UHS reaches definitive agreement to acquire PSI for $2.0 billion

Universal Health Services, Inc. (NYSE: UHS) ("UHS") and Psychiatric Solutions, Inc. (NASDAQ: PSYS) ("PSI") announced today that they have reached a definitive agreement whereby UHS will acquire PSI for a price of $33.75 per share in cash, or approximately $2.0 billion. Including the assumption of approximately $1.1 billion in PSI net debt, the total transaction consideration is approximately $3.1 billion.

“On behalf of the Special Committee of the board of directors of PSI, we are pleased to have reached an agreement that will enable us to deliver significant and certain value to our shareholders”

UHS's acquisition of PSI is a highly strategic transaction that brings together two complementary companies to create a premier facilities-based healthcare provider with an industry-leading presence in the behavioral health care services sector. PSI is the largest standalone operator of owned or leased freestanding psychiatric inpatient facilities with 94 facilities in 32 states, Puerto Rico, and the U.S. Virgin Islands. Today, UHS owns or operates 25 acute care hospitals and 102 behavioral health care facilities and schools located across 32 states, as well as in Washington, D.C. and Puerto Rico.

The 2009 combined revenue and EBITDA (as defined below) of UHS and PSI was more than $7.0 billion and approximately $1.1 billion, respectively. On a combined basis, in 2009 the company had approximately 6.2 million patient days in 221 heath care facilities across 37 states and territories. As a result of this combination, UHS's revenue from the behavioral health care business will represent approximately 45% of combined 2009 revenue and approximately 54% of combined 2009 EBITDA, before the allocation of UHS's corporate overhead costs.

"This transformative transaction is very compelling for shareholders, patients and employees of both companies, and we are excited to add PSI's assets to our portfolio," said Alan B. Miller, Chief Executive Officer and Chairman of the Board of UHS. "The combination with PSI will further strengthen our behavioral health division, which has already grown substantially through capacity expansion and strategic acquisitions. Importantly, the combined company will have ample opportunities for further growth in both the acute care and behavioral health care sectors."

Mr. Miller continued, "UHS is proud of its more than 30-year record of commitment to high quality healthcare and achieving outstanding financial performance, and this transaction - which we expect to be significantly accretive to earnings - will help us continue to deliver strong results and increased shareholder value."

"On behalf of the Special Committee of the board of directors of PSI, we are pleased to have reached an agreement that will enable us to deliver significant and certain value to our shareholders," said Christopher Grant, Jr., Chairman of the PSI Special Committee. "After conducting a thorough review of strategic alternatives and potential partners, we are pleased that PSI will become an important part of an established and highly respected industry leader."

The combination is expected to generate approximately $35-45 million in annual cost synergies within three years following close, with the majority occurring in years one and two. Excluding one-time costs related to the acquisition, the transaction is expected to be significantly accretive to UHS's earnings per share. In 2009, PSI's revenue was $1.8 billion with EBITDA of approximately $330 million.

The transaction was unanimously approved by the Board of Directors of UHS. PSI's Board of Directors, acting on the unanimous recommendation of the Special Committee, has approved the agreement and recommend that PSI shareholders approve the merger.

The transaction has fully committed debt financing to be provided by JPMorgan Chase Bank N.A. and Deutsche Bank AG. UHS expects to complete the transaction in the fourth quarter of 2010, subject to customary closing conditions, including regulatory approvals and clearance under Hart-Scott-Rodino Act, as well as approval by PSI's shareholders.

J.P. Morgan Securities Inc. is acting as financial advisor to UHS. Cravath, Swaine & Moore LLP is acting as legal advisor to UHS.

Goldman, Sachs & Co. is acting as financial advisor to the Special Committee of the Board of Directors of PSI. Shearman & Sterling LLP is acting as the Special Committee's legal advisor.