Almost Family, Inc. (Nasdaq:AFAM), a leading provider of home
health nursing services, today announced that it has signed a
definitive agreement to acquire a controlling interest in the
entity holding the home health and hospice assets of Community
Health Systems, Inc. (NYSE:CYH) (CHS) (referred to herein as CHS
Home Health, pertaining solely to the home health and hospice
business of CHS). CHS Home Health, a provider of skilled home
health and hospice services, currently operates 74 home health and
15 hospice branch locations in 22 states. With the completion
of this transaction, Almost Family will operate 340 branches across
26 states and its annual net revenue run rate is expected to exceed
the $800 million mark.
Strategic Rationale for the
Transaction
- Substantial additional scale with approximately $200 million in
annual revenues: ~$170 million in home health and ~$30 million in
hospice
- A true post-acute healthcare partnership working together to:
- Better manage the needs of patients across the CHS hospital
network
- Collaborate on new and better ways to care for patients
improving care transitions and care coordination enabling us to
deliver higher quality to patients at a lower cost to the Medicare
Program
- Provide future development opportunity for joint venture
locations, through acquisition or development of home health
agencies where CHS Hospital locations are not currently supported
by a common owned certified agency
- Substantially expands Almost Family’s geographic service
territory to a total of 26 states
- The combined companies care for, on average, 50,000 patients
every day
- Based on the most recently available data from CMS, with this
combination Almost Family would become the third-largest Medicare
home health provider in the US
- Almost Family may opportunistically access the equity markets
to reduce leverage, subject to market and other conditions
Company Comments on the
TransactionWilliam B. Yarmuth, CEO of Almost
Family, noted: “Over the past few years, Almost Family has
grown dramatically, both in size and in scope. In addition to
being one of the nation’s largest home health providers, our
HealthCare Innovations investments have brought us new perspectives
and enabled us to be much more active in the development of new
care delivery models. This partnership with CHS may be the
most strategic of all the investments we’ve made yet. We
believe it will enable us to see the health care continuum and home
care specifically through the eyes of not only one of America’s
best hospital companies, but one of America’s best healthcare
companies, leading us to an even better understanding of the
needs of our patients and how to meet them.”
Wayne Smith, CEO of CHS,
stated: “While we are reducing our ownership interest in
our home health and hospice division, it is important to us to
retain a meaningful interest to help ensure appropriate post-acute
care coordination for the benefit of our patients. We believe
hospitals need strong strategic post-acute partners to provide the
right care for patients and return them safely and securely home
following a hospital stay. We selected a partner with proven
capabilities and a successful track record."
Steve Guenthner, President of Almost
Family, added: “As one of the nation’s largest home health
providers, we’re looking forward with great anticipation to working
hand-in-hand with one of the nation’s foremost hospital
companies. We expect the knowledge and perspective we gain
and share with each other through this relationship, to help us
develop even better care transition and coordination capabilities
for the benefit of our patients and for the Medicare Program.
Building on this incredible foundation we will continue our efforts
to be a thought-leader in the evolution of healthcare delivery
models and elevate our service capabilities for patients and other
hospitals over all our service territories.”
Yarmuth concluded, “The market
for healthcare services is intensely competitive and we continue to
position ourselves for continued growth and development. With
this partnership, our breadth and depth now includes, in addition
to skilled home health care, personal care services, ACO
management, In-Home Assessment capabilities, a phenomenal hospital
partnership, and now even a small entrée into hospice. We’re
exceptionally proud and pleased to welcome the employees, patients
and referral sources of CHS Home Health to our growing family of
home care companies.”
Transaction TermsThe total
purchase price for 80% of the equity interest in CHS Home Health is
$128 million, subject to a working capital adjustment.
Financing for the transaction has been fully committed by
JPMorgan. Almost Family expects the transaction to be
completed during the fourth quarter, subject to regulatory
approvals and the satisfaction of customary closing
conditions. The acquisition is expected to be accretive to
EPS in 2017.
