on reimbursement, the introduction of new regulation or
general economic or other factors. Additional factors that could cause results to differ
materially from those described in the forward-looking statements, including statements regarding
the expected impact of the Triumph HealthCare acquisition on the Companys results, are discussed
in the Companys filings with the Securities and Exchange Commission (the SEC), including its
most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and current
reports on Form 8-K available at the SECs Internet site at http://www.sec.gov. You are cautioned
not to rely on forward-looking statements as the Company cannot predict or control many factors
that affect its ability to achieve the results estimated. The Company makes no promise to update
any forward looking statements as a result of changes in underlying factors, new information,
future events or otherwise.
CONTACT: RehabCare Group, Inc.
Financial: Jay Shreiner, Chief Financial Officer
Press: Donna Lee, Office of the CEO
(314) 863-7422
Financial: Jay Shreiner, Chief Financial Officer
Press: Donna Lee, Office of the CEO
(314) 863-7422
MORE
REHABCARE ANNOUNCES ACQUISITION OF TRIUMPH HEALTHCARE | Page 4 |
Reconciliation of Triumph HealthCare Holdings, Inc. Net Income to
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization
(Amounts in thousands)
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization
(Amounts in thousands)
LTM1 Ended | ||||
September 30, | ||||
2009 | ||||
Net income attributable to Triumph HealthCare Holdings, Inc. |
$ | 26,904 | ||
Depreciation and amortization |
14,022 | |||
Interest expense |
31,596 | |||
Income taxes |
16,372 | |||
Loss on disposal of assets |
768 | |||
Adjusted EBITDA |
$ | 89,662 | ||
Base purchase price2 |
$ | 570,000 | ||
Purchase price attributable to two hospitals to be added by
mid- 2010 |
(10,600 | ) | ||
Adjusted base purchase price2 |
$ | 559,400 | ||
Divided by LTM1 ended 9/30/09 adjusted EBITDA |
$ | 89,662 | ||
Adjusted base purchase price2 EBITDA multiple |
6.2 | |||
1 | Last twelve months | |
2 | Subject to adjustment |