Kindred to Pay $218 Million for Hospitals, Nursing Homes

Louisville, KY-based Kindred Healthcare, Inc. announced plans to acquire five long-term acute care hospitals in Southern California, and three nursing homes in Dallas-Fort Worth in two separate cash deals totaling $218 million this week.

Kindred will pay $180 million to Rancho Cucamonga, CA-based Vista Healthcare, LLC, for the four freestanding hospitals and one hospital-in-hospital with a total of 250 beds. The assets generate annual revenues of approximately $150 million and earnings before interest, income taxes, depreciation and amortization of approximately $27 million.

"We view the Vista transaction as a great opportunity to meet the growing demand for our services in southern California and expand our hospital operations,” Kindred CEO Paul J. Diaz says. “The Vista hospitals also provide several clinical service offerings not currently available in our area hospitals providing us with an opportunity to expand our clinical services as well as attract more commercial and managed care business.”

Vista President/CEO Ara Tavitian, MD, says the combined strengths of the two companies “will promote expanded services and clinical programs that will better serve our patients and their families.

Kindred also offers our employees the ability to expand their opportunities with a proven and dynamic healthcare provider. We look forward to integrating our operations with Kindred and to the continued growth and development of our combined services."

Kindred will also pay $38 million for three recently constructed nursing and rehabilitation centers in the Dallas-Fort Worth market, where Kindred already operates six hospitals and is developing a co-located hospital-based subacute unit. Kindred intends to develop two of the nursing centers into transitional care centers, focused on short-term rehabilitation and medically complex patients, and add a transitional care unit to the third nursing center.

These three nursing and rehabilitation centers have 405 beds and annual revenues of $24 million and EBITDA of $3 million. 

“The nursing and rehabilitation center transaction offers us the opportunity to acquire three relatively new, owned facilities and develop them into transitional care centers to complement our existing hospital services in the Dallas-Fort Worth cluster market, where we currently operate six hospitals,” Diaz says. “This transaction also allows us to continue to add to our owned real property base.”

Both acquisitions are subject to regulatory approval and are expected to close this year. Kindred will finance both deals from its revolving credit facility, but the company is not acquiring the capital, or assuming liabilities in either deal.

In the year immediately following the transactions, Kindred said it expects to incur transition costs of between $6 million to $8 million.