8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): December 21, 2006 (December 20, 2006)

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	0-20488	23-2491707
(State or Other	(Commission File Number)	(IRS Employer
Jurisdiction of		Identification
Incorporation)		No.)

6640 Carothers Parkway, Suite 500, Franklin, Tennessee 37067

(Address of Principal Executive Offices)

(615) 312-5700

(Registrant’s Telephone Number, including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01. Entry into a Material Definitive Agreement.
	Item 7.01. Regulation FD Disclosure.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
INDEX TO EXHIBITS
Ex-99.1 Press Release of Psychiatric Solutions, Inc., dated December 21, 2006
Ex-99.2 Text of Slide Presentation

Item 1.01. Entry into a Material Definitive Agreement.

     On December 20, 2006, Psychiatric Solutions, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Panther Acquisition Sub, Inc., a Delaware corporation and wholly-owned direct subsidiary of the Company (the “Merger Sub”), and Horizon Health Corporation, a Delaware corporation (“Horizon Health”), pursuant to which the Merger Sub will be merged with and into Horizon Health such that Horizon Health will become a wholly-owned subsidiary of the Company. The transaction is anticipated to be valued at $426 million, consisting of cash of $20 per outstanding share of Horizon Health common stock totaling $321 million and the assumption of Horizon Health’s outstanding debt.

     Horizon Health, headquartered in Lewisville, Texas and traded on the Nasdaq Global Select Market, owns or leases and operates 15 inpatient behavioral health facilities in 11 states, provides contract management services for behavioral health and physical rehabilitation clinical programs offered by acute care hospitals, and provides employee assistance programs to employers.

     Consummation of the merger, which is anticipated in the second quarter of 2007, is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, as well as approval by Horizon Health’s stockholders.

     On December 21, 2006, the Company issued a press release announcing the execution of the Merger Agreement. The press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

     On December 21, 2006, representatives of the Company will hold a conference call to discuss the Horizon Health transaction. During the conference call, the representatives of the Company will discuss slides containing the information attached to this Form 8-K as Exhibit 99.2. The slides are furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless the Company specifically incorporates them by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this Form 8-K and furnishing this information, the Company makes no admission as to the materiality of the information included in the slides. The Company undertakes no duty or obligation to publicly update or revise the information included in the slides, although it may do so from time to time as the Company’s management believes is warranted. Any such updating may be made through the filing of other reports or documents with the Securities and Exchange Commission, through press releases or through other public disclosure. The Company will make copies of the slides available for viewing at the “Investors” section of its website located at www.psysolutions.com, although the Company reserves the right to discontinue that availability at any time.

     Some of the matters discussed in this Form 8-K (including Exhibits 99.1 and 99.2) may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements other than those made solely with respect to historical fact and are based on the intent, belief or current expectations of the Company and its management. The Company’s business

and operations are subject to a variety of risks and uncertainties that might cause actual results to differ materially from those projected by any forward-looking statements. Factors that could cause such differences include, but are not limited to, those factors set forth in the press release attached hereto as Exhibit 99.1 and the risk factors set forth in the Company’s filings with the Securities and Exchange Commission.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press Release of Psychiatric Solutions, Inc., dated December 21, 2006.
99.2	Text of Slide Presentation.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PSYCHIATRIC SOLUTIONS, INC.
Date: December 21, 2006	By:	/s/	Christopher L. Howard
			Christopher L. Howard
			Executive Vice President, General Counsel and Secretary

INDEX TO EXHIBITS

Exhibit Number		Description of Exhibits
	99.1	Press Release of Psychiatric Solutions, Inc., dated December 21, 2006.
	99.2	Text of Slide Presentation.

EX-99.1

Exhibit 99.1

[PSYCHIATRIC SOLUTIONS, INC. LOGO]

 
Contact:
Brent Turner
Executive Vice President,
Finance and Administration
(615) 312-5700

PSYCHIATRIC SOLUTIONS ANNOUNCES DEFINITIVE AGREEMENT TO
ACQUIRE HORIZON HEALTH CORPORATION

Will Add 15 Inpatient Psychiatric Facilities with over 1,500 Beds

Expects Transaction to Add $0.17 to $0.20 to Earnings per Diluted Share for
12 Months Following Consummation

FRANKLIN, Tenn. (December 21, 2006) — Psychiatric Solutions, Inc. (“PSI”) (NASDAQ: PSYS) today announced that it has signed a definitive merger agreement to acquire Horizon Health Corporation (NASDAQ: HORC) in a transaction valued at $426 million, consisting of cash of $20 per share totaling $321 million and the assumption of Horizon Health’s outstanding debt. Horizon Health produced revenues of $275 million for its 2006 fiscal year, which ended August 31, 2006, primarily through the operation of inpatient behavioral health facilities. At November 30, 2006, Horizon Health owned/leased 15 inpatient facilities with approximately 1,561 beds in 11 states. Horizon Health also provided services under 115 behavioral health and physical rehabilitation program management contracts with acute care hospitals at the end of its fiscal year and operated an employer assistance program services business.

     PSI has received a commitment from Citigroup Global Markets Inc. and Merrill Lynch & Co. regarding the financing of the acquisition price. Consummation of the transaction, which is anticipated in the second quarter of 2007, is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, as well as approval by Horizon Health’s stockholders. PSI expects the transaction to be accretive to its earnings per diluted share for the 12 months following the completion of the transaction by an amount in a range of $0.17 to $0.20. PSI intends to revise its established 2007 guidance for earnings per diluted share of $1.42 to $1.46 to reflect the impact of this transaction closer to the effective date of the transaction.

