Texas-based LifeCare Holdings has entered into a definitive agreement to acquire all of the HealthSouth Corporation's long-term acute care hospitals (LTACHs) for $120 million.
LifeCare, which operates 20 long-term acute care hospitals in nine states, will be adding 414 licensed beds in Sarasota, Fla.; the Louisiana communities of Farmerville, Homer and Ruston; Las Vegas; Mechanicsburg and Monroeville, Pa.; and Houston.
LifeCare currently has operations in four of the five states in which the hospitals are located. Upon completion of the transaction, the company will operate 28 LTACHs in 10 states.
"In acquiring these hospitals from HealthSouth, we are not only expanding our network of facilities, but also enhancing our workforce of highly trained, compassionate caregivers," said Phillip B. Douglas, LifeCare's chairman and chief executive officer. "We look forward to sharing best practices across all of our hospitals and continuing to advance care for medically complex patients who require intensive treatment over an extended period of time."
"HealthSouth intends to use the proceeds from this transaction to invest in the retirement of our 10.75 percent senior notes and our accelerated de novo strategy," said Jay Grinney, HealthSouth’s president and chief executive officer. "Most importantly, this divestiture does not change the company's outlook for 2011: We still expect our 2011 full-year results will be at the high end of, or greater than, the adjusted EBITDA range of $440 million to $450 million."
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LifeCare officials said they don't plan to eliminate any services at the hospitals and have committed to hiring all employees in good standing at the time the transaction is complete.
HealthSouth will receive $120 million at closing, less the value of any working capital not being acquired by LifeCare. The transaction is expected to be financed by additional drawings under LifeCare's senior secured credit facility and proceeds generated from the anticipated sale of the real estate assets associated with five of the acquired hospitals. The transaction is expected to be immediately deleveraging to LifeCare Holdings' balance sheet on a pro forma basis.
The transaction is subject to customary closing conditions, including regulatory approval and third party consents, and is expected to close in the third quarter.