McKesson to Acquire Per-Se Technologies for $1.8 Billion

Posted Monday, November 6, 2006

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SAN FRANCISCO & ATLANTA--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) and Per-Se Technologies, Inc. (NASDAQ:PSTI) announced today that the two companies have signed a definitive agreement under which McKesson will acquire Per-Se. Per-Se is a leading provider of financial and administrative healthcare solutions for hospitals, physicians and retail pharmacies. Under the terms of the agreement, McKesson will acquire all of the outstanding shares of Per-Se for $28.00 per share in cash. In total, including Per-Se’s outstanding debt, the transaction is valued at approximately $1.8 billion. By the third year, McKesson expects to realize pre-tax synergies of at least $50 million to $75 million.

The acquisition is expected to close in the first quarter of 2007, McKesson’s fourth fiscal quarter, subject to customary conditions, including regulatory review. While synergies will begin to be realized in the first year, McKesson expects to invest immediately in the future growth of the businesses being acquired. Excluding special items and including anticipated synergies, the acquisition is expected to be neutral to marginally dilutive to McKesson’s EPS in Fiscal 2008 and accretive thereafter.

Strategic Acquisition Builds Scale and Strengthens Customer Relationships

Per-Se fits directly with McKesson’s strategy to continue as a leader solving the clinical, financial and business process challenges facing healthcare today. The inclusion of Per-Se builds scale and strengthens customer relationships in existing McKesson businesses serving hospitals, physicians and pharmacies. In addition, Per-Se adds to McKesson the nation’s largest electronic pharmacy network connecting approximately 90 percent of U.S. retail pharmacies to other business partners to help manage key clinical, financial and administrative transactions for the pharmacist and payor. Per-Se’s current customer base includes approximately 100,000 physicians in small practices, 17,000 hospital-affiliated physicians, 3,000 hospitals and 50,000 retail pharmacies.

“Per-Se expands our customer base with products and services that augment and strengthen McKesson’s solutions portfolio,” said John Hammergren, chairman and chief executive officer of McKesson. “An increasingly complex reimbursement environment, a rapidly emerging market for physician office software, and the continued need for products and services to help our retail pharmacy customers compete more effectively and profitably, all create opportunities for McKesson to accelerate future growth. Per-Se’s highly regarded products and services strengthen our position in each of these key areas while also providing valuable scale. We look forward to welcoming the creativity and energy of Per-Se’s employees to McKesson.”

“Both McKesson and Per-Se share a vision to reduce healthcare costs while improving quality through streamlining business and clinical processes, and improving patient care,” said Philip M. Pead, chairman, president and chief executive officer of Per-Se Technologies. “Upon closing, our shareholders will realize an attractive and immediate cash premium on their investment in Per-Se. This announcement is also tremendous news for our customers and employees, who will benefit from a significantly enhanced product offering, along with the resources of the world’s largest healthcare services company.”

Stronger Position with Hospitals, Physicians, Pharmacies

In hospital information technology, Per-Se enables McKesson to further strengthen its leading position with expanded connectivity, services and tools to improve cash flow and business office productivity. Per-Se also enhances McKesson's offering of resource management solutions with staff management software.

In physician offices, where McKesson continues to expand its capabilities, Per-Se is a leader in providing practice management software to the small-office physician market and business management outsourcing services to hospital-affiliated and academic physician group practices. The addition of this complementary product line will allow McKesson to market the combined products and services to physicians in groups of all sizes.

In retail pharmacies, Per-Se adds retail claims management to McKesson’s capabilities and bolsters its offering in pharmacy management software. Per-Se offers pharmacy management systems that streamline and connect pharmacy operations and also operates the nation’s largest electronic pharmacy network.

Overall, the acquisition of Per-Se provides McKesson with a platform to further strengthen the relationships among pharmacies, manufacturers, physicians, hospitals, payors and patients. With the acquisition of Per-Se, the scale of McKesson’s transaction-processing services and associated offerings for physicians and hospitals will more than double, to approximately 560 million transactions annually, representing an estimated $300 billion in billed charges.

“The acquisition of Per-Se is consistent with our disciplined, portfolio approach to capital deployment, using the strength of our balance sheet to create shareholder value through a variety of strategies,” Hammergren concluded. “In addition to expanding our scale and enhancing our growth potential, it supports McKesson’s mission to bring technology, clinical best practices and process improvements to healthcare to reduce costs while improving quality, safety and efficiency.”

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