LHC Group, Inc. (NASDAQ:LHCG) and Almost Family, Inc. (NASDAQ:AFAM)
announced today that they have agreed to combine in an all-stock
merger of equals transaction pursuant to a definitive merger
agreement unanimously approved by the Boards of Directors of each
company.
The merger will create a nationwide provider of
in-home healthcare services with a long track record of
successfully partnering with hospitals and health systems led by
the most experienced management team steeped in home health. The
combined company will have 781 locations in 36 states with more
than 31,000 employees and revenue of $1.8 billion and Adjusted
EBITDA of approximately $145 million for the trailing 12-month
period ended September 30, 2017.
Compelling Strategic
Rationale
- Industry Leadership: Creates the leading
in-home healthcare company in the United States, with a large,
national footprint and diversified lines of service as well as
Centers for Medicare & Medicaid Services (CMS) Star ratings
that outpace the industry. The combined company is well-positioned
to lead the industry’s transition to value-based reimbursement and
highly coordinated care.
- Accelerated Growth: The creation of a
comprehensive in-home healthcare solution with home health, hospice
and personal care services sets the stage for new channels of
organic growth throughout the existing footprint. The combined
company will be positioned as the preferred in-home healthcare
partner to current and potential hospital joint venture partners as
well as referral sources. A significant pipeline of joint ventures,
extensions of existing relationships and acquisitions is expected
to accelerate revenue growth.
- Immediate Accretion: The merger is expected to
be immediately accretive to adjusted earnings per diluted share for
both companies, and to generate identified pre-tax run-rate cost
synergies of $25 million.
- Balance Sheet Flexibility: Combined gross
leverage is expected to be 1.5x based on combined trailing 12-month
2017 Adjusted EBITDA as of September 30, 2017, pro forma for $25
million in cost synergies, which provides additional capacity to
pursue new acquisition opportunities.
- Strong Cultural Fit and Shared Vision: A
history of senior leadership collaboration within the in-home
healthcare industry and a shared vision to shape the evolution of
the U.S. healthcare delivery system to value-based reimbursement
set the stage for an integration of naturally synergistic
organizations. The ability to leverage technology to extend scale
and share best practices among two industry leaders in quality and
patient satisfaction creates a localized provider with an unrivaled
commitment to delivering patient-centered care in the
home.
- Industry Leading Management Team: The combined
company is led by a management team with strong operational
expertise, a proven track record of developing joint ventures with
leading hospitals and health systems and a history of successful,
efficient capital deployment.
Transaction DetailsUnder terms
of the transaction, Almost Family shareholders will receive 0.9150
shares of LHC Group for each existing Almost Family share. Upon
closing of the transaction, LHC Group shareholders will own 58.5%
and Almost Family shareholders will own 41.5% of the combined
company. The stock issuance in the merger is expected to be
tax-free to shareholders of both companies. The transaction, which
is expected to be completed in the first half of 2018, is subject
to the receipt of regulatory approvals and other customary closing
conditions as well as the approval of shareholders of both LHC
Group and Almost Family.
The combined company will continue to trade on
NASDAQ under the ticker symbol, “LHCG.” William Yarmuth, current
chairman and chief executive officer of Almost Family, will remain
as a special advisor to the combined company, while Steve
Guenthner, current president and principal financial officer of
Almost Family, will be named chief strategy officer. Keith Myers,
current chairman and chief executive officer of LHC Group, will be
named chairman and chief executive officer of the combined company,
while Donald Stelly will be named president and chief operating
officer and Joshua Proffitt will be named chief financial officer.
The Board of Directors will be comprised of ten members, six of
which (including Mr. Myers and Lead Independent Director Billy
Tauzin) will be current LHC Group directors and four of which will
be Almost Family directors. The combined companies’ Home Office
will remain in Lafayette, La., and Personal Care Services,
Healthcare Innovations and other support services will continue to
operate out of Louisville, Ky.