About Almost Family, Inc.Almost
Family, Inc. (Nasdaq:AFAM), founded in 1976, is a leading regional
provider of home health nursing services, with branch locations,
prior to the CHS Joint Venture, in Florida, Ohio, Tennessee, New
York, Connecticut, Kentucky, New Jersey, Massachusetts,
Pennsylvania, Georgia, Wisconsin, Indiana, Missouri, Illinois,
Mississippi and Alabama (in order of revenue significance).
Almost Family, Inc. and its subsidiaries operate a
Medicare-certified segment, a personal care segment and a
healthcare innovations segment. Almost Family operates 250
home health branch locations in sixteen U.S. states.
About Community Health Systems,
Inc.Community Health Systems, Inc. is one of the largest
publicly traded hospital companies in the United States and a
leading operator of general acute care hospitals in communities
across the country. The Company, through its subsidiaries,
owns, leases or operates 158 affiliated hospitals in 22 states with
an aggregate of nearly 27,000 licensed beds. The Company’s
headquarters are located in Franklin, Tennessee, a suburb south of
Nashville. Shares in Community Health Systems, Inc. are
traded on the New York Stock Exchange under the symbol “CYH.”
More information about the Company can be found on its website at
www.chs.net.
About CHS Home Health and the Joint
VentureCHS Home Health is one of the nation’s larger
Medicare home health care providers with 74 home health and 15
hospice locations in 22 states. Most of its home health and
hospice operations are affiliated with CHS general acute care
hospitals in communities across the country. The JV will be
managed by Almost Family, governed by a board with proportionate
representation from Almost Family and CHS and will be
primarily focused on serving the post-acute home health needs of
the current locations and on developing additional home health
capabilities in communities with a CHS hospital but no affiliated
home health care.
Forward-Looking StatementsAll
statements, other than statements of historical facts, included in
this news release are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of
forward-looking terminology such as “may,” “will,” “expect,”
“believe,” “estimate,” “project,” “anticipate,” “continue,” or
similar terms, variations of those terms or the negative of those
terms. These forward-looking statements are based on the
Company's current plans, expectations and projections about future
events. Statements about the Company’s or CHS Home Health’s
past financial results do not, and are not meant to, predict future
results. The Company can provide no assurance that such
results and performance will continue.
Because forward-looking statements involve risks
and uncertainties, the Company's actual results could differ
materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. The
potential risks and uncertainties which could cause actual results
to differ materially include: the satisfaction of the conditions
precedent to the consummation of the proposed transaction,
including, without limitation, the receipt of regulatory approvals
or third party consents on the terms desired or anticipated; the
Company’s ability to obtain financing on the anticipated terms and
schedule; disruptions of the Company’s and CHS Home Health’s
current plans, operations and relationships caused by the
announcement and pendency of the proposed transaction; the impact
of further changes in healthcare reimbursement systems, including
the ultimate outcome of potential changes to Medicare reimbursement
for home health services and to Medicaid reimbursement due to state
budget shortfalls; the ability of the Company to maintain its level
of operating performance and achieve its cost control objectives;
changes in our relationships with referral sources; unanticipated
difficulties or expenditures relating to the proposed transaction,
including, without limitation, difficulties that result in the
failure to achieve expected synergies, efficiencies and cost
savings from the proposed transaction within the expected time
period (if at all); government regulation; health care reform;
pricing pressures from Medicare, Medicaid and other third-party
payers; changes in laws and interpretations of laws relating to the
healthcare industry; the ability of the Company to integrate,
manage and keep secure our information systems; changes in the
marketplace and regulatory environment for Health Risk Assessments
and the Company’s self-insurance risks. For a more complete
discussion regarding these and other factors which could affect the
Company's financial performance, refer to the Company's various
filings with the Securities and Exchange Commission, including its
filing on Form 10-K for the fiscal year ended January 1, 2016, in
particular information under the headings "Special Caution
Regarding Forward-Looking Statements" and “Risk Factors.”
With regard to the Company’s investment in development-stage
enterprises in its Healthcare Innovations segment, there can be no
assurance that its operational and developmental objectives will be
realized or that the Company’s investments will result in future
returns. The Company undertakes no obligation to update or
revise its forward-looking statements.
Almost Family, Inc.
Steve Guenthner
(502) 891-1000
Community Health Systems (NYSE:CYH)
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