DAC Acquisition LLC has entered into a merger agreement with Diversicare Healthcare Services (OTCQX: DVCR) for $10.10 per share in a deal announced on Friday.
The price represents a value of approximately 256% from Diversicare’s closing share price on Aug. 19 at $2.84 and a premium of approximately 210% to the 90-day average trading price of $3.26 per share, according to the press release. The prospect of a deal was first announced on Wednesday.
“We are excited by the opportunity to add Diversicare’s centers to our portfolio,” Ephram Lahasky, CEO of DAC Acquisition LLC, said in the press release. “”DAC Acquisition LLC views this transaction as a unique opportunity to grow together in the healthcare space with Diversicare’s professional leadership team and dedicated staff who care for their thousands of patients daily.”
Diversicare’s holdings include 61 nursing centers and 7,250 skilled nursing beds. The deal is expected to close in the fourth quarter of 2021, pending approval from Diversicare stockholders and other regulatory and customary closing conditions.
“We could not be more pleased to be joining forces with Mr. Lahasky and his organization with his extensive experience in the long-term care industry,” Diversicare CEO James R. McKnight, Jr. said. “Together, we look forward to continuing to build on the strong momentum Diversicare generated over the past year and share our knowledge of clinical and operational depth with his current portfolio of over 100 skilled nursing facilities.”
Diversicare’s board of directors who collectively hold approximately 33.4% of Diversicare shares, have reportedly all approved the transaction.
Diversicare reported during its second quarter earnings call earlier this month a $10.8 million drop in patient revenues year-over-year, due to a 5% decrease in occupancy, compared to the second quarter of 2020.
Operational revenue was $111.3 million for the second quarter, down $7 million from the prior year’s period. Approximately $1.8 million in favorable Medicaid rate variances helped to mitigate losses.
About $6.4 million in COVID expenses were incurred during the second quarter ending June 30, McKnight said during the call.
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