Gentiva to divest 69% interest in CareCentrix unit for $147 million

Gentiva will receive $84 million in cash and a $25 million interest-bearing seller note upon the closing of the transaction. In addition, Gentiva will retain 31% of the capital stock in CareCentrix having an ascribed value of $26 million. Of the $84 million in cash proceeds, $26 million will be retained by the company and be available to fund future acquisitions. The remaining cash proceeds will be used to repay term loan debt and reduce the company’s leverage ratio.

In addition to the $135 million in consideration paid to Gentiva in the form of cash, the seller note and retained capital stock, the $147 million total value of the transaction also includes an aggregate of $12 million representing capital to be invested in CareCentrix as well as transaction- related costs. Pending necessary approvals, the transaction is expected to close by the end of the third quarter of 2008.

Concurrent with the announced divestiture, CareCentrix has signed an extension of its contract with CIGNA HealthCare, which will provide for the continued coordination and delivery of homecare services to CIGNA members through January 2014. The extension amends a previous agreement that was scheduled to expire on January 31, 2011.

Ron Malone, chairman and CEO of Gentiva, said: “Separating CareCentrix enables us to devote Gentiva’s full resources and attention to the extraordinary growth potential in our home care business, including our industry-leading specialty programs. We think that CareCentrix and its many talented employees will thrive under Water Street’s direction, and we look forward to participating in that success via our continued equity investment.”