Dallas
American HomePatient has announced it is considering an
acquisition by Highland Capital Management or another party.
The Brentwood, Tenn.-based provider has scheduled its annual
stockholders meeting, which could bring about major changes for the
company, for June 7.
Dallas-based Highland, one of AHP's major shareholders,
announced in February it wants to buy the provider, citing
increasing disappointment with AHP's performance.
“We believe that our proposal provides an outstanding
opportunity for your stockholders to maximize the value of their
investment in AHP,” Highland executive Patrick H. Daugherty
said.
Highland owns 9.9 percent of AHP's stock and $204 million of the
company's secured debt.
Based in Brentwood, Tenn., AHP operates approximately 280
locations in 35 states providing respiratory services, infusion
therapy and other HME. The company filed for Chapter 11 bankruptcy
in 2002 but emerged in July 2003, implementing initiatives to
improve productivity and reduce personnel costs in operating and
billing centers.
But in its letter, Highland noted the company's over-leveraged
balance sheet, a challenging Medicare reimbursement environment and
the near-term maturity of AHP's secured debt. The company's
outstanding $250 million promissory note will be payable Aug. 1,
2009.
“We do not expect that AHP's prospects will improve under
the direction of current management such that repayment of the note
will be possible,” the letter stated. If AHP is unable to
simplify its capital structure prior to its looming debt maturity,
Highland said, “AHP may have no other option than to file for
bankruptcy a subsequent time.”
The provider recently reported a 79 percent drop in net income
for the fourth quarter — $1.7 million in 2005 compared to
$8.2 million for the same period in 2004. For the year ended Dec.
31, AHP reported net income of $7.7 million, down 42 percent from
$13.2 million in 2004. Revenues for the year were $328.4 million,
down $7.4 million from the previous year.
