Monday, July 21, 2014

Kindred Looks Increaaingly Desperate

StrangeTony,

Kindred's CEO Paul Diaz raised the offer for Gentiva to $17.25 per share.  A week ago Kindred said $16 but no higher without a date where Kindred gets to look at the goods.  Value, like beauty, is in the eye of the beholder.

Kindred's desperate offer matches that of a mysterious white knight, likely a leveraged buyout organization (LBO).  Firms mentioned as possible bidders include GTCR, Cressey & Co,, Formation Capital and KKR. 

Emergence of the mystery bidder left Kindred with a difficult choice: either walk away from Gentiva and watch a possible competitor buy a company it wanted and outflank it in the healthcare marketplace or swallow hard and raise its bid
The testosterone meter is dinging like an alarm clock.  Kindred punch thrown.  And the LBO/White Knight response?

Anonymous (from Gentiva)

Thursday, July 17, 2014

Gentiva's White Knight an LBO?


StrangeTony,

Gentiva's board leaked news of a White Knight offer:

The Board said it has received today a proposal from a recognized owner, operator and investor in the sector to acquire all of the outstanding shares of Gentiva common stock for $17.25 per share in cash (the "Alternative Proposal"). The Alternative Proposal is based on publicly available information and is subject to financing and due diligence, as well as final internal approvals and the execution of a definitive transaction agreement. The Board will review the Alternative Proposal carefully, in consultation with its financial and legal advisors, in due course. The Alternative Proposal was accompanied by support letters from major financial institutions, subject to customary conditions.
Is the sector as broad as healthcare or as specific as home health and hospice?  Gentiva purchased Harden from Capstar Partners, a leveraged buyout organization (LBO).  Will Capstar open wide and swallow Gentiva?

LBO's have a huge presence in healthcare.  KKR owned, operated and invested in HCA.  They also are the largest holder of Amedisys, recently rumored to be in merger talks with Gentiva.

Welsh, Carson, Anderson and Stowe consider healthcare their specialty niche.  The Carlyle Group owned two post acute care providers, ManorCare and LifeCare.  LifeCare sank under the stress of government reimbursement changes.

Mario Gabelli's hedge fund loaded up on Gentiva stock, but Gabelli does not promote himself as a health care operator.  He won't complain about a big payday courtesy of a leveraged deal.

Gentiva's board is yet to reveal the man or firm behind the White Knight offer but KKR would seem to be most likely candidate, based on what little information is available.

It's important to know which LBO firm is interested in order to assess the likelihood of their closing any deal.  Financing has been plentiful and dirt cheap for corporate deals.

Recall how cheap money caused homeowners to overbuy before the financial crisis.  It may result in a LBO firm overpaying for Gentiva.  The Gentiva board moved their knight, hinting that he's a greedy SOB. 

The testosterone meter read correctly.  It's Kindred's move in the brawl for control of Gentiva.  Doesn't this just warm the hospice heart?  

Anonymous (from Gentiva)

Monday, July 14, 2014

Kindred Offers $16 per share for 14.9% of Gentiva


StrangeTony,

Kindred Healthcare upped their offer to $16 a share for the maximum amount of Gentiva stock under a board adopted poison pill.  Kindred started with a $14 offer, bumped it up to $14.50 before their latest raise.  This plays into Gentiva's meme of Kindred taking advantage of their undervalued status.

Kindred tried to frame this issue in their favor by asking Gentiva's board to explain why they deserve more.  Gentiva consistently refused to come to the negotiating table and I expect that to continue.

Neither party has revealed the extent to which they have Wall Street's support.  Both sides employ an army of supporters to work behind the scenes on the deal.  Kindred remains on offense with Gentiva playing defense. 

As for value creating or destroying, both companies employ management practices that tear people down and destroy quality.  Both cheated employees of fair pay and government payors in the provision of care.

