Merger would make Genesis publicly traded once more

Posted: August 21, 2014

Genesis HealthCare Corp.'s proposed merger with Skilled Healthcare Group Inc., if completed as expected early next year, will mark the Kennett Square firm's return to the ranks of publicly traded companies after a seven-year absence.

Genesis, which traces its roots to a company that was founded in that Chester County town in 1985 and had a meteoric acquisition-fueled rise in the 1990s until heavy debt and government-payment cuts forced it into bankruptcy in 2000, was taken private in 2007 for $1.9 billion.

Chief executive George V. Hager Jr., who has worked for Genesis since 1992, welcomed the company's to the stock market after being owned by Formation Capital, of Alpharetta, Ga., since 2011. Before that, a second private-equity firm was involved as well, beginning in 2007.

"The ownership of Formation Capital was extremely constructive and positive and supportive of everything we tried to accomplish over these seven years, but I do think a more traditional governance structure in the public domain will help us look forward strategically, and have a longer-term focus on the growth and development of the company," Hager said.

Under the deal announced after the stock market closed Monday, Genesis will begin trading on the New York Stock Exchange when the all-stock deal closes next year.

Genesis, with 409 facilities in 28 states, had $4.7 billion in revenue in the year ended June 30. During that period, Skilled Healthcare had $831 million in revenue from 95 facilities in eight states.

Terms were not disclosed, but current Genesis shareholders are expected to own 74.25 percent of the combined company. The remainder will be owned by current shareholders of Skilled Healthcare, which is based in Foothill Ranch, Calif.

Hager will be CEO of the new company, which will operate under the Genesis name and be based in Kennett Square. Pennsylvania and New Jersey have the largest concentration of Genesis facilities. More than 17,000 of Genesis's more than 80,00 employees work in those two states.

Hager said the deal would give Genesis scale, not in the broad sense, but in terms of "density in markets that we find attractive, typically around large urban markets."

For example, Skilled is strong in key Southern California metro areas, Denver, and Albuquerque, N.M., Hager said.

"We want to be the provider of choice as hospitals and managed-care payers are thinking about how they can discharge the patients more quickly out of the acute-care setting," Hager said.



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