With the sale of its 623 rehabilitation clinics set to close by November, former long-term-care provider NovaCare is poised to become a healthcare provider in name only.
The King of Prussia, Pa.-based company agreed last week to sell the physical and occupational therapy clinics to Select Medical Corp. for $155 million in cash and the assumption of $45 million in debt.
Based in Mechanicsburg, Pa., Select operates about 120 outpatient rehabilitation clinics and 44 long-term acute-care hospitals in the U.S. and Canada.
Select will continue to run the clinics under the NovaCare name.
NovaCare shareholders have approved a plan to sell all businesses and pay off debt.
After the new Medicare payment rates for skilled-nursing facilities took effect in July 1998, demand for NovaCare's core contract therapy business fell off.
Earlier this year, NovaCare gave away its contract rehabilitation division and sold its orthotics and prosthetics division.
In September, it agreed to sell its 64% share in NovaCare Employee Services for $48.4 million as part of that company's conversion to a privately held employer services firm.
After it pays off a $175 million bond issue in January, NovaCare will decide whether to invest remaining cash in another business or liquidate.