Sunday, September 14, 2014

Kindred Talks Gentiva in NYC


Kindred CEO Paul Diaz spoke on September 10 at the Morgan Stanley Global Healthcare Conference.  He had this to say about his firm's pursuit of Gentiva:

I can't obviously comment on the Gentiva transaction specifically, other than that we continue to do our work and the Gentiva management team has been, you know, really good and forthcoming.  They've obviously make a lot of progress here in the last couple of quarters, so that excites us and sort of reinforces the investment thesis as we see it.  But, whether the investment thesis is through a Gentiva transaction or through other opportunities in the marketplace, as I referred to before, we just see tremendous opportunities to extend the recovery period, prevent re-hospitalizations and to get on the front side of care for the most critically ill patients in America, chronic patients.  Those patients joining the Medicare program each day through home based models, through medical homes if you will.  And there's an enormous opportunity also as we have a better dialogue about end of life care and the opportunities for palliative care through hospice and palliative care services.  So a logical extension of our service continuum is home based care and home based care models.

We view Gentiva and the other acquisitions in our pipeline today, you know as a great opportunity to really more aggressively grow.  

It's about growth, capital deployment.  And we see lots of opportunities in addition to Gentiva to grow, you know over the next several years.
Gentiva is "just one path" in Paul Diaz's strategic and financially accretive future.



Kindred has $100 to $300 million to put to work in buying home health and hospice providers.  Diaz is excited about Gentiva, but can pivot.  It's but one way for Kindred to grow.

The Ides of September near and with it a Gentiva board decision on the winning bidder looms.  Will debt markets hold for the deal to close?  The Morgan Stanley representative did not speak to that. 

Wednesday, September 10, 2014

Gentivaisms

StrangeTony,

At Gentiva:

1.  We grow by shrinking.
2.  We listen to our employees by not asking for their opinion, ignoring their words when offered anyway and by firing anyone who dares to speak out.
3.  We invest in people who turn over quickly.
4.  We show our value of staff by cutting positions and reducing hours.
5.  We support employees dealing with stressful work by cutting the rate employees earn paid time off, hiding it deep in series of policy updates.
6.  Our employees, our most valuable asset, get no raises most years
7.  We take a long term approach by selling out to the highest bidder
8.  We manage by whim & impulse, delegating blame when things go poorly.
9.  We focus on the big picture by micromanaging.
10.  We prioritize image management over substance.
11.  Our Human Abuse Department is unparalleled and leaves high marks.
12. We provide exceptional service which is a best mediocre.

This leads to the famous quote by Astronomer Carl Sagan:

"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.”

My site is deep in the bamboozle with layers of charlatan's imposing their distorted will.  I don't think this will end with a buyout.  Charlatans will have new executives/investors to bamboozle.  Meanwhile, due diligence is killing us.

Anonymous (from Gentiva)

Sunday, September 7, 2014

Gentiva Insiders to Sell All at Once?

StrangeTony,

The looming sale of Gentiva to Kindred or an anonymous investor will give insiders the chance to profit handsomely from their stock holdings.  Investors expect the impending deal to come in higher than $17,25 per share, the last publicly shared bid by both parties.

Kindred would jettison much of Gentiva's senior management team to achieve cost savings, which explains the cold shoulder CEO Tony Strange and the board have given Kindred since its first paltry offer of $13.  I assume the anonymous investor would keep Gentiva's management team in place.  For this reason insiders are cheering for the white knight.

In this scenario senior leaders and board members could roll their equity into the deal, effectively becoming part owners with the anonymous investor.  If not, they'll have a big payday, get to keep their jobs and have a chance to earn an equity stake in the new company, which I assume will be private.

Gentiva is already highly leveraged, having overpaid and over borrowed for both Odyssey and Harden.   "Due diligence" means conversations with senior management on making the deal work for the buyer.  How much additional debt will Gentiva be saddled with?  How much will the company's interest expense increase?  Will the buyer charge the company millions in deal fees and annual management fees? 

Money to pay interest and fees will need to come from somewhere.  That means more operational cuts for home health agencies and hospices (as if there already hadn't been enough).  Anyone hurt by Gentiva leaders' polishing the company for maximum sale price should give our leaders the feedback they deserve.  Comments anyone on the state of leadership at Gentiva?

Anonymous (from Gentiva)   

Thursday, August 28, 2014

Gentiva's Labor Day


StrangeTony,

Thought your readers might enjoy these in honor of the upcoming Labor Day weekend.  Gentiva's overall rating on Glassdoor fell by 12% from six months ago, The Employee Relations bar continues its free fall at Gentiva.  Then again, these could be Human Abuse stretch goals.  How many employees were laid on the rack this week?

