Tenet Sells Home-Care Agencies to Amedisys

Amedisys Inc., which provides nursing services in patients’ homes, agreed Wednesday to buy 11 home-healthcare agencies from Santa Barbara-based Tenet Healthcare Corp. for about $19 million to expand into Mississippi and throughout the Southeast.

The cash purchase, which also includes two hospices, is expected to be completed by May 1, Baton Rouge, La.-based Amedisys said in a statement.

Amedisys said it expected the services to add about $28 million a year in revenue. The purchase is the company’s second-largest and will raise the number of home-care agencies it operates to 90 in 12 states. The new agencies are in Texas, Louisiana, Mississippi, Tennessee, Alabama, Georgia and Florida, the company said.

“It is a very good deal for them,” said Arthur Henderson, a Jefferies & Co. analyst in Nashville. “Home-health agencies affiliated with hospitals are very good businesses to buy because you already have a very good referral basis in place.”

Amedisys completed $22.8 million in financing in November by selling 1.9 million shares of its stock. Henderson said the company used some of the proceeds from that stock sale to make this purchase. Jefferies helped handle the financing for Amedisys.

Shares of Amedisys fell 6 cents to $19.99 on Nasdaq. Shares of Tenet rose 1 cent to $12.01 on the New York Stock Exchange.

“Before the purchase, we were in 11 states in the Southeastern United States,” said Amedisys Chief Operating Officer Larry Graham. “It gets us in Mississippi, which kind of rounds off our geographic footprint.”

In 1998, Amedisys bought 83 home-care operations from HCA Inc., then Columbia/HCA Healthcare Corp., for $24 million.

“A lot of hospitals have decided to exit the home-care business because they’re refocusing on their core business,” Graham said.

Tenet is selling some hospitals and other facilities to focus on more-profitable properties.

“The sale of these assets is part of our strategic focus on our 69 core hospitals, which will provide our platform for future growth,” Tenet Chief Executive Trevor Fetter said in a separate statement. “Home healthcare is not a significant part of Tenet’s business.”