HealthSouth Expands in Southeast with $170 Million Acquisition

HealthSouth Corporation (NYSE: HLS) has further expanded its portfolio, acquiring the home health agency operations of CareSouth Health System, Inc. for $170 million in cash and merging them with those of Encompass Home Health, the national operator announced Monday.

Along with the acquisition, the national home health, post-acute and senior living services provider CareSouth retains its Health at Home partnership and changes the name of its Senior Living Services division to Careity to continue working with assisted living facilities.* CareSouth’s home health, hospice, private duty and outpatient rehabilitation agencies will function under Encompass Home Health, a HealthSouth operating unit. HealthSouth plans to fund the transaction with cash on hand and borrowings under its senior secured credit facility, according to a news release.

The transaction, expected to close in the fourth quarter of 2015, allows HealthSouth to deploy Encompass home health locations to five new markets, including Alabama, Georgia, North Carolina, South Carolina and Tennessee. It also improves Encompass’ market share position in Florida and Virginia, according to the release.

Currently, HealthSouth operates 14 inpatient rehabilitation hospitals in CareSouth’s coverage area. The new locations, then, enable HealthSouth to offer both facility-based and home-based post-acute services, according to the news release.

“By combining the CareSouth and Encompass teams, we will further our mission of providing a better way to care,” said April Anthony, CEO of Encompass, in a prepared statement. “We have respected the CareSouth management team for some time and are confident our cultures and philosophies will align well.”

The newly named entity, Careity, will continue to provide private duty care, with enhanced services aimed at senior living communities, including transitional and chronic care management, health care business services and Part B Medicare therapy clinics, the company announced.

The announcement comes after HealthSouth unveiled its plans in early August to place home health operations near inpatient rehabilitation facilities and focus on a recent Centers for Medicare & Medicaid Services initiative on joint replacement care, further aligning its offerings for growth. This was preceded by the multimillion-dollar acquisitions of Reliant Health Services and Encompass, at $750 million and $730 million, respectively.

Written by Kourtney Liepelt

*Editor’s Note: This has been corrected from a previous version, which stated that CareSouth’s Health at Home division was also acquired in the transaction.