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Gentiva Closes Harden Buyout

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A major news in the healthcare industry currently is the take over of Harden Healthcare Holdings Inc. by leading health and hospice services provider, Gentiva Health Services Inc. within the stipulated time. The deal was initially announced in Sep 2013 and was scheduled to culminate in the fourth quarter of 2013.

The total purchase consideration equated to $408.8 million, out of which $355 million was paid in cash and the remaining $53.8 million in Gentiva common stock. The cash portion of the transaction was funded by available cash and a new credit facility. Additionally, Gentiva issued a new $825 million term loan facility to finance the transaction and also to refinance the company’s existing term loans.

With the culmination of the deal, Gentiva will now acquire the home, health, hospice and community care business of Harden. Gentiva will now function as the preferred provider for the 49 skilled nursing and assisted living facilities of Harden in Texas. Additionally, Harden employees will be joining Gentiva. The merger of the two companies has created an entity that will have home health accounting for 49% of total revenues, hospice for 41% and community care for 10%.

The acquisition is expected to enhance the Medicare exposure of Gentiva, boost 2014 revenues to a range of $2.1 billion to $2.2 billion and enhance the long-term growth of the company. Owing to the increasing healthcare needs of the aging population and the existing rate pressures, the healthcare industry provides ample growth opportunities at present. With the acquisition of Harden, a leading post-acute care provider, we expect Gentiva to prosper in this field and position itself as a leader. Also, Gentiva’s portfolio should expand as it will be in a position to offer its services to the dual eligibles.

Acquiring a complementary company is always beneficial as it endows the acquirer with the opportunity to curb competition to some extent as well as gain on the acquired company’s resources. Harden has been operating in 13 states with a considerable customer base. Thus, this strategic acquisition should be beneficial in leveraging Gentiva’s operations and curbing competition.

Among other take over deals over the last couple of months, Quest Diagnostics Inc.’s (DGX - Free Report) acquisition of ConVerge Diagnostic Services, LLC this month and the culmination of the acquisition of Ohio-based CarePoint Partners Holdings and its subsidiaries by BioScrip Inc. (BIOS - Free Report) in August are worth mentioning.

Gentiva currently carries a Zacks Rank #3 (Hold). Among other stocks in the healthcare industry, LCA–Vision Inc. carries a favorable Zacks Rank #1 (Strong Buy).

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