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Genesis Healthcare Closes Purchase Of Sun Healthcare (SUNH)

 December 03, 2012 03:19 PM

(By Balaseshan) Genesis HealthCare, a provider of skilled nursing and rehabilitation care, has completed the acquisition of Sun Healthcare Group Inc. (NASDAQ: SUNH), effective December 1, for $8.50 per common share in cash.

The aggregate amount of the merger consideration was about $215 million, excluding closing costs and the repayment of about $89 million of Sun indebtedness. Genesis financed the transaction using borrowings under a term loan and available cash.

Based in Irvine, California, Sun is a healthcare services company serving primarily the senior population. Sun owns SunBridge Healthcare LLC, which operates skilled nursing facilities, assisted and independent living centers and behavioral health centers in 23 states. Sun also owns SunDance Rehabilitation, CareerStaff Unlimited, and SolAmor Hospice.

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The merger of the two companies has created one of the largest skilled nursing providers in the country, with 422 skilled nursing centers in 29 states. It has also expanded Genesis HealthCare's rehabilitation therapy business to more than 1,500 contracts in 46 states.

The new company will have nearly 80,000 employees and combined annual revenue of about $4.6 billion. The Genesis HealthCare headquarters will remain in Kennett Square, Pennsylvania.

Simultaneous with the Genesis / Sun merger, Sun's SolAmor Hospice segment was sold to Life Choice Hospice, a provider of in-home hospice care, for about $85 million. Net cash sale proceeds of $75 million were used to repay Genesis senior indebtedness. Genesis owns an approximate one-third interest in Life Choice Hospice.

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"The addition of Sun's portfolio enables us to expand the breadth of services we provide nationwide and creates economies of scale that better position Genesis for the challenges facing the post-acute care industry in years to come," said George Hager Jr., Chief Executive of Genesis.

SUNH is trading up 0.53% at $8.50 on Monday. The stock has been trading between $2.90 and $8.50 for the past 52 weeks.

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