Commenting on the announcement, Keith G. Myers,
LHC Group’s chairman and CEO, said, “William Yarmuth and I have
worked closely together on many of the important issues our
industry has faced over the years, including the most recent home
health advocacy with CMS, Office of Management and Budget and
Congress. Almost Family shares our vision for making a difference
in the communities we serve by delivering quality,
outcomes-focused, patient-centered care to the most vulnerable in
society. This merger is truly a transformative event for both our
companies and our patients nationwide and a unique opportunity to
bring more than 30,000 dedicated and talented employees together to
lead the in-home healthcare industry’s transition to value-based
reimbursement and highly coordinated care.”
William B. Yarmuth, Almost Family’s chairman and
CEO, added, “In my opinion, we are combining two of America’s most
successful home healthcare companies to create what will be the
best-run, best-positioned in-home healthcare company in
America. The complementary nature of our two firms provides
incredible fit, adding clinical, operational and financial
strength, and depth without any meaningful conflicts or overlaps in
management, geography, and service capabilities. I believe
the combined company will have the management team with the
broadest and deepest experience of all the national in-home
healthcare providers.
“By combining the best of both our long track
records of success and patient-focused cultures, we will be able to
accomplish much more together than either of us could possibly
achieve alone. I am extremely proud of the work we’ve done,
the progress we’ve made, and the tremendous prospects for our
future together. I look forward to working with Keith and the rest
of the management team in the continued evolution of these
companies.”
Jefferies LLC is serving as financial advisor to
LHC Group and Alston & Bird LLP is serving as its legal
advisor. Guggenheim Securities, LLC is serving as financial advisor
to Almost Family and Gibson, Dunn & Crutcher LLP is serving as
its legal advisor.
Conference CallLHC Group and
Almost Family will host a joint conference call today at 11:00 a.m.
Eastern time to discuss the proposed merger. The toll-free number
to call for this interactive teleconference is (866) 393‑1608
(international callers should call (973) 890-8327). A telephonic
replay of the conference call will be available through midnight on
November 23, 2017, by dialing (855) 859‑2056 (international
callers should call (404) 537-3406) and entering confirmation
number 1169538.
A live broadcast of the joint conference call as
well as presentation materials will be available under the Investor
tabs at www.LHCgroup.com and www.AlmostFamily.com. A one-year
online replay will be available approximately an hour following the
conclusion of the live broadcast.
About LHC Group, Inc.LHC Group,
Inc. is a national provider of non-acute healthcare services,
providing quality, cost-effective healthcare to patients primarily
within the comfort and privacy of their home or place of residence.
LHC Group provides a comprehensive array of healthcare services
through home health, hospice, community‑based services agencies and
facility-based services. LHC Group operates 320 home health
services locations, 92 hospice locations, 12 community-based
service locations and 15 long-term acute care hospitals
(LTACHs).
About Almost Family, Inc.Almost
Family, Inc., founded in 1976, is a leading national provider of
home healthcare services, with 332 branch locations in 26 states,
including its joint venture with Community Health Systems, Inc..
Almost Family, Inc. and its subsidiaries operate home health, other
home-based services and healthcare innovations segments.
