DIAGNOSTEK PROPOSED ACQUISITION OF HPI HEALTH CARE SERVICES
DIAGNOSTEK PROPOSED ACQUISITION OF HPI HEALTH CARE SERVICES, Inc. would move the mail-order pharmacy and diagnostic imaging center firm into the hospital pharmacy business and more than double its pharmacy revenues to nearly $ 130 mil. Diagnostek and HPI parent Omnicare announced April 26 an agreement in principle for Diagnostek to acquire HPI in a transaction valued at approximately $ 30 mil. Diagnostek President Nunzio DeSantis said the proposed acquisition "will facilitate our strategic goal of providing pharmaceutical management services." HPI is "an attractive adjunct to our mail service pharmacy business for corporate health and funded pension plans, particularly as it brings to us a large organization" of pharmacists and pharmacy technicians, he commented. The acquisition would give Diagnostek HPI's contracts for pharmacy services to approximately 113 hospitals in 32 states and Canada. Revenues for the Los Angeles-based firm totaled $ 65.6 mil. in 1988. Diagnostek's mail order pharmacy sales accounted for about $ 64 mil., or 80% of total revenues in FY 1989 (ended March 31). Albuquerque-based Diagnostek entered the mail-order pharmacy business last year with the purchase of Health Care Services Inc. for more than $ 1.8 mil. ("The Pink Sheet" March 7, 1988, T&G-9). The company currently operates one mail order pharmacy in Philadelphia and has "70% completed" a second facility in Albuquerque, the firm said. Diagnostek's clients include Ford, Chrysler, Goodyear and Motorola. If consummated, the deal would involved cash plus stock and notes, the companies said. Omnicare will use the funds to buy back stock and as a source of funds for expansion and acquisitions, the company said. Omnicare President Joel Gemunder said the decision to divest HPI "is in line with our longstanding objective of exiting the acute-care pharmacy management business," and will allow the company to "concentrate its resources on alternate care markets such as the medical and dental private practice, home health care and nursing home markets." After the sale, Omnicare will continue to provide pharmacy services to nursing homes through its Home Care Pharmacy, Inc. subsidiary, which it acquired in December. The acquisition of HPI is expected to be completed by the end of the second quarter. HPI would be run as a wholly-owned subsidiary of Diagnostek. The transaction is subject to a number of conditions, including completion of a final agreement, due diligence and approval by both companies' boards. Omnicare terminated an earlier deal for HPI in 1985 when Hospital Corporation of America tried to buy the hospital pharmacy services business for $ 35 mil. in cash. The two firms failed to reach a final agreement.
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