Integrated Health plans 43 more care facilities

April 16, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Integrated Health Services Inc. said yesterday it will sign agreements to lease and run 43 long-term care facilities in 10 states. The expansion would increase the company's nursing home beds by 20 percent and further secure its presence in the fast developing health care markets of Florida and Texas.

The facilities, with 5,275 beds, had combined revenues of $134 million last year. The transaction is expected to result in higher earnings this year and next, the company said. Integrated's earnings rose 69 percent to $15.4 million for the year ended Dec. 31 on revenues of $282 million.

In a second announcement yesterday, the Owings Mills manager of post-hospital care and recovery said it would sell 3 million shares of common stock to finance the purchase last year of facilities from Central Park Lodges Inc.

That deal doubled Integrated's size and was financed by borrowing. The company said at the time it would raise money in 1994 to repay the debt.

"They just recently completed a bond offering, so a stock sale improves their balance sheet," said Todd Richter, analyst with Dean Witter Reynolds in New York.

Integrated Health pioneered what is now one of the fastest-growing segments of the health care industry -- post-acute care.

Initially it revamped wings inside its own nursing homes for more medically sophisticated patients who could be treated outside hospitals at a cost of 30 percent to 60 percent less.

Now its goal is to be able to offer managed care companies a complete line of post-hospital care, including rehabilitation, pharmacy, and home health, for a preset, per-person fee.

The new leases will allow the company to execute its new strategy.

"This is a very exciting growth opportunity for IHS," said Robert N. Elkins, Integrated chair and chief executive officer. "It's one that is superbly aligned with our business goals of building a post-acute health care system in key geographic areas."

The company has focused in selected markets, including Florida and California.

In the leasing arrangement, a group of 24 limited partners will sell the facilities to a general partner, which will set up a new management company, Litchfield Asset Management Corp., of New Milford, Conn.

Litchfield will simultaneously lease the facilities to Integrated.

The lease agreement depends on further negotiations and approvals from various authorities.

The company said it could not guarantee the transaction would be completed.

Integrated currently owns or manages 19,600 beds in 27 states.

The newest leases are expected to be for 12-year terms, with the option to purchase the facilities or renew the lease for 15 years.

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