Genesis Health Ventures to acquire NCS Healthcare for 0.06 times revenue

Weekly Corporate Growth Report, Aug 5, 2002

The Deal: Genesis Health Ventures Inc. has signed an agreement to acquire NCS Healthcare. The announcement of the deal was made after Omnicare Inc. made a public offer of $3 per share for NCS. According to the terms of the agreement, each outstanding share of NCS will be exchanged for 0. 1 shares of Genesis common stock. In addition, Genesis will repay in full the outstanding debt of NCSS, including $206 million of senior debt and $102 million of 5.75% convertible subordinated debentures. With the assumption of debt, the deal is valued at about $340 million. The deal has been approved by the boards of both companies, but regulatory and shareholder approvals are still pending.

Discussion: NCS HealthCare provides pharmacy services to nursing homes, assisted living facilities, and other longterm care facilities in more than 30 states. Company services include purchasing and dispensing both prescription and non-prescription drugs, automated record-keeping, drug therapy evaluation, and regulatory assistance.

Genesis Ventures owns or manages about 275 geriatric care facilities located in 15 eastern and midwestern states. These facilities include long-term-care, assisted-living, and independent-livIng centers. The company's NeighborCare subsidiary is a pharmaceutical and medical supply operation. NeighborCare accounts for about 40 percent of company revenues.

The merger will consolidate the operations of NCS and NeighborCare, making NeighborCare the second largest longterm care pharmacy in the United States.