One of the nation’s largest providers of post-acute care, Genesis Healthcare (NYSE: GEN), has sold the majority of its home health and hospice operations to post-acute provider Compassus for $84 million. The deal is expected to close within 90 days, pending regulatory approvals and other closing conditions.
Genesis, which comprises more than 500 skilled nursing centers and assisted living senior housing communities in 34 states with its subsidiaries, entered into an agreement to sell its home health and hospice operations with Compassus, a Nashville, Tennessee-based post-acute provider that primarily provides home health, palliative and hospice care services. Genesis’ home health and hospice operations had aggregate revenue of $70 million and EBITDA totaling $9 million in 2015.
Genesis acquired its home health and hospice division in combination with Skilled Healthcare in February 2015. Its home health and hospice operations are located in California, Idaho, Montana and New Mexico. Genesis executives stated the sale is part of its effort to monetize non-strategic assets. Remaining hospice operations out of Arizona and Nevada will be closed.
“Home health and hospice services are non-strategic businesses for Genesis to operate at this time, and we believe we can better allocated the capital be de-levering our balance sheet,” George V. Hager, Jr., CEO of Gensis, said in a statement. “We are pleased that our home health and hospice businesses will join a respected, quality provider like Compassus.”
The continued sale of non-strategic assets by Genesis are expected to generate $100 million to $150 million of after tax cash proceeds, according to a press release. The proceeds from the sales will be used to repay Genesis’ debt. The company’s stock price faltered at the beginning of the year, dropping nearly 50% in January alone. Share values have since begun to recover.
Compassus has been expanding its footprint over the last year, most recently acquiring Hospice Advantage. That deal brought Compassus into three new states. The company will operate more than 165 locations in 30 states.
“We are excited to welcome Genesis’ home health and hospice businesses to the Compassus family as we share very similar missions and values,” James Deal, Compasses CEO, said in a statement. “As Compassus continues to grow, this further strengthens our ability and desire to provide greater access to a continuum of high-quality post-acute care, including hospice, palliative and home health care services to even more patients, families and the health care professionals who serve them.”
Written by Amy Baxter