Air Products has declared that it is planning to sell its US Healthcare business and plans to report the division as a discontinued operation beginning in the fiscal fourth quarter.
The company will continue to operate and serve patients until the business is transitioned to a new owner, with the news coming in the same week as its healthy third quarter results were revealed.
In 2007, the company implemented a number of significant actions to improve the performance of its US Healthcare business, including changes in management, a product and service offering simplification programme, and other measures to drive earnings growth and improve profitability.
During 2008, the business continued to underperform and as a result, in April 2008 Air Products disclosed that it was evaluating its strategic options for the business. Based on a review of the market and competitive conditions, the company determined that the US Healthcare business no longer fits its business portfolio.
At its July meeting, the company’s Board of Directors authorised management to pursue the sale of the business, and the company is currently thought to be in discussions with potential buyers.
Chairman, President and CEO John E. McGlade, explained, “Our US Healthcare employees have worked very hard to execute our plan to increase volumes and reduce costs. Unfortunately, despite progress in a number of areas, the US business is still not meeting expectations.”
“At this time, we believe the decision to sell this business is in the best interest of our shareholders. This in no way affects our healthcare operations outside of the US, which continue to perform well and remain a core component of our strategy moving forward.”
Air Products is also announcing that it has reached preliminary agreement to sell its US Healthcare businesses in the metropolitan New York area and in New Jersey, with the sale expected to be complete by the end of the fiscal year.
The company has been in the US healthcare market since October 2002 when it acquired American Homecare Supply and subsequently made additional acquisitions to grow its sales to $271m in fiscal 2007.
Air Products has noted that it will continue to serve its hospital and magnetic resonance imaging customers in the US through its Merchant Gases segment.