ATLANTA – In a transaction guaranteed to shake up the hospice care industry, home health firm Gentiva Health Services will acquire hospice provider Odyssey HealthCare for an aggregate purchase price of approximately $1 billion.
Based in Dallas, Odyssey is one of the leading providers of hospice care in the United States in terms of both average daily patient census and number of locations. Atlanta-based Gentiva anticipates that the combination of the two companies' hospice operations will result in a market-leading hospice care provider with a combined average daily patient census of approximately 14,000 and operations in 30 states.
Gentiva CEO Tony Strange said the merger will create the largest U.S. healthcare provider focused on home health and hospice services.
"The combination of the two companies clearly positions us as a leader in both home health and hospice care in the United States," he said. "The two companies share similar geography between Gentiva's home health operations and Odyssey's hospice operations, with very little overlap between the two companies' hospice programs."
Based on results from the respective companies' 2009 fiscal years, the merger would create a company with more than $1.8 billion in annual revenue, comprised of approximately 60 percent in home healthcare revenue and approximately 40 percent in hospice revenue.
"This agreement represents an exciting opportunity to provide Odyssey's stockholders with significant, immediate and certain value, while also accelerating our strategy," said Robert Lefton, president and CEO of Odyssey HealthCare. "With Gentiva, we are bringing together two complementary businesses that are positioned for continued leadership in the hospice industry."
The transaction has been unanimously approved by the boards of directors for both organizations.
The transaction is expected to close in the third quarter of 2010. Gentiva expects to raise approximately $1.1 billion in new debt financing to fund the purchase price and refinance existing debt.
The company has secured a financing commitment for the transaction from a syndicate of financial institutions, including BofA Merrill Lynch, Barclays Bank PLC, General Electric Capital Corporation and SunTrust Bank and SunTrust Robinson Humphrey, Inc.
