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Gentiva expects strong Q2 as it continues to spurn Kindred offer


By Rachel Landen
Posted: July 9, 2014 - 3:00 pm ET
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Gentiva Health Services on Wednesday announced expectations for a stronger second quarter that the Atlanta-based home health, hospice and community services provider says validates its rejection of an unsolicited takeover offer from Kindred Healthcare.

In an investor presentation submitted to the Securities and Exchange Commission, the company cited operational efficiencies from its integration of Harden Healthcare, acquired last October, and other investments, as well as favorable industry trends.

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Gentiva, which plans to release its second-quarter financial results Aug. 5, told investors that quarterly net revenues should be at least $496 million, up 1.7% or more from $487.5 million in the first quarter of 2014. Also, adjusted earnings before taxes, interest and depreciation expenses (EBITDA) is expected to increase 33% from $39 million in the first quarter to $52 million in the second. Adjusted income attributable to stockholders on a diluted basis is anticipated to equal or exceed $0.33 per share, up 60.6% from $0.13 per share reported in the first quarter.

“Gentiva’s continued momentum in the second quarter of 2014 reflects the success of the changes and strategic investments the company has made over the past year,” Ron Windley, executive chairman of Gentiva, said in a release. “We strongly believe that today’s announcement provides further evidence that Gentiva’s strategy to increase stockholder value is working, reinforcing that Kindred’s offer grossly undervalues Gentiva and is not in the best interest of Gentiva stockholders.”

Post-acute care provider Kindred made an unsolicited offer in April to acquire Gentiva for $13 per share in cash and Kindred common stock. Gentiva’s directors unanimously rejected the offer before Kindred made another offer at $14 per share. Again, Gentiva unanimously rejected the slightly sweetened proposal.

Then in June, Kindred issued a conditional tender offer for Gentiva’s shares at $14.50 per share in cash, but the Gentiva board has since rejected that offer as well, stating that the “opportunistic and conditional proposal significantly undervalues Gentiva.” It was timed, the board says, to take advantage of a temporary decline in its stock price following the release of its disappointing 2013 fourth-quarter earnings before the company could realize benefits from the Harden acquisition. This month, the stock has been trading in the $15 range.

In reaffirming its full-year earnings guidance of net revenues of $1.9-$2.1 billion, adjusted EBITDA of $177 million-$195 million, and adjusted income of $0.85-$1.15 on a diluted per share basis, management recommended that stockholders do not tender their shares to Kindred. That offer expires July 16.

Follow Rachel Landen on Twitter: @MHrlanden


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