Management language has little true meaning at Gentiva, in that it is not lived.  Leaders' words are used to double bind people into robotic, reflexive responses.  A mind is a terrible thing to waste, but a heart is an awful thing to break.  Gentiva leaders use fear and intimidation to do both.

I expect Kindred offers a slightly different version of management manipulation, especially given their behavior in pursuing of Gentiva.  "We will not be deterred..."

Gentiva will eventually implode under its obscene debt load and management ineptness.  I've seen from the inside Gentiva's sorry employee relations and declining customer service.  Develeraging by overpaying for companies and destroying their value is not a winning strategy.  Yet Gentiva may punch this losing lottery ticket yet again with Amedisys.

Will Kindred take the hint and walk?  The testosterone meter says no.

Anonymous (from Gentiva)

Tuesday, July 8, 2014

Who Am I?

StrangeTony,

You likely noticed comments in late June that made a number of points:

Why is the senior management group actually spending money to investigate who owns this blog and who you are when they should be running the company? 

Apparently you've gotten under the skin of someone or several someones at Gentiva. 

The truth hurts I guess or the truth will set you free...

Who am I?  I am the nurse who knows deep in their heart that hospice is the best work I can do.  I am the chaplain who ministers to patients and staff because God called me to serve.  I am the nurse aide who shares love and laughter with my patients.  I am the bereavement counselor who holds a shattered heart in my hand until it starts beating again.  I am the volunteer coordinator who knows how a friend eases pain, physical or emotional.  I am the secretary who mobilizes resources that doctors, nurses and patients need.  I am the receptionist who cares for people I see and voices I hear.  I am the doctor who answers calls in the middle of the night because pain doesn't sleep.  I am the employee Gentiva CEO Tony Strange thanks at the end of each investor presentation.

Why not just solve the problems in the company? 

Those who can hear hear.  Those who can't, well, they seek identity and retribution.

Anonymous (from Gentiva)

Saturday, July 5, 2014

Kindred-Gentiva War Continues


StrangeTony,

Kindred's pursuit of Gentiva continued with two recent SEC filings.  The first was a response to Gentiva's board declining Kindred's enhanced $14.50 offer.  In the letter Kindred's President stated:

In order to send a strong signal to the Gentiva board, Kindred continues to urge all Gentiva shareholders to tender their shares in support of its value enhancing offer. If a majority of the outstanding Gentiva shares are tendered prior to July 16, 2014, Kindred intends to amend the offer to seek to purchase 14.9% of Gentiva’s outstanding shares, positioning Kindred as Gentiva’s largest shareholder. 

Two days later Kindred extended the tender to July 23, 2014.   They did so to give the FTC time to review the proposed deal for antitrust purposes. 

Kindred labels their offer "value enhancing," while characterizing Gentiva's possible deal with Amedisys as "value destroying."  Both companies, and their legions of hired guns, are selling Wall Street hard on their perspective.  Wall Street values greed, so this development is hardly inspiring.

Huge resources and leadership attention are going to fight off Kindred and pursue other postacute care companies, like Amedisys.  The war has a month to go, maybe more.  Power, control, growth at all costs and greed have not made hospice better.  I'd hate to think what squaring it might do.

Anonymous (from Gentiva)

Friday, June 27, 2014

Will Kindred Be Deterred by Gentiva-Amedisys Combination?


StrangeTony,

The machinations continue.  See letter below.

Anonymous (from Gentiva)

June 27, 2014

Rodney Windley
Executive Chairman
Gentiva Health Services, Inc.
3350 Riverwood Parkway, Suite 1400
Atlanta, GA 30339

Tony Strange
Chief Executive Officer, President and Director
Gentiva Health Services, Inc.
3350 Riverwood Parkway, Suite 1400
Atlanta, GA 30339

Dear Rod and Tony:

We are writing to you, and the entire board of directors of Gentiva, regarding the reports in the marketplace that Gentiva may be pursuing an acquisition of Amedisys (NASDAQ:AMED). We are concerned that, while refusing to discuss Kindred’s highly attractive cash offer, the Gentiva board may be pursuing a course that would disenfranchise its shareholders through a value-destroying and highly levered transaction with Amedisys.

