Centerre Healthcare Corporation

Centerre Healthcare Corporation was a privately held, national company dedicated to operating inpatient rehabilitation hospitals. At the time of its 2014 merger agreement with Kindred Healthcare, it operated 11 inpatient rehabilitation hospitals with 612 beds, developed and run in partnership with acute care hospital systems through joint ventures, and employed approximately 1,600 people. Only its management team was based at its Franklin, Tennessee headquarters.

The company had two additional hospitals totaling 90 beds under construction and scheduled to open in 2015, plus a pipeline of further potential hospitals at various stages of development. Three of its 11 operating hospitals opened in 2014 and two opened in 2013, so its facility portfolio was still maturing at the time of the transaction. All of Centerre's hospitals were leased, with expected rent expense of roughly $20 million in 2014.

In November 2014, Kindred Healthcare announced a definitive merger agreement to acquire Centerre for approximately $195 million in cash; the deal closed and was announced as completed in January 2015. Centerre's hospitals were folded into a new Kindred business line, Kindred Hospital Rehabilitation Services, which combined RehabCare, Kindred's rehabilitation hospitals and Centerre.

Business model

Centerre developed and operated inpatient rehabilitation hospitals, structuring facilities as joint ventures with acute care hospital systems that held minority ownership interests. Its hospitals were leased rather than owned, with approximately $20 million in expected 2014 rent expense, and minority interest expense attributable to hospital partners was approximately $14 million in 2014.

Revenue was generated from operating inpatient rehabilitation hospitals; 2014 revenues were expected to be approximately $200 million with EBITDAR of approximately $48 million before deducting $14 million of minority interest expense for hospital partners' interests.

Traction

Operated 11 inpatient rehabilitation hospitals with 612 beds and about 1,600 employees, with two more hospitals (90 beds) under construction for 2015 opening; expected 2014 revenues of approximately $200 million and EBITDAR of approximately $48 million.

Latest developments

Kindred Healthcare announced a definitive merger agreement to acquire Centerre for approximately $195 million in cash on November 12, 2014. The FTC granted early termination of the Hart-Scott-Rodino waiting period on December 24, 2014, and Kindred announced completion of the acquisition on January 2, 2015. Cain Brothers served as financial advisor and Bradley Arant Boult Cummings LLP as legal advisor to Centerre.