Stryker Corp., Kalamazoo, Mich., completed the sale of its outpatient
physical therapy business to Chicago-based private equity firm Water
Street Healthcare Partners for approximately $150 million.
Water Street, which is focused exclusively on healthcare, has committed
an additional $50 million in equity investment for future growth and
acquisitions, a spokeswoman said. The business, Physiotherapy Associates,
will retain its name, providing a wide array of outpatient physical
therapy services through 475 clinics in 31 states.
Under the terms of the sale agreement, Stryker will retain responsibility
for cash damages to be paid in connection with a previously announced
federal investigation of Physiotherapy Associates billing and coding
practices, officials said in a news release. In 2006 Physiotherapy
Associates sales ($258.4 million), operating income ($10.7 million) and
net earnings ($6.3 million) declined 2%, 41% and 43% respectively
compared to the previous year, according to a Stryker news release.
The deal creates the second largest outpatient physical therapy services
company in the U.S., the spokeswoman said. Water Street plans to build on
Physiotherapy Associates foundation by pursuing acquisitions of small
to midsize physical therapy companies so as to extend Physiotherapy
Associates services to new markets and offer consistent, high-quality
care that is difficult to find in todays highly fragmented market, said
Kip Kirkpatrick, a partner with Water Street in the news release.
-- by Cinda Becker