Gentiva Health Services Inc.
) announced that it has purchased the home health and hospice
operations of Washington-based Family Home Care Corporation. The
financial terms of the deal were not divulged.
While the transaction is not expected to have a material impact
on Gentiva's earnings, it will substantially expand the company's
foothold in the eastern Washington and northern Idaho markets.
Family Home Care is one of the market leaders in home health and
hospice services in these two states. Thus, the takeover will
significantly boost Gentiva's market share and strengthen its
position as the largest provider of home health and hospice
services in the U.S. based on revenues.
Gentiva will fund the acquisition with its available cash. This
is expected to reduce the company's cash balance significantly as
it has been using its cash reserve to finance other acquisitions as
well. Nevertheless, considering the fact that Gentiva exited the
second quarter of 2012 with cash and cash equivalents of
approximately $155.3 million, it can be assumed that it has ample
cash balance to support the acquisitions.
Gentiva has been on an acquisition spree over the last few
years. The company undertakes strategic acquisitions to expand its
scope of operations and geographic coverage.
During July 2012, the company announced the acquisition of
Advocate Hospice, a leading provider of end of life care. The
acquisition of this Indiana-based company was also being funded
from Gentiva's cash reserves.
The transaction is not expected to have a material impact on
Gentiva's 2012 earnings. However, the acquisition of Advocate
Hospice is expected to spread out its coverage in central and
southern Indiana and leverage its existing hospice and home health
facilities in the state.
Gentiva, which competes with
), carries a Zacks #2 Rank, which translates into a short-term Buy
rating. We maintain a long-term 'Outperform' recommendation on the
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