FOR IMMEDIATE RELEASE
HORIZON/CMS HEALTHCARE CORPORATION
CONTACT:
HORIZON HEALTHCARE CORPORATION CONTINENTAL MEDICAL SYSTEMS,
INC.
CONTACT: CONTACT:
Michael H. Seeliger Dennis L. Lehman
Vice President, Investor Senior Vice President
and Corporate Relations Finance and Chief
(505) 881-4961 Financial Officer
(717) 790-8300
HORIZON HEALTHCARE CORPORATION TO ACQUIRE
CONTINENTAL MEDICAL SYSTEMS, INC.,
IN STOCK FOR STOCK MERGER
ALBUQUERQUE, NM and MECHANICSBURG, PA, March 31, 1995 -- Horizon Healthcare
Corporation ("Horizon") (NYSE:HHC) and Continental Medical Systems, Inc.
("CMS") (NYSE:CNM) jointly announced today that they have agreed to a
strategic merger and that the merger was unanimously approved by each
company's Board of Directors. The combined company will be called Horizon/CMS
Healthcare Corporation.
Under the terms of the merger agreement, CMS stockholders will receive for
each of their CMS common shares a number of shares of Horizon common stock
equal to $13.00, divided by the average daily closing price of Horizon common
stock for a twenty trading-day period preceding the mailing of the proxy
materials relating to the special meetings of stockholders for approval of
the transaction. The transaction is intended to be tax free to CMS
stockholders and to be accounted for as a pooling of interests. CMS has
approximately
38,623,786 shares of common stock outstanding. At yesterday's closing price
for Horizon common stock, the aggregate value of the transaction to CMS
stockholders would be $502.1 million.
As of March 31, 1995, CMS operated thirty seven "State of the Art"
rehabilitation hospitals which provide a full continuum of acute medical
rehabilitation services. The Company also provides out-patient services at
more than 140 locations. In addition, CMS provides contract therapy services
to approximately 1,000 facilities and operates a respiratory therapy company.
CMS's annualized revenues based on the quarter ended December 31, 1995, were
approximately $974.5 million.
Horizon, headquartered in Albuquerque, New Mexico, is a leading provider
of specialty health care services, and long-term nursing care, including
licensed specialty hospitals and subacute units, institutional pharmacy
services, rehabilitation therapies, clinical laboratory services, medical and
sleep diagnostics, home respiratory care services and Alzheimer's care in 149
inpatient units. Horizon's annualized operating revenues based on the quarter
ended February 28, 1995 were approximately $675.3 million.
Commenting on the merger, Horizon's Chairman and CEO Neal Elliott noted
"We are very excited about the merger with Continental Medical Systems, Inc.
The merger will create the largest specialty health care company in the
United States providing a full continuum of lower cost health care from acute
rehabilitation services through subacute care, long-term care,
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out-patient and home care services. The combination of these two companies
represents a market place response to the rapidly changing health care
environment. This consolidation will enhance our efforts with managed care
organizations as we together seek cost-efficient, quality results."
Mr. Elliott continued, "Significant savings and economies of scale, as
well as the synergies we have identified convince us that the merger will be
accretive to earnings and immediately have a positive impact on the combined
earnings. In addition, tremendous opportunities are created for the expansion
of Horizon's institutional pharmacy, laboratory and other specialty programs
in each of CMS's hospitals."
"The unique combination will bring together the expertise necessary to
respond to the growing post-acute market which is being asked to care for
more higher acuity patients. As a result, we will be the nation's premier
post-acute provider."
Commenting on the proposed merger, Rocco Ortenzio, Chairman and CEO of
Continental Medical Systems, Inc., made the following statement: "The
combination of these two quality health care companies represents a
tremendous opportunity. The merger will establish a much stronger system for
the consistent delivery of acute rehabilitation and economical therapy
services to the long-term care and subacute industry, and will establish a
foundation to immediately expand contract therapies from both related and
non-related facilities. When CMS is
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combined with Horizon, I believe the full potential from our contract
rehabilitation division and the full potential of our first class facilities
and excellent professional staff will be realized. CMS is a leading developer
of clinically responsive programs nationwide and this expertise combined
with the long-term industry will be timely and responsive to this growing
market."
The companies expect to complete the merger by June 30, 1995. Completion
of the transaction is subject, among other conditions, to a normal review of
appropriate regulatory authorities. Horizon and CMS said that they expect
their respective stockholders to vote on the proposed merger at special
stockholders meetings, the dates of which will be announced later. Proxy
materials fully describing the transaction will be mailed to stockholders as
soon as possible. CMS's Chairman, Rocco Ortenzio, and Robert Ortenzio,
President of CMS, have entered into an agreement with Horizon pursuant to
which the Ortenzios have agreed to vote the CMS shares owned or controlled by
them in favor of the merger. Their shares constitute approximately 9.0
percent of the outstanding shares of CMS.
When the merger is consummated, Neal M. Elliott will continue as Chairman
of the Board, President & CEO, Rocco Ortenzio will be Vice Chairman and Klem
Belt and Robert Ortenzio will be Executive Vice Presidents of Horizon. The
combined entity's board of directors will be increased to 13
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members and will consist of the eight current Horizon directors and five of
the current CMS directors.
Salomon Brothers Inc., has rendered a fairness opinion to the Horizon
board of directors, and Merrill Lynch & Co. acted as financial advisor to
CMS and has rendered a fairness opinion to CMS's board of directors with
respect to the financial terms of the proposed combination.
Horizon Healthcare Corporation, headquartered in Albuquerque, New Mexico
is a leading provider of quality specialty health care services and long-term
nursing care. The Company's specialty health care services include subacute
care, pharmacy services, rehabilitation therapies, laboratory services,
medical and sleep diagnostic services, home respiratory care services and
Alzheimer's care. Horizon currently operates 16 specialty hospitals and
specialty centers, fifteen specialty subacute units and 133 long-term care
centers totalling 17,760 beds in 18 states. In addition, the Company provides
institutional pharmacy services to more than 36,400 beds from 19 pharmacies
in 16 states. The Company also provides contract rehabilitation therapy
services through 442 contracts in 20 states serving approximately 41,200 beds.
CMS is a diversified provider of medical rehabilitation and physician
services. CMS operates 37 freestanding rehabilitation hospitals, provides
outpatient rehabilitation services at more than 125 locations and manages
13 inpatient rehabilitation units for general acute care hospitals. These
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services are provided in 20 states. CMS provides contract therapy in more
than 30 states with physical, occupational, and speech therapy services.
Physician staffing services provide hospitals and physician groups with
temporary physician and allied health professional staffing services in all
50 states.
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