Why Kindred Healthcare is Buying Gentiva for $1.8 Billion
Kindred Healthcare Inc. (NYSE: KND) and Gentiva Health Services Inc. (NASDAQ: GTIV) have reached a definitive agreement under which Kindred will acquire all outstanding shares of Gentiva common stock for $19.50 per share.
The cash and stock deal was valued at $1.8 billion, including the assumption of net debt. The companies expect the closing of the transaction to occur in the first quarter of next year.
Under terms of the agreement, Gentiva shareholders will receive $14.50 per share in cash and $5 of Kindred common stock.
According to Kindred, the merger accelerates the development of an integrated approach to patient care, creating significant value for both companies’ patients, employees and shareholders.
“With Gentiva, we will expand the breadth of our offerings and our geographic footprint and enhance our presence in Kindred’s Integrated Care Markets to drive more efficient and cost-effective coordinated care across more communities,” said Benjamin A. Breier, President and Chief Operating Officer of Kindred Healthcare. “This combination strengthens our ability to serve patients across the full continuum of care – from the hospital to the home. Together we will create the industry leading provider of home based patient-centered care, solidifying our position at the forefront of the care delivery model that is preferred by patients and payers. As a combined company, we will continue to grow and help shape the American healthcare delivery system.”
In an issued news release, Kindred outlined both strategic and financial benefits of the combination. Improvements in care, stronger workforces and an increase in revenues were noted.
On a pro forma basis, the combined company is expected to generate annual revenues of approximately $7.1 billion and an operating income of $1 billion. Kindred also believes the acquisition of Gentiva will “immediately and significantly” accretive to earnings and operating cash flows.
“This merger represents a successful conclusion to a process in which, from the beginning, we have focused on maximizing value for Gentiva’s shareholders consistent with our board’s responsibilities while ensuring the future success of the company, said Rodney D. Windley, Executive Chairman of the Board of Gentiva. “The cash and equity structure of the transaction, which represents a 128 percent premium to Gentiva shares since Kindred’s offer became public, provides Gentiva shareholders with immediate value and the opportunity to participate in the potential growth and value creation of the combined company by virtue of their continued investment in Kindred stock. On behalf of our board and management team, I would like to express my deep appreciation to our employees across the country for their dedication and commitment to our patients and the families that we serve each and every day.”
Aligning with Kindred’s five-year strategic plan, the merger will create “the largest provider of integrated care in America,” according to Tony Strange, Chief Executive Officer of Gentiva.
A guide to labelling compliance for medical devices
Small medical device manufacturers often find themselves scrambling to achieve the necessary compliance and validation, risking costly mistakes.
Validating systems and processes including labelling, to ensure they are compliant with stringent regulatory standards is tough and can be expensive. Indeed, compliance with the EU’s Medical Device Regulation (MDR) will cost more than 5% of annual sales, according to 48% of 101 companies polled by the German company Climedo Health, in July and August 2020 about their MDR-readiness.
But if companies bungle the software validation process or put incorrect and uncompliant data on the labels themselves, the penalties are likely to be more severe than just making corrections. Health and safety may be put at risk and fines imposed for failing to comply. When it comes to compliance, they may become overwhelmed with regulations in other geographic regions that focus on device traceability, each with a unique device identifier (UDI-like) component to it.
On the validation front, companies may not be familiar with the software validation process and the multiple tests and documentation necessary for validation are demanding if companies only have a small IT team that is very busy.
Putting a plan in place
MDR-compliant labelling, however, brings with it certain requirements which differ from what is demanded under the FDA’s Unique Device Identification (UDI) system rules. Under MDR, for example, manufacturers must ensure the label specifically states the device is a medical one using an MD symbol in a box. This is only one of many stipulations that usually require redesigned labels.
Small medical device manufacturers who rely on time-consuming and error-prone manual or legacy labelling processes to facilitate these label updates run the risk of mislabelling which can lead to non-compliance. They may have limited staff and no structured processes around roles and responsibilities when it comes to label design, changes and approval. As project leads work toward a compliant labelling process, it is therefore important to establish defined roles and access for each stage of the process.
When dealing with a compliance initiative, up to date, correct and compliant labelling is imperative. This involves having all the relevant label design elements in place to comply with the EU MDR or FDA regulations. Many times, label templates are hard coded, meaning IT must be involved in making changes. And with IT staff often being tasked with multiple mission-critical projects in the organisation, labelling projects can be delayed. For many small medical device manufacturers who have limited resources, finding a solution can be a challenge.
Why labelling in the cloud offers a roadmap forward
Validation-ready cloud labelling solutions have now emerged to ease compliance with regulations and time-consuming validation requirements. These solutions, built with the needs of regulated companies in mind, digitise the quality control processes and facilitate compliant labelling with role-based access, approval workflows and electronic signatures. Outside of compliance, carrying out labelling in the cloud drives scalability and productivity for small medical device manufacturers and boosts overall efficiency.
The latest cloud labelling solutions integrate with other cloud solutions, allowing for seamless functionality and minimising the need for local infrastructure resources and cost.
When it comes to validation, as with many labelling systems, those hosted in the cloud have vendor-supplied documentation that streamlines the process and significantly eases the burden when it comes to installation qualification (IQ). The manufacturer itself has a much lighter burden and a streamlined path to a validated system and process.
A more relaxed software release schedule eases the validation burden on life sciences companies because the software is updated once a year rather than multiple times. This gives them a continuously updated and maintained labelling solution without increasing the validation workload on their IT staff.
The manufacturer would of course need to work closely alongside the vendor and review the documentation, but, if needed, the vendor is able to do much of the work for them, providing not only the full validation acceleration pack but also professional services to assist with the validation process.
While some medical device manufacturers choose to tackle validation on their own, the vendor supplied validation acceleration pack or documentation helps to simplify the process. Consultancy and advice around validation is usually available from the vendor, tailored to the business’s specific needs.
Given the immense hassles of compliance for small device manufacturers, cloud-based labelling systems offer the benefits of a full label management system while easing compliance and validation. This is a future-proof technology. With a cloud-based labelling system, medical device manufacturers can be confident that they are running the most up-to-date software, enabling them to address the fast-changing new regulations and cope with whatever comes their way. And especially in the current pandemic, when face-to-face meetings are still problematic, it is a perfect way to keep labelling operations moving forward.