Gentiva, an Atlanta-based publicly traded home health company that operates about 300 home healthcare offices in the U.S., signed a deal in the wee hours of Monday morning to purchase Odyssey, a national hospice company with about 100 facilities based in Dallas. The deal will create what is believed to be the largest home health and hospice company in the country. Gentiva estimates the merged company will have revenue nearing $2 billion, with about 60 percent home health and 40 percent hospice. It will operate in 33 state and have some 14,000 patients per day.
The all-cash transaction of $27 per share should end up costing about $1 billion. Gentiva is financing the deal through debt issued from a consortium, including Bank of America, GE Capital, Merrill Lynch and Barclays Bank, according to the Wall Street Journal. While the agreed price was a premium on the Friday close, shares closed near $28 on Tuesday. Odyssey also closed up nearly 40 percent at close to $27 per share.
Analysts have long seen the potential synchronicity between home care and hospice--not because they can merge operations, but as a way of leveraging the clients of home care into hospice units when possible. The potential for healthcare reform to weed out smaller players may also influence further mergers in this arena. Indeed, this deal was announced at the same time as a smaller union between national hospice organization LHC, based in Lafayette, La., and Idaho Home Health and Hospice, which operates nine locations throughout Idaho.