Psychiatric Solutions to Purchase Horizon Health Corp. for 1.17 Times Revenue

Weekly Corporate Growth Report, Apr 2, 2007

The Deal: Psychiatric Solutions Inc. has entered into an agreement to acquire Horizon Health Corporation in a transaction valued at approximately $426 million including the assumption or repayment of about $105 million of Horizon debt. Under the terms of the deal, each common share of Horizon will be exchanged for $20 in cash. Horizon shareholders voted to approve the deal on March 28, 2007. The deal still requires regulatory approval and the Federal Trade Commission has made a request for additional information for its evaluation of the transaction. The companies expect the deal to close in the second quarter of 2007.

Discussion: Horizon Health operates 15 psychiatric hospitals in 11 states. The company also manages 91 mental health and 23 physical rehabilitation programs for hospitals in 36 states. Horizon also offers employee assessment and referral services to employers regarding behavioral health concerns.

Psychiatric Solutions provides a range of behavioral health services to children, adolescents, and adults. The company owns and operates about 75 psychiatric hospitals. The company also manages inpatient facilities for other hospitals and for government agencies.

The acquisition of Horizon will extend Psychiatric Solutions' inpatient care and hospital management operations.