Anonymous (from Gentiva)

Monday, August 25, 2014

Fawning over Tony


StrangeTony,

The Gentiva Board of Directors, the group that will decide who wins the company, said this a few months ago:

In nominating Mr. (Tony) Strange for re-election as a director, our Board of Directors focused on his leadership and execution as our chief executive officer in growing Gentiva, his driving and integrating significant acquisitions by Gentiva and his setting and communicating the proper cultural and behavioral tone as important attributes and experience for his continuing to serve as one of our directors. 

It's hard to see how Tony grew hospice.  He finally confessed to Wall Street analysts he didn't have the key to unlock hospice marketing.  The Harden acquisition resulted in many hospices closing via a "branch rationalization."

The proper cultural and behavioral tone flowed down to the site level where we experienced no raises for years, until the paltriest crumb fell from the executive table.  However, we're back to no raises again.  Apparently we did not show enough gratitude for the morsel senior leaders tossed our way.

Strange does thank employees at the end of each investor call for what we do on a daily basis to enrich him and those who will decide our fate in the buyout.  I imagine all 42,000 Gentiva employees saying in unison, "Our pleasure!"

Everything about Gentiva is exceptional and it starts at the top.  I frequently take exception to them and their myopic actions.  Our leaders are unusual, uncommon, atypical and abnormal.  I'll add another "a word", abysmal.  It's the outcome of a health care world with the absolute wrong priorities.   

Anonymous (from Gentiva)

Thursday, August 21, 2014

Gentiva Winner Should be Revealed by Ides of September


StrangeTony,

Two bidders remain for Gentiva, Kindred and an unnamed investment firm.  They are in due diligence at the moment sharpening their pencils for a possible higher bid.  Benzinga reports that Kindred may have the upper hand. 

They suggest the unnamed investment firm is Formation Capital. owner of long term care provider Genesis.  Genesis is in the process of merging with Skilled Healthcare in a stock only deal.  Benzinga's story believes this stock deal would consume Formation Capital's time and resources, making it more likely Kindred will win Gentiva.

A stock for stock deal doesn't seem complex.  It does not require arranging any debt to fund the combination.  It's more like a merger than an acquisition.

Formation Capital has five unrealized affiliates, all in the post acute health care space.   Formation does not need to combine Gentiva with Genesis.  It could acquire Gentiva and keep it a stand alone company.  It could roll in its existing hospice and home health companies, LifeChoice Hospice (seven hospices) and Millenium Home Health (twelve home healths), which have nothing to do with Genesis.

Gentiva considered calling its higher interest debt in September 2014 and arranging lower rate financing.  It wanted to acquire other businesses in the hospice, home health and community care space.    Conceivably, Gentiva could remain a wholly owned Formation affiliate and fulfill this previously stated vision.

What if the unnamed investment firm is not Alpharetta based Formation Capital?  That means its back to the bidder with the deepest pocketbook and ability to raise debt.  

Gentiva senior leaders would love to be acquired by an investor that believes in them and their vision.  That sole criteria would give the unnamed investor an upper hand in the Gentiva boardroom.  The Ides of September should reveal Gentiva's winner.  Expect lots of silence until then.

Anonymous (from Gentiva)

Thursday, August 14, 2014

Gentiva Under Justice Department Investigation

StrangeTony,

Gentiva made the financial news:

On or about June 19, 2014, the Company received a Civil Investigative Demand from the U.S. Department of Justice, Western District of Missouri, under the federal False Claims Act requesting complete medical records for 14 hospice patients and other documents of Hospice Care of the Midwest, L.L.C., a subsidiary of Harden Healthcare Holdings, LLC (“Harden Holdings”), for the period from January 1, 2009 through June 19, 2014. The Company is in the process of complying with the demand for documents and is cooperating with the investigation.
What a difference ten days made in the telling of a prior story:

On or about June 9, 2014, Iowa Hospice, L.L.C., a subsidiary of Harden Holdings, received a Subpoena Duces Tecum (“Subpoena”) from the Office of Investigations, Kansas City Regional Office of the Office of Inspector General of the Department of Health and Human Services. The Subpoena requests complete medical records for 17 hospice patients and other documents of Iowa Hospice, L.L.C. for the period from January 1, 2007 through June 9, 2014. Harden Holdings is in the process of complying with the Subpoena and is cooperating with the investigation.

I wasn't sure there were any Harden Hospices left, given Gentiva acquired 69 then closed 50.  At least two remain and those are being investigated.

Anonymous (from Gentiva)