King of Prussia-based Universal Health Services has written off $147 million after the business model of its recently acquired Foundations Recovery Network did not hold up, writes Harold Brubaker for The Philadelphia Inquirer.
UHS paid $350 million for the addiction-treatment firm four years ago. At the time, the addiction sector was booming and the deal seemed in-line with society trends.
However, the Foundations model which involves out-of-network insurance payments, as well as direct-to-consumer marketing and travel for treatment, faltered. This has led its new owner to write off more than 40 percent of its investment in Foundations.
“There is much less out-of-network,“ said UHS chief financial officer Steve Filton. “There is much less travel for treatment. There is more and more control by the payers and less and less by the patients.”
UHS founder Alan B. Miller emphasized that for the initial years following the acquisition, the addiction-treatment addition did well, until the nature of the business changed.
“We are making adjustments,” he said.
The company reported $97.2 million in net income on $2.8 billion in revenue for the last quarter.
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