Post-Acute Giant HealthSouth Expands Through $730 Million Acquisition

One of the nation’s largest post-acute care providers is getting bigger, as today, HealthSouth Corporation (NYSE: HLS) entered into a definitive agreement to acquire the operations of Reliant Hospital Partners, LLC for a cash purchase price of $730 million.

HealthSouth offers both facility-based and home-based post-acute care services in 33 states and Puerto Rico via its network of inpatient rehabilitation hospitals, home health and hospice agencies.

Reliant operates a portfolio of 11 inpatient rehabilitation hospitals in Texas, Massachusetts and Ohio, plus an additional three inpatient satellite locations in Massachusetts for a total of 902 beds.


The acquisition of the operations of Reliant Hospital Partners furthers HealthSouth’s position as a leading provider of post-acute services, said HealthSouth President and CEO Jay Grinney.

“Reliant’s portfolio of high-quality inpatient rehabilitation hospitals complements our networks in the highly competitive Houston, Dallas-Fort Worth and Austin Markets while providing entry into new markets in Abilene, Texas; Dayton, Ohio; and the greater Boston metropolitan area,” Grinney said in a written statement.

The transaction is the most recent blockbuster deal from HealthSouth, which last November acquired Dallas-based Encompass Home Health and Hospice for a slightly higher price tag at approximately $750 million. The acquisition added 140 locations across 13 states to HealthSouth’s portfolio.


All of the Reliant hospitals are leased, and seven of the leases are treated as capital leases for accounting purposes, HealthSouth said in an announcement of the transaction. The company will assume the lease obligation for all of the acquired hospitals.

The amount of the capital lease obligation to be recognized on HealthSouth’s balance sheet upon closing is subject to the final purchase price allocation and is preliminarily estimated at approximately $210 million.

In 2014, Reliant’s operations generated revenues of approximately $249 million and Adjusted EBITDA of approximately $82 million. HealthSouth expects the acquisition of Reliant’s operations to be “immediately accretive” to the company’s earnings per share following closing, excluding transaction costs.

The transaction was approved by both companies’ boards of directors and is expected to close this year, pending certain customary closing conditions and regulatory approvals. 

Wells Fargo Securities LLC is acting as exclusive financial advisor to HealthSouth, while Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to the company.

Written by Jason Oliva

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