Kindred Healthcare Acquires Gentiva Health Services

The deal was concluded for about USD 720 million in cash and stock, but when including the assumption of outstanding, it is valued at USD 1.8 billion.

The combined company will have 109,000 employees in hundreds of long-term acute-care hospitals, inpatient rehabilitation facilities, skilled-nursing facilities, and hospices. It is projected to have annual revenue of about USD 7.1 billion, with 70% coming from government programs such as Medicare and Medicaid, despite recent payment cuts for many services. Kindred Healthcare expects, however, that the combined company will find good sales-growth opportunities due to the aging population and the health-care system’s push to transfer more care into patients’ homes.

Gentiva, a large provider of hospice services and at-home nursing care and physical therapy, also offers skilled nursing, physical, occupational, speech and neurorehabilitation services, in addition to hospice services. It is also involved in social work, nutrition, disease management education, and other therapies and services. The company had downsized in recent quarters amid the tougher federal reimbursement, prompting Kindred to initiate a hostile takeover in July 2014. Gentiva rejected several of Kindred's bids up to the merger offer.

“Kindred now has an expanded breadth of offerings, broad geographic footprint, and enhanced presence in our integrated care markets that we believe will drive more efficient and cost-effective coordinated care,” said Benjamin Breier, president of Kindred Healthcare. “We are pleased with the strong operating trends in both companies in the back half of 2014 and strong momentum going into 2015.”

“Over the last eight weeks, we undertook a robust due diligence process and worked closely and constructively with our counterparts at Gentiva to better understand their operations, financial results, and outlook,” said Paul Diaz, CEO of Kindred Healthcare. “This process confirmed the compelling strategic rationale and industrial logic of this combination, as well as our belief that this transaction is in the best interests of both companies and our respective shareholders, patients, employees and business partners.”

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Kindred Healthcare
Gentiva Health Services