Baton Rouge-based Amedisys Inc. (Nasdaq: AMED), one of the nation’s largest home health care providers, has purchased more than 2.4 million of its common shares for approximately $178 million from KKR (NYSE: KKR).
The shares represent half the holdings of Amedisys by KKR, a global investment firm based in New York City. The shares were purchased at 96% of their closing price on June 4, 2018. KKR will maintain its presence on the board of directors at Amedisys for at least 12 months, according to a press release issued Monday.
The transactions will be immediately 6% to 7% accretive to earnings per share. The deal will be financed through $140 million of available cash, with the remainder of the $178 million funded by borrowing under the company’s existing revolving credit facility.
“Our ability to opportunistically deploy capital in an accretive manner, while maintaining extremely low leverage and significant borrowing capacity to finance further acquisitions, makes this a great deal for our shareholders and our company,” Amedisys CEO and President Paul Kusserow said in a statement. “This transaction is a strong signal of confidence in our company’s continued attractive growth prospects.”
The transaction comes as Kusserow recently stated he was “frustrated with the market,” as a result of high valuations for hospice and home health care assets.
Amedisys ended 2017 with $120 million of cash on hand, and the company was “anxious to put that to work,” CFO Scott Guinn stated at the Bank of America Merrill Lynch 2018 Health Care Conference on May 16, 2018.
“While accretive acquisitions remain our first priority for capital deployment, we view this transaction as the best use of capital given current acquisition multiples and the confidence we have in our business,” Kusserow said. “Our acquisition pipeline remains active, cash flow is strong and we have ready access to capital markets.”
Amedisys is also in advanced discussions to significantly expand its borrowing capacity with lenders under its secured credit facility to allow it to capitalize on its active acquisition pipeline.
Following the transaction, Amedisys will have approximately 32 million outstanding shares of common stock. The company’s available cash will be approximately $20 million and its outstanding borrowings under the credit facility will be $128 million, leaving a net leverage ratio of approximately 0.7x.
Amedisys stock was trading up slightly, at above $77 per share in after-hours trading Monday.
Written by Amy Baxter