Wednesday, health care services provider Psychiatric Solutions, Inc. (PSYS) updated its guidance for earnings from continuing operations per share for 2009 to reflect the sale of its EAP business that would be classified as income from discontinued operations. Additionally, the company extended the maturity of its entire $300 million revolving credit facility to December 31, 2011.
The company had previously announced the definitive agreement to sell the EAP business for about $70 million in cash. The deal is expected to be consummated in the fourth quarter of 2009. Although the company continues to expect this business to contribute about $0.08 per share to net income for 2009, this contribution will now be classified as income from discontinued operations.
Psychiatric Solutions now sees earnings from continuing operations per share in a range of $2.16-$2.24, compared to the prior range of $2.24-$2.32. This guidance reflects growth of 18% to 22% compared with earnings from continuing operations for 2008 of $1.83 per share, which also reflects the results of the EAP business in discontinued operations, the company noted.
On average, 16 analysts polled by Thomson Reuters expect 2009 earnings in a range of $2.26-$2.32 per share with a consensus of $2.30 per share.
Due to greater interest expense savings in 2010 resulting from the sale, the company expects the net impact of the sale on 2010 earnings from continuing operations to be in a range of $0.04 to $0.06 per share.
The company also extended the maturity of its entire $300 million revolving credit facility to December 31, 2011. Earlier this year, the company had announced that the maturity of $200 million of its $300 million revolving credit facility had been extended until the end of 2011 from the originally scheduled maturity on December 21, 2009. The maturity of the remaining $100 million of the revolving credit facility has now also been extended to December 31, 2011. The revolver currently has an outstanding balance of about $80 million.
Brent Turner, Executive Vice President, Finance and Administration of the company, said, "In a challenging credit environment, we are very pleased to have extended the maturity of the final $100 million of our revolving credit facility. The extension provides us with $300 million through 2011, which, combined with the free cash flow we expect going forward, positions us well to continue adding new beds through acquisition and internal development.
''Consistent with our renewed focus on acquisitions, we completed the purchase of a 107-bed inpatient psychiatric facility in early September, and our active pipeline includes a number of potential facility acquisitions," Turner added.
PSYS closed Tuesday's regular trade at $26.52, down from the previous close of $26.52, on 791,100 shares.
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