Plan A fell through for Coram Healthcare Corp. and Lincare Holdings, but the two home-care companies have quickly moved on to Plan B.
Last week, the two companies announced their mutual agreement to call off a planned $1.1 billion merger that would have formed the nation's largest alternate-site healthcare provider as well as the second-largest home respiratory firm.
"We strongly believed in the strategic reasons for the merger, which we explained when we announced it; but from a financial viewpoint, it no longer makes sense," the companies said.
However, both signed a letter of intent to cooperate in marketing their services in certain metropolitan areas, which haven't been specified.
By combining efforts in areas with high managed-care penetration, Coram and Lincare will still be responding to the consolidation frenzy that has seized the home healthcare market.
However, the two will not be offering a fully integrated set of services, as they originally planned.
Last month, Clearwater, Fla.-based Lincare put the deal on hold when its board requested additional information from Coram.
Industry observers then predicted that the deal would not go through, especially in light of Coram's worse-than-expected financial performance in the first quarter. The price of Coram's stock has dropped about 50% since the deal was announced.
Also, Denver-based Coram is still grappling with the untested combination of the four businesses that merged last year to form the company.