VITAS Completes the Previously Announced Purchase of Assets of Covenant in Florida and Alabama

Rhea-AI Summary

VITAS Healthcare , a subsidiary of Chemed , completed the purchase of hospice operations and an assisted living facility from Covenant Health and Community Services for $85 million. The transaction covers Florida and Alabama markets and closed on April 17, 2024.

Insights

Healthcare Merger and Acquisitions Analyst

VITAS Healthcare's acquisition of Covenant's hospice operations represents a strategic expansion in the healthcare services sector. This move diversifies VITAS's portfolio and is likely to increase their market share in both Florida and Alabama. It's important to assess the transaction's synergy potential—how the combined operations may lead to cost savings or revenue enhancements. Given that VITAS is a subsidiary of Chemed, a company that operates in distinct businesses, one being end-of-life care and the other in plumbing, this acquisition bolsters their position in the healthcare space without diluting their focus.

The purchase price of 85 million needs to be weighed against the long-term revenue projections for the acquired assets to determine if the investment will generate an adequate return. Investors should monitor how this capital allocation compares with industry multiples and the existing profitability of the hospice operations. It's also important to consider how this acquisition could affect Chemed's overall financial health, such as changes in debt levels or cash flows.

Financial Analyst

When considering the impact on Chemed's stock (NYSE: CHE), investors should focus on the earnings accretion that this acquisition could bring. Typically, these types of transactions can create value when they lead to earnings growth that outpaces the cost of capital. The operational efficiencies and increased market penetration are key factors that can contribute to this. For a retail investor, understanding this dynamic is important for assessing the potential of their investment to grow over time.

Moreover, the timing of the deal's closure and integration will be influential on the short-term performance of the stock. Any operational disruptions or integration challenges could potentially offset the anticipated benefits of the transaction. Therefore, close attention should be paid to Chemed's upcoming earnings calls and management commentary for updates on the integration process and any revisions to financial guidance.

CINCINNATI--(BUSINESS WIRE)-- VITAS Healthcare Corporation, a wholly-owned subsidiary of Chemed Corporation (“Chemed”) (NYSE: CHE) announced the completion of the previously announced purchase of all hospice operations and an assisted living facility from Covenant Health and Community Services, Inc. d/b/a/ Covenant Care (“Covenant”) for an aggregate purchase price of $85 million. The transaction is structured as an asset purchase.

Covenant’s hospice operations span the panhandle of Florida and Alabama, specifically including the Tallahassee, Marianna, Fort Walton Beach, Panama City, Crestview and Pensacola markets in Florida, and the Dothan and Mobile/Daphne markets in Alabama.

The transaction, which was announced on March 13, 2024, closed effective April 17, 2024.

Listed on the New York Stock Exchange and headquartered in Cincinnati, Ohio, Chemed Corporation (www.chemed.com) operates two wholly owned subsidiaries: VITAS Healthcare and Roto-Rooter. VITAS is the nation's largest provider of end-of-life hospice care and Roto-Rooter is the nation’s leading provider of plumbing and drain cleaning services.

Statements in this press release or in other Chemed communications may relate to future events or Chemed's future performance. Such statements are forward-looking statements and are based on present information Chemed has related to its existing business circumstances. Investors are cautioned that such forward-looking statements are subject to inherent risk that actual results may differ materially from such forward-looking statements. Further, investors are cautioned that Chemed does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240417493903/en/

Michael D. Witzeman

(513) 762-6714

Source: Chemed Corporation

FAQ

What is the total purchase price for the assets acquired by VITAS Healthcare from Covenant Health and Community Services?

The total purchase price for the assets acquired by VITAS Healthcare from Covenant Health and Community Services is $85 million.

When did the transaction between VITAS Healthcare and Covenant Health and Community Services close?

The transaction between VITAS Healthcare and Covenant Health and Community Services closed on April 17, 2024.

Where are Covenant's hospice operations located that were acquired by VITAS Healthcare ?

Covenant's hospice operations acquired by VITAS Healthcare are located in the panhandle of Florida and Alabama, including markets like Tallahassee, Marianna, Fort Walton Beach, Panama City, Crestview, Pensacola in Florida, and Dothan, Mobile, Daphne in Alabama.