GranCare and Evergreen Healthcare have agreed to merge in a $155 million deal, forming a chain of 133 long-term-care facilities with more than 17,000 beds in 15 states.
Officials said the deal will complement both companies.
"This is a no-brainer for GranCare to put pharmacies services into the Evergreen facilities," said Greg Moerschel, senior healthcare analyst for Chicago Corp., a regional brokerage firm. GranCare has one of the nursing home industry's largest pharmacy subsidiaries, with 88,000 customers. Evergreen was using an outside firm to service most of its 79 nursing home pharmacies, he said.
"The value of the companies is increased by putting them together,"Moerschel added.
The deal is the latest in a series of mergers in the long-term-care industry and will create the nation's sixth-largest publicly traded long-term-care provider, officials said.
"You have to have a strategic concentration and become part of acute-care hospital networks," said Kay Brown, GranCare's senior vice president.
The Evergreen acquisition follows GranCare's recent buy of Cornerstone, which manages geriatric and subacute units in hospitals, from Healthtrust.
Under the agreement, 0.775 of a share of Atlanta-based GranCare will be exchanged for each share of Indianapolis-based Evergreen. Based on 12.6 million shares of Evergreen common stock, Evergreen shareholders will own 35% of the merged company.
GranCare will take on $40 million in Evergreen debt, giving the merged company about $250 million in debt.
For the first quarter ended March 31, GranCare reported profits of $3.7 million, or 26 cents per share, on revenues of $144 million. For the nine-month period ended March 31, Evergreen posed net income of $7.8 million, or 63 cents per share, on revenues of $139.1 million.
The deal is expected to be completed Aug. 1.