Forward-Looking StatementsThis press release
contains “forward-looking statements” (as defined in the Securities
Litigation Reform Act of 1995) regarding, among other things,
future events or the future financial performance of LHC Group,
Inc. (“LHC Group”) and Almost Family, Inc. (“Almost Family”). Words
such as “anticipate,” “expect,” “project,” “intend,” “believe,”
“will,” “estimates,” “may,” “could,” “should” and words and terms
of similar substance used in connection with any discussion of
future plans, actions or events identify forward-looking
statements. The closing of the proposed transaction is subject to
the approval of the stockholders of LHC Group and Almost Family,
regulatory approvals and other customary closing conditions. There
is no assurance that such conditions will be met or that the
proposed transaction will be consummated within the expected time
frame, or at all. Forward-looking statements relating to the
proposed transaction include, but are not limited to: statements
about the benefits of the proposed transaction, including
anticipated earnings accretion, synergies and cost savings and
future financial and operating results; LHC Group’s and Almost
Family’s plans, objectives, expectations, projections and
intentions; the expected timing of completion of the proposed
transaction; and other statements relating to the transaction that
are not historical facts. Forward-looking statements are based on
information currently available to LHC Group and Almost Family and
involve estimates, expectations and projections. Investors are
cautioned that all such forward-looking statements are subject to
risks and uncertainties, and important factors could cause actual
events or results to differ materially from those indicated by such
forward-looking statements. With respect to the proposed
transaction, these risks, uncertainties and factors include, but
are not limited to: the risk that LHC Group or Almost Family may be
unable to obtain governmental and regulatory approvals required for
the transaction, or that required governmental and regulatory
approvals may delay the transaction or result in the imposition of
conditions that could reduce the anticipated benefits from the
proposed transaction or cause the parties to abandon the proposed
transaction; the risk that required stockholder approvals may not
be obtained; the risks that the other condition(s) to closing of
the transaction may not be satisfied; the length of time necessary
to consummate the proposed transaction, which may be longer than
anticipated for various reasons; the risk that the businesses will
not be integrated successfully; the risk that the cost savings,
synergies and growth from the proposed transaction may not be fully
realized or may take longer to realize than expected; the diversion
of management time on transaction-related issues; the risk that
costs associated with the integration of the businesses are higher
than anticipated; and litigation risks related to the transaction.
With respect to the businesses of LHC Group and/or Almost Family,
including if the proposed transaction is consummated, these risks,
uncertainties and factors include, but are not limited to: changes
in, or failure to comply with, existing government regulations that
impact LHC Group’s and/or Almost Family’s businesses; legislative
proposals for healthcare reform; the impact of changes in future
interpretations of fraud, anti-kickback, or other laws; changes in
Medicare and Medicaid reimbursement levels; changes in laws and
regulations with respect to Accountable Care Organizations; changes
in the marketplace and regulatory environment for Health Risk
Assessments; decrease in demand for LHC Group’s or Almost Family’s
services; the potential impact of the announcement or consummation
of the proposed transaction on relationships with customers, joint
venture and other partners, competitors, management and other
employees, including the loss of significant contracts or reduction
in revenues associated with major payor sources; ability of
customers to pay for services; risks related to any current or
future litigation proceedings; potential audits and investigations
by government and regulatory agencies, including the impact of any
negative publicity or litigation; the ability to attract new
customers and retain existing customers in the manner anticipated;
the ability to hire and retain key personnel; the risk that the
credit ratings of the combined company or its subsidiaries may be
different from what the companies expect and/or risks related to
the ability to obtain financing; increased competition from other
entities offering similar services as offered by LHC Group and
Almost Family; reliance on and integration of information
technology systems; ability to protect intellectual property
rights; impact of security breaches, cyber-attacks or fraudulent
activity on LHC Group’s or Almost Family’s reputation; the risks
associated with assumptions the parties make in connection with the
parties’ critical accounting estimates and legal proceedings; the
risks associated with the combined company’s expansion strategy,
the successful integration of recent acquisitions, and if
necessary, the ability to relocate or restructure current
facilities; and the potential impact of an economic downturn or
effects of tax assessments or tax positions taken, risks related to
goodwill and other intangible asset impairment, tax adjustments,
anticipated tax rates, benefit or retirement plan costs, or other
regulatory compliance costs.
Additional information concerning other risk
factors is also contained in LHC Group’s and Almost Family’s most
recently filed Annual Reports on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and other
Securities and Exchange Commission (“SEC”) filings.
Many of these risks, uncertainties and
assumptions are beyond LHC Group’s or Almost Family’s ability to
control or predict. Because of these risks, uncertainties and
assumptions, you should not place undue reliance on these
forward-looking statements. Furthermore, forward-looking statements
speak only as of the information currently available to the parties
on the date they are made, and neither LHC Group nor Almost Family
undertakes any obligation to update publicly or revise any
forward-looking statements to reflect events or circumstances that
may arise after the date of this press release. Neither LHC Group
nor Almost Family gives any assurance (1) that either LHC
Group or Almost Family will achieve its expectations, or
(2) concerning any result or the timing thereof. All
subsequent written and oral forward-looking statements concerning
LHC group, Almost Family, the proposed transaction, the combined
company or other matters and attributable to LHC Group or Almost
Family or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements above.