We believe it is incumbent on the Gentiva board, in fulfilling its fiduciary duty to its shareholders, to sit down with Kindred immediately and explore our value-enhancing proposal before entering into any agreement that could impair the value of, or preclude, a Kindred-Gentiva combination. As you know, our all-cash offer of $14.50 per share represents a 70% premium to Gentiva’s closing share price on May 14, 2014 (the day prior to Kindred making its proposal public), and would deliver immediate and certain value to Gentiva shareholders. In addition, we have expressed a willingness to offer cash and stock in a structure that would allow Gentiva shareholders to participate further in the synergies and upside potential of the proposed combination (which many Gentiva shareholders have told us they would prefer).

We have also indicated that we would be prepared to consider increasing the value of our offer if Gentiva were to commence discussions and demonstrate additional value. Even before the Amedisys reports were brought to our attention, we listened with interest to the remarks of Gentiva’s Chief Financial Officer, Eric Slusser, at the Wells Fargo Healthcare Conference, particularly his statements indicating that a vertically integrated post-acute care provider would be best positioned to deliver effective care in the long run. This is one of the many reasons why we believe the proposed combination of Kindred and Gentiva makes so much sense.

A Kindred-Gentiva combination would offer the benefits of vertical integration and position our combined company to provide integrated post-acute care at lower cost to a much broader range of patients. As both Gentiva and Amedisys focus exclusively on home health and hospice care, such a combination would not similarly advance the interests of patients or position Gentiva at the forefront of changes to the U.S. healthcare delivery system. We note that Kindred has an outstanding track record of successfully integrating acquisitions, including most recently RehabCare and Senior Home Care.

In contrast to Kindred, both Gentiva and Amedisys have experienced integration challenges in the past. We believe the combination of Kindred and Gentiva would have minimal execution risk and a high likelihood of swift and seamless integration. Kindred remains firmly committed to the proposed combination with Gentiva, but we take our responsibilities to our shareholders very seriously.

If Gentiva were to move forward with any other transaction, Kindred would review the outstanding $14.50 cash offer and consider revising or withdrawing it. As we have stated repeatedly over the last six weeks, we would strongly prefer to work with the Gentiva board to reach a negotiated agreement. We have repeatedly requested meetings with you, and are prepared to meet with you and your advisors as soon as is practicable.

We once again call upon your board to immediately commence good-faith discussions with Kindred, so that our companies can move forward with a combination that serves the interests of all our stakeholders.

Sincerely, Paul J. Diaz
Chief Executive Officer
Kindred Healthcare, Inc.

cc: Phyllis R. Yale, Chair of the Board

Wednesday, June 25, 2014

Generic's Management by Manipulation

Anonymous,

LinkedIn ran two pieces on bad bosses.  Together they nailed the horrific boss one our staff suffered under for years.  One article identified:

1.  The boss lies for personal gain or to discredit others.
2.  They're envious of subordinates, peers and higher ups.
3.  Their promises are repeatedly empty.
4.  They blame others to mask their shortcomings.
5.  They fail to manage conflict and bad behavior.
6.  They send their team into harm's way at the whim of top management

The other cited:

7.  They have others fire their direct reports
8.  They make a decision in private and fail to protect their people in public if it doesn't work.
9.   They tell people in private what they believe the subordinate wants to hear.  Such inconsistent messaging is an attempt to control people by manipulation.
10.  They will not have face-to-face meetings to resolve conflict.
11.  They slip in a negative comment about another co-worker in every conversation.
12.  They don't allow people to get to know them and they don't invest time getting to know their people.  Everything is shallow and image focused.  Relationship depth is non-existent.

Given what you've shared in the past about Gentiva I bet this hits aspects of your branch manager.  I am interested in your thoughts and reactions. 

StrangeTony