HealthSouth To Acquire Encompass Home Health And Hospice In $750 Mln Deal

(RTTNews) - Hospitals operator HealthSouth Corp. (HLS) agreed Monday to acquire privately-held EHHI Holdings, Inc., which owns Encompass Home Health and Hospice, for about $750 million. The deal, approved by the boards of directors of both companies, is expected to close before the end of 2014.

"One of our stated strategic objectives has been to expand into home health, assuming we were able to acquire a high-quality, scalable asset that was capable of consolidating the highly fragmented home health industry. Today we are very pleased to announce the acquisition of the company we believe fits these requirements," HealthSouth President and CEO Jay Grinney said in a statement.

Healthcare-focused private investment firm Cressey & Co. LP currently owns Encompass, which is the fifth largest provider of Medicare-focused, skilled home health services in the U.S. It offers home health, hospice, paediatric and speciality program services to its clients.

Encompass operates in 140 locations across 13 states, with about 5,000 employees making more than 2.1 million patient visits annually.

Encompass was acquired in August 2007 by Thoma Cressey Bravo, formerly Thoma Cressey Equity Partners, from Apax Partners in 2007 for an undisclosed amount. Thoma Cressey Bravo then split into two firms in 2007, Cressey & Co. and Thoma Bravo, with Cressey managing the Encompass investment and other health-care portfolio companies.

Birmingham, Alabama-based HealthSouth, the inpatient rehabilitation hospitals operator, said Encompass' expertise in home health complements its leadership position in inpatient rehabilitation.

The combined entity will be highly competitive in the evolving healthcare delivery system by offering both facility-based as well as home-based post-acute services on a comprehensive, coordinated basis.

The Wall Street Journal reported exactly a month ago that Cressey & Co. were exploring a sale of its Dallas-based nursing services group Encompass Home Health.

HLS closed Friday's regular trading session at $38.25, down $0.75 on a volume of 0.34 million shares.