A Medical Device Daily
RehabCare Group (St. Louis), a national provider of physical rehabilitation program management services, said it will acquire Symphony Health Services (Hunt Valley, Maryland), a provider of contract therapy services with annual revenue of over $230 million, for cash consideration of $101.5 million.
RehabCare said that it expects "to harvest" $8 million to $12 million in annualized synergies over the next 24 months to add to Symphony Health's 2005 adjusted EBITDA of $8 million. It said these savings will begin to be realized in 4Q06 and throughout the following 24 months.
RehabCare said the purchase accelerates its strategy of providing post-acute continuums of care by integrating its rehabilitation services in hospitals with Symphony, whose RehabWorks subsidiary is a provider of services to long-term care facilities.
It said that the combined organization will be one of the largest providers of rehabilitation program management services in the U.S., with nearly 15,000 employees servicing about 24,000 patient visits per day in more than 1,400 facilities, including hospitals, nursing homes and other long-term care facilities in 42 states, the District of Columbia and Puerto Rico.
John Short, PhD, president and CEO of RehabCare, called the acquisition "a unique opportunity to combine the services and best practices of the two largest providers of contract therapy in the United States. . . . The combination will create a scalable, responsive, single-source provider of rehabilitation program management services necessary to compete in today's fast-growing healthcare marketplace."
Symphony Health is a family of companies focused on providing contract therapy, nursing and healthcare consulting services for the post-acute industry. The company is comprised of three primary subsidiaries:
• RehabWorks, founded in 1978, provides physical therapy, occupational therapy, speech-language pathology, wellness/fitness and short-term staffing services to more than 500 facilities.
• VTA Management Services provides contract therapy staffing for the healthcare and educational markets in the New York Metropolitan area and throughout the state of New York.
• Polaris Group provides consulting services to post-acute healthcare providers, integrating nursing, operational, regulatory and financial expertise.
R. Scott Jones, president and CEO of Symphony Health, said, "Over the past two years, Symphony Health Services has dedicated significant resources to its Quality Management initiatives. . . . This investment has resulted in rapid improvements along with the expansion of our product offerings into such areas as Wellness and Clinical Outcomes Management."
To finance this transaction, RehabCare expanded its senior credit facility commitment from $90 million to $150 million. The deal is expected to close on or about June 30.
Following the close of the transaction, R. Scott Jones will remain as president and CEO of Symphony Health during the integration period and will lead a transition team comprised of both RehabCare and Symphony Health executives.
• Renal Advantage (Brentwood, Tennessee), the fourth largest provider of dialysis services in the United States, reported an agreement with Fresenius Medical Care North America (FMCNA) to manage and ultimately acquire RenaLab (Jackson, Mississippi), an independent clinical laboratory, with administrative offices in Nashville. Terms of the transaction were not disclosed.
RenaLab employs 163 individuals and currently provides services to more than 33,000 end-stage renal disease (ESRD) patients and the facilities where they are treated. It is expected that RenaLab will serve patients at Renal Advantages' 73 facilities. Substantially all of the employees of RenaLab are joining Renal Advantage effective May 1, 2006.
Renal Advantage will help manage RenaLab until the completion of the acquisition, expected at the end of 2006.
Michael Klein, CEO of Renal Advantage, said, "Operating our own laboratory increases our control over data generation, which can positively impact both the quality and delivery of patient care. It also provides us with better control of our costs and integrates diagnostic capabilities with the therapy we provide in our dialysis centers."
Renal Advantage says that its growth plan began with the acquisition of 73 dialysis centers, which was financed in partnership with Welsh, Carson, Anderson & Stowe.
• NovaMed (Chicago) reported that it has acquired a 51% interest in the Eye Surgery Center of Arkansas (Jonesboro), an ambulatory surgery center and its first surgery center in Arkansas.
Thomas Hall, NovaMed president and CEO, said, "In the last 12 months over 3,800 ophthalmic surgical procedures were performed at this center and we expect this acquisition will also be immediately accretive to our earnings."
NovaMed develops and operates ambulatory surgery centers in partnership with physicians. Including the transaction noted above, NovaMed now has ownership interests in 31 surgery centers located in 17 states. NovaMed's executive offices are located in Chicago.