HealthSouth Corp. signed a definitive agreement to acquire rehabilitation hospital provider Reliant Hospital Partners for $730 million in cash. Reliant operates 11 inpatient facilities and 902 beds in Texas, Massachusetts and Ohio. HealthSouth said the deal will strengthen its position in Houston, Dallas-Ft. Worth and Austin markets, as well as the Dayton, Ohio and greater Boston markets. In 2014, Reliant generated $89 million in EBITDA on $249 million in revenues. 

HealthSouth is one of the largest post-acute providers in the nation, offering both in-home and facility-based rehabilitation services in 33 states. As of Friday, HealthSouth had trailing 12-month EBITDA of $600 million on $2.52 billion in revenue.

Our Take: In May, HealthSouth missed its earnings target by 22 percent, sending its stock price into a 10 percent dive. Shares in HealthSouth have been volatile of late as the company has recently seen a dramatic increase in Medicare claims denials, which the company says it intends to fight. News of the acquisition sent share prices back up to near its historic high. 

Analysts say the move is a good one for HealthSouth, taking out competitors in key markets. We’re bullish on post-acute providers like HealthSouth and its larger competitor Kindred Healthcare, as post-acute providers have yet to realize their potential in the evolving value-based care environment. 

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