Lifetime to Buy Quality Care Health Services
Lifetime Corp., which in the past year has gobbled up three big competitors in the home health-care field, on Monday announced plans to buy a fourth for $106 million cash.
With the purchase of Quality Care from the consumer products conglomerate GrandMet USA Inc., a subsidiary of Grand Metropolitan PLC of London, Lifetime says it will become the largest supplier of home health-care services in the United States.
Lifetime, based in Great Neck, N.Y., said that it will pay $95 million for all the outstanding shares of Quality Care and an additional $6.5 million, primarily for Quality Care’s liability for income taxes currently payable.
In American Stock Exchange trading Monday, Lifetime shares closed at $4.125, up 12.5 cents.
Anthony Reeves, president and chief executive of Lifetime, said the transaction would allow the company “to achieve competitive advantages and significant improvements in incremental profit margins, overhead savings and other economies of scale.”
Lifetime Corp. greatly expanded its operations in 1986, when it purchased Homecare of Orange, Calif.; Hospital Capital Corp., and the 125-office Kimberly Services. The firm provides temporary personnel for hospitals, as well as nurses and other health-care personnel who care for the elderly and the infirm in their homes. Lifetime has 12 offices in Southern California and eight in Northern California.
Quality Care Inc., with 211 U.S. offices, also specializes in providing home health-care services and nursing home care. Quality Care was purchased by GrandMet USA in early 1985. The company had 1986 revenue of $160 million and operating income of $7.3 million.
The home health-care industry is expected to grow dramatically as the nation’s bumper crop of “Baby Boomers” moves toward old age. In addition, the government and private health insurers are encouraging hospitals to discharge patients quicker so that they can be treated more economically at home.
Lifetime’s purchase of Quality Care also comes at a time when many home health operators are struggling with Medicare reimbursement problems.
Last year, the Health Care Financing Administration denied 321,000 home care claims or 6% of all claims. That’s an increase of 82.4% from 1985, when 176,000 claims were denied. What’s more, the government is taking as long as four months to pay the claims it approves, analysts say.
“The government is clamping down on the industry,” said Sarah Willard, a consultant for Louden & Co., a Chicago health-care marketing firm. “You have to run a tighter ship . . . because profit margins are going down.”
HOME HEALTH CARE
Fast-growing Lifetime Corp. said it will become the largest provider of home health-care services when it completes the acquisition of Quality Care, a subsidiary of GrandMet USA. Here are the top five home care companies based on annual sales, according to a list provided by Lifetime.
Company and city Annual sales 1. Medical Personnel Pool $230 million
(Division of H & R Block Inc., Kansas City, Mo.)
2. Upjohn Health Care Services $188 million
(Division of Upjohn Co., Kalamazoo, Mich.)
3. Quality Care $162 million
(Owned by a subsidiary of Grand Metropolitan PLC, London)
4. Tender Loving Care Health Care Services Inc. $157 million
(Based in Lake Success, N.Y.)
5. Lifetime Corp. $153 million
(Based in Great Neck, N.Y.)
Source: Lifetime Corp.
