Gentiva, Harden enter into definitive merger agreement

Gentiva Health Services, Inc. (NASDAQ: GTIV) ("Gentiva" or "the Company"), the largest provider of home health and hospice services in the United States based on revenue, and Harden Healthcare Holdings, Inc. ("Harden"), a leading provider of home health, hospice and community care services, announced today that they have entered into a definitive merger agreement whereby Gentiva will acquire Harden.

Under the terms of the merger agreement, Gentiva will acquire Harden's home health, hospice and community care businesses. Harden's existing shareholders will retain the company's long-term care business. The purchase price to be paid by Gentiva is approximately $408.8 million, consisting of $355 million in cash and approximately $53.8 million in Gentiva common stock. Gentiva expects to fund the cash portion of the purchase price through available cash and a new credit facility. The Company expects to raise a new $855 million term loan facility to fund the transaction and refinance its existing term loans.

Founded in 2001 and based in Austin, Texas, Harden operates in 13 states and has a large presence in Texas and several other south central states.  Excluding its long-term care business, Harden's 2012 consolidated revenue was approximately $476.0 million.

Based on results from continuing operations for the respective companies' 2012 fiscal years, we anticipate the combination of Gentiva and Harden will create a company with revenue comprised of 49% home health revenue, 41% hospice revenue and 10% community care revenue. The percent of combined company Medicare revenues for the full-year 2012 would have been 72%, down from 86% for standalone Gentiva, thereby reducing the Company's Medicare exposure.

As part of the transaction, Gentiva will become a preferred provider for Harden's 49 skilled nursing and assisted living facilities in Texas.

"This transaction is a great strategic fit for Gentiva and we believe it will provide significant long-term value for our shareholders," commented Gentiva Executive Chairman Rod Windley. "I consider the Harden transaction a milestone in the continued Gentiva growth story. The increasing healthcare needs of an aging population and ongoing rate pressures will fuel industry consolidation and Gentiva is positioned to be a leader in this effort. Additionally, I am pleased to announce that current Harden Chairman Steve Hicks will be joining the Gentiva board at the completion of the merger."

"We are excited to welcome the Harden employees to the Gentiva family," said Gentiva CEO Tony Strange. "Harden is recognized as a leader in the post-acute care continuum for seniors and shares our commitment to quality outcomes, customer satisfaction and employee engagement, all done in an environment of compliance. In addition to further strengthening our core home health and hospice businesses, this acquisition expands Gentiva's service offerings into the dual eligibles, which is one of America's most frail populations and a key priority for federal and state governments as they seek better coordination of care, reduced costs and improved outcomes. We believe the combination of these two companies uniquely positions us to provide pre- and post-acute care services in the markets we serve."

Harden CEO Lew Little added, "This merger represents an exciting opportunity to bring together two complementary companies that share a commitment to providing compassionate care and we look forward to better serving our patients and their families with the expanded resources of the combined company."

The transaction was approved by the Board of Directors of each company and by Harden's shareholders. The transaction is scheduled to close in the fourth quarter of 2013 and is subject to customary closing conditions.

The Company expects the acquisition to be accretive to adjusted income per share, exclusive of one-time costs, within the first 12 months following closing. Assuming the transaction closes in the fourth quarter of 2013 as expected, the Company expects combined 2014 revenues to be in the range of $2.1 billion to $2.2 billion and Adjusted EBITDA to be in the range of $210.0 million to $220.0 million, excluding the impact of equity-based compensation expense.

Edge Healthcare Partners, LLC, a division of Edge Corporate Finance, LLC, is acting as financial advisor to Gentiva. Greenberg Traurig, LLP is acting as legal advisor to Gentiva.  Barclays and BofA Merrill Lynch have provided committed financing for the transaction.  

Barclays is acting as financial advisor to the Board of Directors of Harden. Alston & Bird LLP is acting as legal advisor to Harden.


Gentiva Health Services, Inc.

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