In a deal announced late Friday, Integrated Health Services agreed to buy Community Care of America, a rural provider often viewed by analysts as IHS' little sister, for $94 million.
Financially struggling CCA, based in Naples, Fla., has been reviewing its strategies, including a possible sale, since last year (Oct. 14, 1996, p. 17).
Earlier this year, it obtained a $15 million line of credit from IHS, which also agreed to manage CCA for five years while the company sorted out its future. CCA lost $18.9 million, or $2.56 per share, on revenues of about $130 million in 1996.
CCA operates 54 long-term-care facilities, a physician practice and an outpatient rehabilitation center. IHS, based in Owings Mills, Md., is one of the nation's largest providers of post-acute-care services.
IHS Chairman and Chief Executive Officer Robert Elkins, M.D., has been the principle shareholder of CCA, at one time owning up to 60% of the company. He also has been a member of its board.
According to the deal announced late last week, IHS will offer $4 per outstanding CCA share as of Aug. 7. So far, it has received commitments for about 4.1 million of CCA's 7.6 million outstanding shares. CCA subsequently would become a wholly owned subsidiary of IHS. The deal is expected to be completed in 90 days.
IHS said the acquisition of CCA will strengthen its network in rural areas.
In another transaction, IHS said it will acquire Arcadia Services of Southfield, Mich., for undisclosed terms. Arcadia operates home-care agencies and other facilities in 16 states and has annual revenues of about $70 million. Its operations are concentrated in Indiana, Michigan and Ohio.