Kindred Healthcare and Gentiva Health Services will merge in a $1.8 billion transaction that will create the largest operator of long-term acute care hospitals and inpatient rehabilitation facilities in the United States; the largest provider of rehab, home health and hospice services; and one of the leading providers of subacute and skilled nursing care, the companies said today.
Kindred announced a takeover bid for Gentiva in May, which up to this point, Gentiva had rejected. Now, in a transaction expected to be finalized in the first quarter of 2015, Kindred will acquire all outstanding shares of Gentiva common stock for $19.50 per share, $14.50 in cash and $5 in Kindred common stock. The boards of both companies approved the agreement unanimously.
“With Gentiva, we will expand the breadth of our offerings and our geographic footprint and enhance our presence in Kindred’s integrated care markets to drive more efficient and cost-effective coordinated care across more communities," said Benjamin A. Breier, president and COO of Kindred. "This combination strengthens our ability to serve patients across the full continuum of care—from the hospital to the home."
The combined entity, according to Kindred, will:
- Serve more than one million patients/residents per year;
- Operate in 47 states;
- Employ about 109,000 people, making it the 78th-largest private employer and the fourth-largest healthcare employer in the United States;
- Have pro forma annual revenues of about $7.1 billion; and
- Generate pro forma operating income (EBITDAR), including expected cost synergies, of $1 billion.
It will be headquartered in Louisville, Ky., where Kindred currently is based, with a "significant, regional presence" in Atlanta, where Gentiva is based.
“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 J. Diaz, CEO of Kindred. "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."
Tony Strange, CEO of Gentiva, said: “By combining Gentiva and Kindred, we have solidified the importance of home care in the post-acute care continuum of tomorrow. Kindred and Gentiva will create the largest provider of integrated care in America. The combined company has tremendous growth potential and will give Gentiva employees greater opportunities in the future. We look forward to working together with Kindred to ensure a seamless transition.”