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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150903005803/en/
Copyright Business Wire 2015