Sale of Paidos Health Management Services to Paradigm Health Corporation

Completes 18 Transactions in 18 Months for M&A Advisory Firm

BOSTON, Jan. 9, 2002 – Covington Associates announced today it acted as financial advisor to Paidos Health Management Services, Inc. (“Paidos”) in its sale to Paradigm Health Corporation (“Paradigm”), successfully completing a deal that will allow Paidos to extend its specialty care management for infants to a broader base of hospitals and insurance plan participants nationwide.  Terms were not disclosed in the transaction that was completed on December 31, 2002 between the two privately held companies.

The sale of Paidos Health Management Services, Inc. marks the 18^th transaction in as many months for Covington Associates, which specializes in mergers and acquisitions advisory services to technology and healthcare firms. Since July 2001, Covington Associates has advised on nine technology M&A deals and nine medical transactions, including a $55 million senior debt financing to support acquisitions and operations for Inverness Medical Innovations, Inc. of Waltham. Transactions have been under $100 million, with the exception of the $1.3 billion sale of Inverness Medical Technology of Waltham to Johnson & Johnson in November 2001.

“Our team of seasoned M&A advisors works hard to bring deals across the finish line,” said Chris Covington, founder and partner in Covington Associates.  “At a time when M&A activity has declined across most sectors, the key to our success has been a focus on building trust, finding points of agreement and creating solutions when both companies feel the transaction involves a fundamentally good fit.”

The acquisition of Paidos Health Management Services by the larger Paradigm Health Corporation creates a national healthcare services firm that can provide a wider array of services to a larger network of health plans and hospitals than either company could offer alone.  Paidos, of Deerfield, IL, contracts with health plans to manage services for newborns admitted to neonatal intensive care units (NICUs). Paradigm, of Concord, CA, specializes in medical management for injured workers who suffer catastrophic injuries on the job.

Ben Dunn, the Covington Associates partner who worked closely on the transaction, said the deal between two privately held firms was difficult to structure, but the outcome strengthens Paradigm’s position in the disease management sector.  “As the healthcare services sector grows to meet the demands of managed care, disease management specialists are diversifying to reduce costs and improve outcomes for a broader scope of medical needs.  This transaction creates a stronger company that will be able to ensure the best possible care for both newborns and injured workers.”

Greg Lippe, President & CEO of Paidos said: “Covington Associates helped Paidos find the right partner and business structure to advance our position as the country’s leading specialist in NICU care management.  Since 1996, we have offered services to families of more than 30,000 infants admitted to NICUs throughout the U.S.  Now, as part of a larger Paradigm Health Corporation, we will offer our unmatched research and knowledge in neonatal care to more health plans, self-funded groups and providers across the country.”

Covington Associates are seasoned M&A advisors to technology and healthcare companies.  Focused exclusively on mergers and acquisitions, Covington Associates has established a track record of success based on deep domain experience and an unrivaled level of service from a team of senior advisors.  Since its founding in 1991, Covington Associates has successfully completed transactions ranging in value from $10 million to more than $1 billion.