CHOICE DRUG SYSTEMS' NURSING HOME DRUG DISTRIBUTION BUSINESS WILL DOUBLE
CHOICE DRUG SYSTEMS' NURSING HOME DRUG DISTRIBUTION BUSINESS WILL DOUBLE with the acquisition of Teaneck, N.J.-based J&J Drug & Medical. A definitive merger agreement, announced Sept. 22, will add annual sales of nearly $10 mil. to Choice Drug Systems' current unit dose business to nursing homes. The acquisition also expands Choice Drug into durable medical equipment and disposables. Founded in 1948, J&J Drug & Medical generated revenues of $7.1 mil. during the nine months ended June 30. The distributor currently serves about 4,500 nursing home patient beds in the New Jersey and New York metropolitan area. In addition to supplying pharmaceuticals, durable medical equipment and disposables to nursing homes, J&J also services hospitals, physicians and the home health care market throughout the New York and New Jersey metro area. Choice, which was organized in 1973, said that it distributes unit dose pharmaceuticals to over 7,000 patient beds in 37 long-term health care facilities. Choice also provides computerized record keeping services to customers. According to Choice's annual report for fiscal 1987 (ended Feb. 28), the company last year had sales of $3.52 mil., an increase of 66.3% over the previous year. Current sales are annualizing at roughly $5 mil. New York metropolitan-based Choice Drug Systems is paying approximately $2.3 mil. for J&J Drug & Medical Service -- $1.3 mil. in cash and short term notes and $1 mil. in two-year notes that are convertible into Choice common stock. The acquisition is expected to close by Nov. 16, Choice said. Since going public in June 1986, Choice is pursuing an expansion strategy in the Northeast. In addition to the J&J Drug & Medical purchase, Choice indicated it is currently in negotiations to acquire a privately held drug distributor to nursing homes in the Massachusetts/Connecticut area. If completed, that acquisition will put Choice Drugin nursing homes with another 4,000 patient beds. Choice raised approximately $3.2 mil. from its initial public offering of 650,000 units of common stock. The proceeds went to relocation and related costs, repayment of loans, marketing activities, expansion of computer facilities and working capital, the annual report said.
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