Additional Information And Where To Find ItThe
proposed transaction between LHC Group and Almost Family will be
submitted to the respective stockholders of LHC Group and Almost
Family for their consideration. LHC Group will file with the SEC a
registration statement on Form S-4 that will include a joint proxy
statement of LHC Group and Almost Family that also constitutes a
prospectus of LHC Group. LHC Group and Almost Family will deliver
the joint proxy statement/prospectus to their respective
stockholders as required by applicable law. LHC Group and Almost
Family also plan to file other documents with the SEC regarding the
proposed transaction. This press release is not a substitute for
any prospectus, proxy statement or any other document which LHC
Group or Almost Family may file with the SEC in connection with the
proposed transaction. INVESTORS AND SECURITY HOLDERS OF LHC
GROUP AND ALMOST FAMILY ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LHC
GROUP, ALMOST FAMILY, THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and stockholders will be able to obtain
free copies of the joint proxy statement/prospectus and other
documents containing important information about LHC Group and
Almost Family, once such documents are filed with the SEC, through
the website maintained by the SEC at www.sec.gov. LHC Group and
Almost Family make available free of charge at www.lhcgroup.com and
www.almostfamily.com, respectively (in the “Investor” or “Investor
Relations” section, as applicable), copies of materials they file
with, or furnish to, the SEC.
Participants In The Merger SolicitationLHC
Group, Almost Family, and certain of their respective directors,
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies
from the stockholders of LHC Group and Almost Family in connection
with the proposed transaction. Information about the directors and
executive officers of LHC Group is set forth in its proxy statement
for its 2017 annual meeting of stockholders, which was filed with
the SEC on April 28, 2017. Information about the directors and
executive officers of Almost Family is set forth in its proxy
statement for its 2017 annual meeting of shareholders, which was
filed with the SEC on April 7, 2017. These documents can be
obtained free of charge from the sources indicated above. Other
information regarding those persons who are, under the rules of the
SEC, participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available.
No Offer or SolicitationThis press release is
for informational purposes only and does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval with respect to the proposed
transaction between LHC Group and Almost Family or otherwise, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Non-GAAP Financial InformationThis press
release includes certain financial measures that were not prepared
in accordance with U.S. generally accepted accounting principles
(“GAAP”), including Adjusted EBITDA and Adjusted Earnings per
Share. The companies use these non-GAAP financial measures in
operating its business because management believes they are less
susceptible to variances in actual operating performance that can
result from the excluded items. The companies present these
financial measures to investors because they believe they are
useful to investors in evaluating the primary factors that drive
the companies’ operating performance. The items excluded from these
non-GAAP measures are important in understanding LHC Group’s and
Almost Family’s financial performance, and any non-GAAP measures
presented should not be considered in isolation of, or as an
alternative to, GAAP financial measures. Since these non-GAAP
financial measures are not measures determined in accordance with
GAAP, have no standardized meaning prescribed by GAAP and are
susceptible to varying calculations, these measures, as presented,
may not be comparable to other similarly titled measures of other
companies. Adjusted EBITDA of LHC Group and Almost Family is
defined as net income (loss) before income tax benefit (expense),
interest expense, depreciation and amortization expense, and
transaction costs related to previous transactions. Adjusted
Earnings per Share is defined as diluted earnings per share
adjusted transaction costs related to acquisition activities, net
of estimated tax benefit.
Contact:Investors:LHC
GroupEric Elliott Senior Vice President of Finance(337)
233-1307 eric.elliott@lhcgroup.com
Almost FamilySteven GuenthnerPresident and Principal Financial
Officer(502) 891-1000steveguenthner@almostfamily.com
Media:Schmidt Public Affairs Rebecca Reid (410)
212-3843
rreid@schmidtpa.com
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