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Major Medical Providers Announce Merger Deal : Health care: The new firm will tap fast-growing outpatient surgery and home therapy markets.

June 18, 1992|From Reuters

DALLAS — Medical Care International Inc., the nation's largest operator of non-hospital surgical centers, and Critical Care America Inc., the biggest independent U.S. provider of home health care services, said Wednesday that they will merge.

Saying their goal is to revolutionize the health care industry, the companies announced that they will form a new company called Medical Care America Inc. The merger is expected to be completed in late summer or early fall.

Under the agreement, which calls for a tax-free pooling of interests, each Medical Care share will be exchanged for one share in the new company and each Critical Care share for 0.72 share in the new company.

The new company, with a market capitalization of nearly $2 billion, will have assets of $800 million.

The merged company is expected to have combined revenue this year of $650 million. In 1991, Medical Care had revenue of $282 million and Critical Care $233 million.

Medical Care International fell $6.50 to $48.50 and Critical Care America $3.875 to $35.375 on the New York Stock Exchange.

Medical Care said Critical Care Chairman and President Patrick S. Smith will serve as chairman of the merged company, and Medical Care Chairman and President Donald E. Steen will be president and chief executive.

Critical Care is based in Nashua, N.H., and Medical Care in Dallas. The merged company will be based in Dallas.

"We're embarking on a quest to revolutionize the health care industry by creating an alternate-site health care network, which will enable patients to receive complex medical services outside the hospital--in the more cost-efficient outpatient and home environments," Smith said.

"The new organization will have access to Critical Care's current marketing, sales, managed care and management training resources," Steen said. "This will enable our combined organizations to create new outpatient health care service packages (and) sell them effectively to our broad physician network."

In the last 10 years, outpatient surgical centers and home infusion therapy have been two of the fastest-growing segments of the health care industry. They offer non-acute health care services and procedures traditionally performed in a hospital on an outpatient basis at lower costs.

The companies said the transaction is subject to antitrust clearance and stockholder approval.

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