Hanger & NovaCare Merge

Wed Apr 7 00:38:23 PDT 1999

In a message dated 4/6/99 9:25:04 PM Pacific Daylight Time, kaderli at juno.com 
writes:

<< Hanger Orthopedic To Buy NovaCare Unit (Last updated 8:05 AM ET April 5)

 BETHESDA, Md. (Reuters) >> <snip>

The Wall Street Journal's Tuesday story -- appended below -- contains some 
additional information about NovaCare and why they sold.  They have been 
doing very poorly and apparently are having trouble collecting from Medicare 
on their prosthetics business.

If that's so, putting the business in the hands of financially stronger 
Henger might be a plus.

Michael B.

===================================
The Wall Street Journal Interactive Edition
Tuesday, April 6, 1999

Health

Hanger Orthopedic Agrees
To Buy NovaCare Division

By a WALL STREET JOURNAL Staff Reporter

BETHESDA, Md. -- In its latest bid to dominate the orthotics and
prosthetics industry, Hanger Orthopedic Group Inc. said it agreed to
acquire a division of health-care company NovaCare Inc., King of 
Prussia, Pa., for $417 million.

The transaction, which is expected to close by June 15, also includes 
$38 million in debt. In New York Stock Exchange composite trading 
Monday, Hanger shares soared $1.875, or 14%, to $14.875, and 
NovaCare rose 43.75 cents, or 37%, to $1.625.

Hanger has been on a buying spree, acquiring 18 companies in 1998 
and half a dozen, including this one, in 1999. With the NovaCare 
deal, Hanger will have 625 outlets in 43 states, making the company 
"the pre-eminent player" in the industry, said Hanger's chief executive, 
Ivan Sabel.

Mr. Sabel said Hanger plans to continue acquiring companies 
domestically.  After that, he said he would begin acquiring companies 
abroad "to create a global prosthetics and orthotics provider."

NovaCare is selling its prosthetics and orthotics unit, which it acquired
in 1992, "to solidify our balance sheet in light of these difficult times,"
CEO Timothy Foster said.

NovaCare, which also provides geriatric and outpatient-rehabilitation
services and has an employee-services business, has been hard hit 
in recent quarters because of ongoing changes in Medicare 
reimbursement policies. Its orthotics and prosthetics unit, with annual 
revenue of $280 million, represents about a quarter of NovaCare's 
rehabilitation business. The unit has 369 patient-care centers in 38 
states.