All-Around ‘Good Fit’ on Lincare-Gentiva Deal

ATLANTA — Following weeks of rumors, Gentiva Health
Services announced today it has sold its respiratory,
home medical equipment and infusion therapy businesses to a
subsidiary of HME titan Lincare Holdings. The businesses generated
$55 million for the trailing12 months ended Sept. 27, 2009.

The deal includes approximately 40 locations in seven states,
according to a release on the transaction. The purchase price was
not disclosed, but Lincare paid cash, the release said.

Speculating on the rumors in December, Bob Leonard of The Braff
Group, a Pittsburgh-based mergers-and-acquisitions firm, said the
sale “seems logical for Gentiva, as they continue to focus on
Medicare home health … and seem intent on divesting non-core
businesses.”

In 2008, the company sold a majority interest in CareCentrix’
ancillary care benefit management services, then branch offices
specializing in pediatric and adult private duty services in March
2009. Moving forward, Gentiva’s business will consist primarily of
home health and hospice services targeted to seniors, the release
confirmed.

“A while back, it had become popular to be a one-stop-shop and
be all things to all people,” said Leonard on learning of the final
sale, “but then people realized that is a hard thing to do. More
and more, people are trying to concentrate on their base business,
and this sale kind of completes the process for Gentiva.”

For Lincare, said Leonard, the buy is “a perfect fit” as part of
its core business. Although heavily tilted toward respiratory
business in oxygen and sleep, the provider also has “quietly” had a
presence in infusion, Leonard said, so the acquisition “is just a
continuation of their long-term strategy and an opportunity to
expand their core footprint.

“It probably doesn’t give them brand new geography, just more
business,” he added.

Gentiva’s generally small locations, generating around $1
million each, could be rolled into Lincare’s existing locations,
numbering 1,056 at the end of September.

“It’s just a good fit all around,” Leonard said of the deal.

Headquartered in Clearwater, Fla., Lincare serves more than
700,000 customers in 48 states. Revenues in 2008 were $1.7
billion.