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The separation of CareCentrix positions Gentiva to sharpen its focus onaccelerating growth in its core home care and hospice provider businesses,both organically and through acquisition. Gentiva will receive $84 million incash and a $25 million interest-bearing seller note upon the closing of thetransaction. In addition, Gentiva will retain 31% of the capital stock inCareCentrix having an ascribed value of $26 million. Of the $84 million incash proceeds, $26 million will be retained by the Company and be available tofund future acquisitions. The remaining cash proceeds will be used to repayterm loan debt and reduce the Company's leverage ratio.
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The Company will host an investor conference call today, Thursday, August21, 2008 at 10:00 a.m. EDT to discuss the announcement in more detail.Details for accessing the call appear at the end of this news release.
"Separating CareCentrix enables us to devote Gentiva's full resources andattention to the extraordinary growth potential in our home care business,including our industry leading specialty programs," said Gentiva Chairman andCEO Ron Malone. "Going forward Gentiva will generate 95% of its revenues fromhome health and hospice services. By separating CareCentrix at this juncture,we are both unlocking value for shareholders today and preserving thepotential to deliver future value as Water Street, an accomplished healthcareinvestor, provides the expertise, resources and relationships to helpCareCentrix maximize its potential. We think that CareCentrix and its manytalented employees will thrive under Water Street's direction, and we lookforward to participating in that success via our continued equity investment."
CareCentrix was started by Gentiva in 1996 and is today a leading nationalprovider of ancillary care benefit management services for major managed careorganizations. Kip Kirkpatrick, a partner with Water Street, commented, "Weare excited that Gentiva has selected Water Street as the partner best suitedto support its corporate goals and strategically grow CareCentrix.CareCentrix has distinguished itself by helping organizations better managehealthcare costs and enhance patient care. We believe CareCentrix can play aneven bigger and more impactful role in achieving positive outcomes as moreorganizations utilize home health products and services as a primary approachfor providing quality, cost-effective care. Our objective is to build onCareCentrix's strong foundation and drive greater value by expanding itsservices to more payers and providers."
CareCentrix Senior Vice President Tom Boelsen added, "The separation fromGentiva is both recognition of what we have built together, and an importantmilestone in charting CareCentrix's future growth. With Water Street'ssupport, we will gain access to additional resources, strengthen ourtechnology and infrastructure, and leverage marketplace relationships. All ofthis will further improve our ability to serve customers, our providerancillary care network and ultimately our patients. We're looking forward toworking with the Water Street team, and to continuing to deliver results thatbenefit Gentiva as well."
Transaction Terms, Financial Outlook and Related Information
In addition to the $135 million in consideration paid to Gentiva in theform of cash, the seller note and retained capital stock, the $147 milliontotal valu
