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Nursing Home Company to Acquire Workers Comp Services Firm

December 28, 1994

FORT SMITH, Ark. (AP) _ Beverly Enterprises Inc., one of the nation’s biggest nursing home companies, said Tuesday it is buying a firm that manages workers compensation claims.

The stock swap deal would have Beverly pay $16.50 per share, or about $148.5 million, for Tampa, Fla.-based Pharmacy Management Services Inc.

The acquisition follows a trend in the health care industry as some companies try to diversify as a way of coping with the cost-cutting demands of managed health care plans such as health maintenance organizations.

Beverly operates about 750 nursing homes, along with long-term hospitals, rehabilitation services, drug stores and other health care centers. It earned $57.9 million in 1993, on $2.89 billion in revenues.

Pharmacy Management administers workers compensation claims for insurance companies and others, coordinating doctor care and supplies of drugs and medical gear with a goal of lower costs. It earned $4.3 million in the year ending July 30, on $113.1 million in revenues.

David R. Banks, Beverly’s chairman and chief executive, said the combination will allow it to serve some of the needs of those injured on the job who get workers compensation services through Pharmacy Management.

″We believe this acquisition positions us to be a major force in containing workers’ compensation costs for insurers and employers,″ Banks said.

Cecil S. Harrell, chairman and chief executive of Pharmacy Management said the company had fielded several offers and felt the two companies would complement each other.

Mark Banta, a health care analyst at the investment banking firm Salomon Brothers, said a case could be made for the strategy, though he was uncertain how the companies would mesh.

″They’ll provide a significant number of medical services on a facility basis,″ Banta said. ″And you can leverage that facility base to leverage other things, including workers compensation services.″

The transaction is subject to approval by regulators and Pharmacy Management stockholders but is expected to be completed in the spring of 1995.

Beverly shares closed unchanged on the New York Stock Exchange at $14.25. Pharmacy Management shares fell $1.56 to $15.44 on the Nasdaq Stock Market.

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