Kindred Healthcare Finally Buying Gentiva Health
October 9, 2014
In the current deal, Kindred will be paying $19.50 per share, made up of $14.50 per share in cash and $5.00 per share in Kindred stock. The $1.8 billion value includes assumed debt. Apparently, the acquisition will be significantly accretive to Kindred, by about 40 cents to 60 cents per share to pro forma earnings. At the new, high price, if it is that accretive, we wonder what was taking Kindred so long to up the ante. In addition, Gentiva is one of the country’s largest home health and hospice providers, with more than $1.8 billion in revenue. This will be a transformative acquisition for Kindred, putting it into the unique position of being a truly national post-acute provider with everything from LTACs to rehab hospitals to SNFs to home health and hospice in a big way, with a company-wide $7.1 billion in annual revenues. One concern we have is how this acquisition will impact Kindred’s focus on its 20 Integrated Care Markets. There must be many Gentiva locations well outside these 20 markets that Kindred has been wisely focusing on. So will this acquisition result in some significant divestitures, a future dilution of this geographically focused strategy, or an expansion beyond these 20 primary markets? That may be what president and COO Ben Breier will have to decide next year assuming he succeeds Paul Diaz as CEO on schedule.
Finally, there must be some Gentiva shareholders who don’t think the fat lady has sung her final song in this transaction. Earlier this morning, Gentiva’s shares traded as high as $19.77 per share, or 22 cents above the agreed upon deal. Is there a private equity firm still lurking in the background? Perhaps, but they won’t have Kindred’s synergies, and a competing bid would have to have some kick.