Jefferies Believes Kindred Healthcare's Acquisition Of RehabCare Will Be Accretive Near-Term

Jefferies & Company has published a research report on Kindred Healthcare KND after the company showed its transaction with RehabCare Group RHB should be accretive near-term. In the report, Jefferies writes "With the acquisition of RehabCare (RHB, $37.05, NC), KND is now positioned as a leader in the post-acute services space with an expanded geographical footprint and increased service capabilities. This should give KND a competitive advantage in discussions with acute care providers and managed care payors. On a full year basis and after incorporating first year synergies of $25MM ($40MM over two years), the transaction is expected to add $0.50-$0.55 to EPS and provide $87-$91MM in incremental cash flow. FCF will be directed toward debt repayment, allowing for incremental earnings from reduced interest expense." Jefferies maintains its Buy rating and has raised the price target from $25 to $30. Kindred Healthcare closed yesterday at $25.00.