Molina Healthcare to Acquire Providence Human Services & Providence Community Services, the Behavioral & Mental Health Subsid...
September 03 2015 - 9:02AM
Business Wire
Molina Healthcare, Inc. (NYSE: MOH) and The Providence
Service Corporation (NASDAQ: PRSC) together announced today that
the parties have entered into a definitive agreement whereby Molina
Healthcare will acquire all the outstanding ownership interests of
Providence Human Services, LLC (PHS) and Providence Community
Services, LLC (PCS), both wholly owned subsidiaries of The
Providence Service Corporation. Under the terms of the acquisition
agreement, Molina will pay The Providence Service Corporation
approximately $200 million upon the closing of the transaction,
which will be subject to customary working capital adjustments.
Molina intends to fund the transaction with available cash on its
balance sheet. The transaction is expected to close during the
fourth quarter of 2015, subject to regulatory approvals and the
satisfaction of other closing conditions.
PHS is one of the largest national providers of accessible,
outcome-based behavioral and mental health services and operates in
23 states and the District of Columbia. PHS’ broad national
footprint is deployed on a local level enabling it to effectively
target specific needs in diverse geographies. PHS generated revenue
of approximately $346 million for 2014.
“We are excited to enter into this strategic transaction with
The Providence Service Corporation,” said J. Mario Molina,
M.D., President and Chief Executive Officer of Molina Healthcare.
“The PHS and PCS platforms, coupled with their extensive experience
in Medicaid, will enable us to complement our health plan offering
with behavioral and mental health and other services that focus on
social determinants of health. Providing access to these types of
quality services is imperative, as we increasingly arrange for
healthcare services for patients with complex needs.”
“PHS is an industry leader with a strong management team and
highly dedicated workforce,” said James Lindstrom, Providence’s
President and Chief Executive Officer. “We appreciate our
workforce’s contributions to Providence, particularly under the
current PHS leadership, and believe that PHS is ready for its next
stage of growth with Molina, a company with a complementary
mission, vision, set of values and culture.”
Providence intends to use 50% of the net cash proceeds from the
transaction to prepay certain loans under its existing credit
facility. Subject to additional management evaluation of market and
business conditions, share price and other factors and evaluation
and approval by Providence’s Board of Directors, the remaining net
proceeds of the transaction may be used for acquisitions,
investments in the long-term development of the Company’s other
segments and the return of capital to stockholders through a share
buyback program, among other uses.
Molina Healthcare’s management will further discuss the
acquisition of PHS, as well as several additional topics, at its
upcoming investor day on September 17th in New York City.
Similarly, Providence’s management will be reviewing its strategy
and business operations September 18th at its investor day.
Molina Healthcare’s financial advisor is UBS Investment Bank and
its legal advisor is Sheppard Mullin Richter & Hampton LLP. The
Providence Service Corporation’s financial advisor is Moelis &
Company LLC and its legal advisor is Paul Hastings LLP.
About Molina Healthcare, Inc.
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed
health care services under the Medicaid and Medicare programs and
through the state insurance marketplaces. Through our locally
operated health plans in 11 states across the nation and in the
Commonwealth of Puerto Rico, Molina serves approximately 3.4
million members. Dr. C. David Molina founded our company in 1980 as
a provider organization serving low-income families in Southern
California. Today, we continue his mission of providing high
quality and cost-effective health care to those who need it most.
For more information about Molina Healthcare, please visit our
website at molinahealthcare.com.
About Providence Human Services, LLC
Providence Human Services provides accessible, high-quality,
outcome-based behavioral/mental health and social services
predominately through Medicaid programs and serves as an
alternative to traditional higher-cost institutional care. The
Company is dedicated to ensuring that all clients have access to
professional community-based care, proven treatment methods and
comprehensive service planning.
About The Providence Service Corporation
The Providence Service Corporation, and our approximately 14,000
employees, provides and manages multiple healthcare and social
services, comprised of non-emergency transportation services, human
services, workforce development services, and health assessment
services in the United States and abroad. For more information,
please visit provcorp.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This press release contains
“forward-looking statements” regarding the proposed transaction
between The Providence Service Corporation and Molina Healthcare,
Inc. All forward-looking statements are based on current
expectations that are subject to numerous risk factors that could
cause actual results to differ materially. Such risk factors
include, without limitation, risks related to: the timely closing
of the acquisition, including the need to obtain third party
consents, regulatory approvals and clearance under the
Hart-Scott-Rodino (HSR) Antitrust Improvement Act of 1976; any
conditions imposed on the parties in connection with consummating
the transaction described herein; statements with respect to
Providence’s expected use of net proceeds from the transaction; the
ability of Providence Human Services and Providence Community
Services (together, the “Acquired Companies”) to maintain
relationships with customers and employees following the
announcement of this transaction; the ability of the parties to
satisfy other conditions to closing the transaction described
herein; the integration of the operations and employees of the
Acquired Companies’ businesses into Molina Healthcare’s business;
the retention and renewal of the Acquired Companies’ business
contracts; synergies from the proposed transaction; the Acquired
Companies’ future financial condition and operating results; and
the possibility that the transaction will not be completed on a
timely basis or at all. Additional information regarding the risk
factors to which the parties are subject is provided in greater
detail in their respective periodic reports and filings with the
Securities and Exchange Commission, including each party’s most
recent Annual Report on Form 10-K. These reports can be accessed
under the investor relations tab of each party’s website or on the
SEC’s website at sec.gov. Given these risks and uncertainties,
neither party can give assurances that its forward-looking
statements will prove to be accurate, or that any other results or
events projected or contemplated by its forward-looking statements
will in fact occur, and each party cautions investors not to place
undue reliance on these statements. All forward-looking statements
in this release represent the parties’ judgment as of the date
hereof, and each party disclaims any obligation to update any
forward-looking statements to conform the statement to actual
results or changes in a party’s expectations that occur after the
date of this release.
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version on businesswire.com: http://www.businesswire.com/news/home/20150903005803/en/
Molina HealthcareJuan José Orellana, 562-435-3666Investor
RelationsorSunny Yu, 562-477-1608Public RelationsorProvidence
Service CorporationDavid Shackelton, 520-747-6600Interim Chief
Financial OfficerorCameron AssociatesAlison Ziegler,
212-554-5469Investor Relations
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