Kindred Grows Post-Acute Network With New $195 Million Acquisition

Kindred Healthcare, Inc. (NYSE: KND), the nation’s largest provider of integrated post-acute care and rehabilitation, recently announced that it has signed a definitive merger agreement to acquire Centerre Healthcare Corporation for approximately $195 million in cash.

Centerre currently operates 11 inpatient rehabilitation hospitals with 612 beds in partnership with some of the nation’s leading acute care hospital systems through joint ventures. Centerre has two additional hospitals with a total of 90 beds under construction and scheduled to open in 2015, and a pipeline of additional potential hospitals in various stages of development.

“Our acquisition of Centerre will expand our relationships with some of the nation’s premier hospital systems,” said Benjamin A. Breier, Kindred’s president and chief operating officer. “This is a positive step in Kindred’s strategy to collaborate with healthcare networks, managed care providers and other health entities in local markets so that we may best meet patient needs, reduce costs and improve clinical outcomes.”


With this acquisition, Kindred will establish a focused growth platform and business line to be known as Kindred Hospital Rehabilitation Services, which will combine RehabCare, Kindred’s Rehabilitation Hospitals and Centerre.

The business will operate in 36 states in 384 locations and will have pro forma revenues of approximately $578 million, and earnings before interest, income taxes, depreciation, amortization and rent (EBITDAR) of approximately $147 million.

Kindred Hospital Rehabilitation Services will be focused on providing high-quality clinical outcomes and patient satisfaction as well as improved care transitions to home for patients in need of intensive rehabilitation, the company says.


Centerre’s operations are expected to generate 2014 revenues of approximately $200 million and EBITDAR of approximately $48 million — prior to deducting $14 million of minority interest expense for interests owned by Centerre’s hospital partners.

All of Centerre’s hospitals are leased and are expected to have approximately $20 million of rent expense in 2014.

Of the 11 hospitals that Centerre currently operates, three opened in 2014 and two opened in 2013, so the anticipated 2014 results do not include expected additional results from the full two-year maturation of the recently opened hospitals.

Kindred expects the acquisition of Centerre to be $0.04 to $0.06 accretive to earnings and operating cash flows in 2015, assuming Kindred’s expected pro forma share count following completion of its pending acquisition of Gentiva Health Services, Inc. (NASDAQ: GTIV) of approximately 85 million shares, exclusive of transaction and integration costs.

Once fully integrated, and the new and existing inpatient rehabilitation hospitals mature, Kindred expects the transaction to be approximately $0.10 to $0.12 accretive to earnings. The acquisition is expected to close in the first quarter of 2015.

In connection with the acquisition, Kindred has posted accompanying slides, which can be accessed here.

Written by Emily Study

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