The Carlyle Group to Acquire LifeCare; Industry Veteran Earl Reed to Be Named CEO of LifeCare, The Third-Largest Long-Term Acute Care Provider in the U.S.

Washington, DC – Global private equity firm The Carlyle Group today announced it has agreed to acquire LifeCare Holdings, Inc., the third-largest long-term acute care provider in the United States. Private equity firm GTCR Golder Rauner is the current majority owner of LifeCare. Carlyle also announced that healthcare veteran W. Earl Reed, III, with more than 30 years in the healthcare industry, will become Chief Executive Officer of LifeCare upon the close of the transaction. Financial terms were not disclosed. The transaction is expected to close in August 2005.

LifeCare operates 21 long-term acute care hospitals (LTACH), with more than 1,000 beds; facilities are located in Colorado, Louisiana, Michigan, Nevada, North Carolina, Ohio, Pennsylvania, Texas and Wisconsin.

Long-term acute care hospitals are licensed hospitals with an average patient stay greater than 25 days. These facilities accommodate patients who require extended hospital treatment due to serious and often complex medical conditions such as respiratory failure, chronic pulmonary disease, head injuries and non-healing wounds.

W. Robert Dahl, Carlyle Managing Director and Head of the Healthcare group, said, "The aging population has created significant demand for acute care facilities such as those operated by LifeCare. Under Earl’s seasoned leadership, we expect LifeCare to expand its clinical service offerings to meet the needs of critical care patients in underserved communities. This is a significant addition to our current healthcare portfolio."

Mr. Reed said, "I am pleased to have the opportunity to be part of LifeCare, whose mission is assuring the delivery of quality clinical outcomes to critically ill patients. We begin this next phase with a seasoned management team and the energy to innovate and expand our presence in our existing and new markets."

Mr. Reed comes to LifeCare from The Allegro Group, Inc., a healthcare consulting firm based in Louisville, KY. Prior to founding The Allegro Group, Mr. Reed was Chief Executive Officer of Rehab Designs of America, Inc. From 1987 to 1998, he was Chief Financial Officer of Vencor, Inc. – now Kindred Healthcare, Inc., the largest LTACH operator in the U.S. – where he played a key role in the company’s growth from a one-hospital operation to a $3 billion national network of more than 60 LTACHs and 300 nursing homes. Prior to Vencor, Inc., Mr. Reed headed the development function and served on the financial operating team of Humana Inc.

Carlyle’s healthcare team is part of the U.S. buyout group, which is now investing Carlyle Partners IV, a $7.85 billion U.S. buyout fund. Carlyle has made a number of healthcare-related investments, including Empi, Inc., a medical device manufacturer; Connecticare, Inc., a regional health maintenance organization; and Align Technology, Inc., an orthodontic device manufacturer.

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