Kindred Healthcare, Inc. ("Kindred") (NYSE:KND) and RehabCare Group, Inc. ("RehabCare") (NYSE:RHB) announced the signing of a definitive merger agreement earlier this week where Kindred will acquire RehabCare. The combination will create a post-acute healthcare services company in the United States with over $6 billion in annual revenues and operations in 46 states. The combined company will operate 118 long-term acute care ("LTAC") hospitals with 8,492 licensed beds, 226 nursing and rehabilitation centers with 27,442 licensed beds, 121 inpatient rehabilitation ("IRF") hospitals (primarily hospital-based units) and 1,808 hospital, nursing center and assisted living rehabilitation therapy services contracts across the country. Kindred expects to obtain operating synergies of approximately $40 million within a period of two years following consummation of the acquisition, with $25 million expected in the first year after closing.
"We are excited to announce the RehabCare acquisition and we believe that the combination will be highly accretive for Kindred stockholders, provide significant long-term strategic benefits to the stockholders of both companies and enhance our future growth prospects. The expansion of our size and scale and the opportunities to integrate RehabCare’s LTAC and IRF hospitals and rehabilitation therapy contract business with our operations will create a stronger company both nationally and locally and create value for all of our constituents in the communities we serve. We are particularly excited about the opportunity to add RehabCare’s services in our cluster markets and inpatient rehabilitation services to our service offerings. Together with our growing home care and hospice businesses, the merger offers our patients an expanded continuum of services and the opportunity for us to "Continue the Care" for our patients and residents through an entire episode of treatment and recovery," said Paul J. Diaz, President and Chief Executive Officer of Kindred.
Financing for the transaction will come from commitments from JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Citigroup Global Markets Inc. The transaction is expected to closed by June 30, 2011.