The new Paracelsus Healthcare Corp., now the nation's sixth-largest investor-owned hospital company, will continue to pursue acquisitions in markets with populations of 30,000 to 500,000.
After closing its merger last week with Champion Healthcare Corp., Paracelsus' headquarters has moved from Pasadena, Calif., to Houston, the longtime home of Champion. Combined as Paracelsus, the company owns and operates 31 hospitals in 11 states. Those facilities posted nearly $700 million in revenues last year.
"The acquisition strategy is still the same, acquiring hospitals in mid-sized markets," said Deborah Frankovich, Paracelsus' vice president and treasurer. "We're looking to acquire hospitals with revenues of between $100 million and $150 million a year."
With its bank credit line expanded to $400 million, Paracelsus initially hopes to acquire one or two hospitals a year. "We also plan to expand in our existing markets," Frankovich said.
Paracelsus, which had been privately held since it was founded in 1981, is now publicly traded on the New York Stock Exchange. Manfred George Krukemeyer, M.D., who had been Paracelsus' sole shareholder, owns 29.7 million shares, or 54.5%, of the new company's common stock and is the chairman.
Krukemeyer, a 34-year-old surgeon who lives in Osnabruck, Germany, can veto certain acquisitions. He received a special $21 million dividend as part of the deal (July 15, p. 20).
Champion stockholders were issued 19.8 million shares of Paracelsus, or 36% of the company's outstanding stock.
The remaining 5.4 million shares, or 9.5%, were issued in a public offering designed to raise $41 million. Paracelsus stock was trading at about $8.50 a share last week.
R.J. Messenger, chief executive officer of the old Paracelsus, is vice chairman of the merged company and retains his position as CEO. Charles Miller, who had been Champion's top executive, will serve on Paracelsus' board and as president and chief operating officer.
"We now have a stronger balance sheet and improved access to capital as well as greater visibility and financial resources to compete more effectively," Paracelsus said in a written statement.