Universal Health Services, one of the nation's largest hospital companies, has reached an agreement to acquire behavioral health provider Psychiatric Solutions, Inc. in a deal worth approximately $3.1 billion.
Psychiatric Solutions is the largest stand-alone operator of owned or leased freestanding psychiatric inpatient facilities, with 94 facilities in 32 states. UHS owns or operates 25 acute care hospitals and 102 behavioral healthcare facilities and schools in 32 states.
"The combination with PSI will further strengthen our behavioral health division, which has already grown substantially through capacity expansion and strategic acquisitions," said Alan B. Miller, CEO of UHS. "The combined company will have ample opportunities for further growth in both the acute care and behavioral healthcare sectors."
UHS will acquire PSI for $33.75 per share in cash, or approximately $2 billion. Including the assumption of approximately $1.1 billion in PSI net debt, the total transaction consideration is approximately $3.1 billion.
The 2009 combined revenue of UHS and PSI was more than $7 billion. Combined, in 2009 the two companies had approximately 6.2 million patient days in 221 heathcare facilities in 37 states and territories.
As a result of this combination, UHS' revenue from the behavioral healthcare business will represent approximately 45 percent of combined 2009 revenue, before the allocation of UHS' corporate overhead costs.
The combination, if completed, is expected to generate approximately $35 million to $45 million in annual cost synergies within three years, with the majority occurring in years one and two, Miller said.