Jul 24 2008
Air Products announced today that it is planning to sell its U.S. Healthcare business and will record an impairment charge of approximately $315 million ($237 million after-tax) in its fiscal 2008 third quarter results, ended June 30. The company plans to report the U.S. Healthcare business as a discontinued operation beginning in the fiscal fourth quarter and will continue to operate and serve patients until the business is transitioned to a new owner.
In 2007, the company implemented a number of significant actions to improve the performance of its U.S. Healthcare business, including changes in management, a product and service offering simplification program, and other measures to drive earnings growth and improve profitability. During 2008, the business continued to underperform. As a result, in April 2008, Air Products disclosed that it was evaluating its strategic options for the business. Based on a review of the market and competitive conditions, the company determined that the U.S. Healthcare business no longer fits its business portfolio. At its July meeting, the company’s Board of Directors authorized management to pursue the sale of the business, and the company is in discussions with potential buyers.
Chairman, President and Chief Executive Officer John E. McGlade, said, “Our U.S. Healthcare employees have worked very hard to execute our plan to increase volumes and reduce costs. Unfortunately, despite progress in a number of areas, the U.S. business is still not meeting expectations. At this time, we believe the decision to sell this business is in the best interest of our shareholders. This in no way affects our healthcare operations outside of the U.S, which continue to perform well and remain a core component of our strategy moving forward.”
Air Products is also announcing that it has reached preliminary agreement to sell its U.S. Healthcare businesses in the metropolitan New York area and in New Jersey, including its A&J Care locations in Glendale and Peekskill, New York and its COPD Services locations in Runnemede, Cape May Courthouse and Cedar Grove, New Jersey. This sale is expected to be completed by the end of the fiscal year.
Air Products has been in the U.S. healthcare market since October 2002 when it acquired American Homecare Supply. The company subsequently made additional acquisitions, growing its U.S. sales to $271 million in fiscal 2007 by providing respiratory therapies, home medical equipment and infusion services to patients in their homes. The U.S. Healthcare business operates in over 80 locations, has approximately 1,700 employees, and serves 120,000 patients, mainly throughout the eastern half of the U.S.
Air Products will continue to serve its hospital and magnetic resonance imaging customers in the U.S. through its Merchant Gases segment. These institutional healthcare businesses were never included in the Healthcare segment.
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