     Joey Jacobs, Chairman, President and Chief Executive Officer of PSI, commented, “We are very pleased to be announcing this agreement with Horizon Health. Under the leadership of Chairman and CEO Ken Newman and the rest of his management team, Horizon Health has built a strong presence in the behavioral health industry, both in the freestanding facilities segment and as the leading provider of contract management services. Our definitive agreement represents an outstanding opportunity for PSI to expand its behavioral health business through, among other assets, the addition of high quality inpatient psychiatric facilities in attractive, growing markets. Consistent with our long-term record of successfully integrating new facilities

- MORE -

PSYS Signs Definitive Agreement to Acquire
Horizon Health Corporation
Page 2
December 21, 2006

into our operations, we expect to work closely with the highly skilled and experienced teams at these facilities to enhance top-line performance, as well as operating productivity and efficiency. In addition, we have already identified opportunities to expand Horizon Health’s EBITDA (earnings before interest, taxes, depreciation and amortization) of $31 million for fiscal 2006 by at least $10 million through corporate synergies alone. As a result, we are confident that the completion of this transaction will have a significant positive impact on our future earnings growth.”

     PSI will hold a conference call to discuss this release today at 10:00 a.m. Eastern time. Participants will have the opportunity to listen to the conference call over the Internet by going to www.psysolutions.com and clicking Investor Relations or by going to www.earnings.com. Participants are encouraged to go to the selected web sites at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call through the end of business on January 4, 2007.

     This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements other than those made solely with respect to historical fact and are based on the intent, belief or current expectations of PSI and its management. PSI’s business and operations are subject to a variety of risks and uncertainties that might cause actual results to differ materially from those projected by any forward-looking statements. Factors that could cause such differences include, but are not limited to: (1) PSI’s ability to complete the Horizon Health acquisition and to successfully integrate the Horizon Health operations; (2) potential competition which alters or impedes PSI’s acquisition strategy by decreasing PSI’s ability to acquire additional inpatient facilities on favorable terms; (3) the ability of PSI to improve the operations of acquired inpatient facilities, including the Horizon Health facilities; (4) the ability to maintain favorable and continuing relationships with physicians who use PSI’s facilities; (5) the ability to receive timely additional financing on terms acceptable to PSI to fund PSI’s acquisition strategy and capital expenditure needs, including financing for the acquisition of Horizon Health; (6) risks inherent to the health care industry, including the impact of unforeseen changes in regulation, reimbursement rates from federal and state health care programs or managed care companies and exposure to claims and legal actions by patients and others; (7) PSI’s ability to comply with applicable licensure and accreditation requirements; and (8) potential difficulties in integrating recently acquired operations with PSI. The forward-looking statements herein are qualified in their entirety by the risk factors set forth in PSI’s filings with the Securities and Exchange Commission. PSI undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof.

     PSI offers an extensive continuum of behavioral health programs to critically ill children, adolescents and adults through its operation of 74 owned or leased freestanding psychiatric inpatient facilities with approximately 8,000 beds in 29 states, Puerto Rico and the U.S. Virgin Islands. PSI also manages freestanding psychiatric inpatient facilities for government agencies and psychiatric inpatient units within medical/surgical hospitals owned by others.

- END -

EX-99.2

Exhibit 99.2

December 2006 Nasdaq: PSYS Psychiatric Solutions, Inc. The Leading Provider of Inpatient Behavioral Healthcare Services

Forward-Looking Statements Statements contained in this presentation concerning future results, performances or expectations are forward-looking statements that involve risks and uncertainties. Actual results, performance or developments could differ materially from those expressed or implied by those forward-looking statements as a result of known or unknown risks, uncertainties and other factors described from time to time in the Company's filings with the Securities and Exchange Commission, press releases and other communications. The Company assumes no obligation to update information contained in this presentation.

Transaction Overview Psychiatric Solutions ("PSI") to acquire Horizon Health Corporation ("Horizon") $20.00 cash per share of Horizon stock Total equity value of approximately $321mm Total transaction value of $426mm, including Horizon debt Transaction will be funded through combination of revolver and term loan Pro forma Debt/EBITDA of 4.8x Transaction subject to Horizon shareholder approval, HSR and other regulatory approvals Second Quarter of 2007 Description: Consideration: Required Approvals: Expected Closing:

Horizon Health Corporation Horizon Health is a leading provider of behavioral healthcare services operating in three primary sectors Owns/leases 15 behavioral healthcare facilities with 1,561 beds Current bed mix is approximately 60% Acute / 40% RTC Through its 115 management contracts, is a leading provider of behavioral and rehabilitation contract services to acute care providers Provides employee assistance programs ("EAPs") to approximately 4.5 million covered lives

Acquisition Rationale Strengthens PSI's position as the clear leader in the inpatient behavioral healthcare sector Attractive portfolio of behavioral facilities with significant margin expansion opportunity Significant synergy opportunities - at least $10 million of corporate savings Attractive valuation - Purchase multiple of approximately 8.0x calendar year 2007 EBITDA including synergies Generates meaningful EPS accretion of $0.17- $0.20 in first full year Complementary business with limited integration risk +

Creates Leading National Presence Largest provider of inpatient behavioral healthcare in the U.S. Company will have an approximately 16% national market share in a fragmented industry Expands operations from 29 to 31 states PSI will grow from 74 to 89 facilities and from over 8,000 to more than 9,500 beds Pro forma bed mix of approximately 53% acute and 47% RTC Pro forma payor mix very similar to PSI's current diversified mix Approximately 90% of pro forma revenue derived from freestanding behavioral facilities National Footprint Key Metrics Areas Where PSI Operates Facilities Areas Where Horizon Operates Facilities Areas Where PSI and Horizon Operate Facilities PSI Facilities Horizon Facilities