Genesis HealthCare to Sell Home & Hospice Operations

Genesis HealthCare (Kennett Square, PA, USA) has signed an agreement to sell the majority of its home health and hospice operations to Compassus (Brentwood, TN, USA) for USD 84 million.

The Genesis home health and hospice operations included in the deal are located in the states of California, Idaho, Montana, and New Mexico; remaining hospice operations in Arizona and Nevada will be closed. The agreement is part of an ongoing strategic move launched by Genesis to monetize non-strategic assets, including the home health and hospice businesses, in order to repay debts. The strategy is expected to yield a cash flow income of USD 100–150 million, after tax.

The home health and hospice operations became part of Genesis HealthCare following its February 2015 merger with Skilled Healthcare, which created one of the largest post-acute care providers in the United States. The buyer, Compassus, is comprised of a nationwide network of community-based post-acute care services primarily focused on hospice, palliative, and home health care. The company opened its first hospice in 1979, and following the deal will operate more than 165 programs in 30 states.

“Home health and hospice services are non-strategic businesses for Genesis to operate at this time, and we believe we can better allocate the capital by de-levering our balance sheet,” said George Hager, Jr., CEO of Genesis HealthCare. “We are pleased that our home health and hospice businesses will join a respected, quality provider like Compassus.”

“We are excited to welcome Genesis’ home health and hospice businesses to the Compassus family, as we share very similar missions and values,” said James Deal, CEO of Compassus. “As Compassus continues to grow, this further strengthens our ability and desire to provide greater access to a continuum of high-quality post-acute care, including hospice, palliative, and home health care services to even more patients, families and the health care professionals who serve them.”

According to the Wall Street Journal (WSJ), the supersizing of the healthcare industry in the United States is a result of the Affordable Care Act, and reflects the efforts of providers to gain the scale necessary to succeed amid the changes unleashed or accelerated by the health law. Those include growing pressures to constrain costs and new forms of payment that require providers to meet efficiency and care-quality goals. The process has so far not been slowed down by the growing regulatory concern about health-care consolidation.

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Genesis HealthCare
Compassus