(Adds CEO's comment in paragraphs 7 and 8, context on the
industry's consolidation in paragraphs 6 and 9)
By Susan Kelly
Aug 18 Skilled Healthcare Group Inc and
privately held Genesis HealthCare said on Monday they have
agreed to combine in an all-stock transaction that will create
one of the largest U.S. operators of long-term care facilities.
Under terms of the agreement, Skilled Healthcare
shareholders will own 25.75 percent of the equity in the
combined company, while Genesis shareholders will own the other
The combined company will operate under the Genesis
HealthCare name and will trade on the New York Stock Exchange.
Genesis Chief Executive Officer George Hager will lead the new
company, which will be based at Genesis' offices in Kennett
Genesis operates skilled nursing centers and senior living
communities and supplies rehabilitation services to other
Skilled Healthcare, based in Foothill Ranch, California,
runs long-term care facilities and provides a range of services
to patients after they leave the hospital.
Cuts in Medicare insurance reimbursement rates and efforts
under President Barack Obama's health reform law to tie payments
to improved patient outcomes are driving a wave of consolidation
among hospitals and other healthcare providers.
Hager, in an interview, said the deal will reduce costs,
improve purchasing power and leverage technology for the
"We are positioning the companies to react to a system that
is changing and becoming more outcomes-based and
pay-for-performance-based," the CEO said.
In the so-called post-acute sector that provides services to
patients after they've been discharged from the hospital, home
healthcare provider Gentiva Health Services Inc
rejected an offer last month from Kindred Healthcare Inc
to buy a stake in the company. Gentiva said it had received a
new $634.2 million buyout offer from an unnamed party.
Genesis and Skilled Healthcare together will have annual
revenue of more than $5.5 billion and more than 500 facilities
in 34 states.
The deal, which has been approved by the boards of both
companies, is expected to close in early 2015.
In another development, Toledo, Ohio-based Health Care REIT
Inc said it expects to pursue a cashless exercise of an
option to buy a 9.9 percent stake in Genesis that it obtained
when it acquired real estate from the company in April 2011.
(Reporting by Susan Kelly in Chicago; Editing by Steve Orlofsky
and Jan Paschal)