Integrated Health and Coram Plan to Merge

Integrated Health Services Inc. announced Monday that it plans to buy Coram Healthcare for $655 million, creating the nation’s second-largest home health company.

The combined company, which would keep the Integrated Health name, would operate more than 700 home health branch locations in 44 states, including California.

Coram shareholders would get stock valued at about $280 million, and Integrated Health would also assume Coram’s debt and other financial obligations, valued at $375 million. Both companies are traded on the New York Stock Exchange.

Integrated Health executives said the company would be the industry leader in the two largest home health sectors, home nursing and a service that provides intravenous medicine to patients in their homes.

“We will now be one of the largest companies in the home care industry, which creates many economies of scale and increases our geographic coverage,” said Robert N. Elkins, chairman and chief executive of Owings Mills, Md.-based Integrated Health.

“This will make us very attractive to managed-care companies in order to obtain contracts,” he said.

Denver-based Coram has annual revenue of $532 million and 112 locations in 43 states. The company is the largest provider of home-infusion services, the controlled delivery of intravenous fluids, including drugs and nutritional therapies.

Integrated Health executives said they expect the mergers to add to earnings in 1997 and thereafter.

Rob Mains, a health-care analyst for the investment firm Advest, said this deal, combined with the recent acquisition of First American Health Care, enables Integrated Health to provide a variety of options for patients needing medical attention but not hospitalization.

“This now gives them two avenues into which they can discharge subacute-care patients and continue to gain revenue,” Mains said. “Now, we’ll see whether they can package home health care with subacute care and turn around and sell that to managed-care organizations.”

Under the agreement, Coram stockholders will receive 0.2111 shares of Integrated Health stock, worth about $5.50, for each share of Coram stock.

When the merger is completed, Integrated Health will issue 10.8 million shares of stock. The company had 23.1 million shares outstanding as of Sept. 30.

Elkins will remain at the helm of the company. Coram President and CEO Don Amaral has signed a one-year agreement to remain with the company after the merger as chief executive of Coram.

Integrated Health has also negotiated a settlement to litigation between Coram and Caremark International, in which the companies each claimed that the other had made misrepresentations when Caremark sold its home infusion business to Coram in April 1995, the companies said.

Caremark has agreed to cancel $111 million in notes owed by Coram and will instead receive a two-year note for $57.5 million.

On the New York Stock Exchange, Integrated Health lost 62.5 cents at $25.125, while Coram shares rose 12.5 cents at $5.