Kindred Healthcare (NYSE: KND) will acquire rival RehabCare Group, Inc. (NYSE: RHB) for about $900 million, according to a joint announcement made Tuesday.
The merger will create the largest post-acute healthcare services company in the U.S. with more than $6 billion in annual revenues and operations in 46 states. The deal will bring together Louisville-based Kindred, which runs or services nearly 700 hospitals, nursing and rehab clinics, with St. Louis-based RehabCare, which owns and operates 34 facilities and manges services at more than 1,250 locations. The combined company will feature 118 long-term acute care hospitals with 8,492 beds and 226 nursing and rehab centers.
The deal was spurred in part by declining healthcare reimbursement rates and healthcare reform, executives of the two companies said, according to the Wall Street Journal. "Without question, we're all being called upon to be more efficient," Kindred CEO Paul Diaz said. He added that the company's size and scale would allow it to cut costs related to purchasing and IT.
By buying out RehabCare, Kindred hopes to improve how it manages patient conditions over the long term, instead of delivering care in unrelated episodes. The merger should make better transitions in care possible.
Kindred will take on about $400 million in RehabCare debt. The companies expect the sale to close around June 30.
To learn more:
- read the press release
- here's the Wall Street Journal article
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