King of Prussia, Pa. - On Monday, Universal Health Services, Inc. (NYSE: UHS) announced that it completed its previously announced acquisition of Psychiatric Solutions, Inc. (Nasdaq: PSYS).
UHS's acquisition of PSI brings together two complementary companies, creating a huge facilities-based behavioral healthcare provider with combined 2009 revenues totaling over $3 billion. UHS owns or operates 25 acute care hospitals and 102 behavioral healthcare facilities and schools in 32 states, Washington, D.C. and Puerto Rico. PSI is the largest standalone operator of freestanding psychiatric inpatient facilities with 94 facilities in 32 states, Puerto Rico, and the U.S. Virgin Islands.
"This transformative transaction is compelling for patients, employees and stakeholders of both companies as it establishes an industry leader with the scale and scope to impact mental health issues at the national level. The new combined company looks forward to exceeding expectations by continuing to provide the quality treatment services that have kept UHS in the forefront of the healthcare industry over the years," said Alan B. Miller, Chief Executive Officer and Chairman of the Board of UHS.
The transaction is expected to generate approximately $35 to $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 transaction, the acquisition of PSI is expected to be significantly accretive to UHS's earnings per share.
In connection with its receipt of antitrust clearance for the transaction, UHS has agreed to divest a PSI facility in Delaware (MeadowWood Behavioral Health), two PSI facilities in Las Vegas, Nevada (Montevisa Hospital and Red Rock Behavioral Health Hospital) and a UHS facility in Puerto Rico (Hospital San Juan Capestrano). The combined revenues of these facilities for the nine-month period ended September 30, 2010 and the twelve-month period ended December 31, 2009 was approximately $52.25 million and $64.5 million, respectively.
Under the terms of its agreement with the Federal Trade Commission (the "FTC"), UHS is required to divest the facilities in Delaware and Las Vegas within approximately six months, and the facility in Puerto Rico within approximately nine months. The agreements UHS has entered into with the FTC, including a Decision and Order and an Order to Hold Separate and Maintain Assets, are publicly available on the FTC's website at www.ftc.gov.
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