I have not specifically sought information
about Centennial but have some information. It is interesting because
of the strategy it used to deal with falling profits, and because it
is one of the companies being investigated for fraud.
WelCare International Inc. of Atlanta and Transitional Health Services, Inc. merged to form Centennial Healthcare in 1996. Centennial continued to expand building debt into 1998 even though profits had started falling. It became the 14th largest nursing home chain in the USA with 11,575 beds in 107 homes in 21 states.
It seemed to read the market trends and realised its bankers would not be sympathetic to increasing its loans. It adopted a different strategy. In October 1998 it set out to sell itself to Carson, Anderson & Stowe, a wealthy financier, which already owned a large share of the company. They would take it off the stock market turning it into a private company shielded from the peculiar pressures of the sharemarket. They would continue to run the company. Carson, Anderson & Stowe's offered $16 per share. Centennial believed that this groups substantial financial resources "will provide the Company with the ability to continue to pursue aggressively its acquisition and development activities". This reflects their primary objective - not a word about care!
The nursing home market was tumbling and so were Centennial shares. It was clear that US $16 was far too much to pay. W hen the US department of justice commenced a fraud investigation of Centennial in March 1999, the financiers took the opportunity to renege on the deal.
Centennial continued to perform poorly and its share prices dropped from a high of US $22.50 to $2.50 by October 1999.
Centennial continued with its strategy and in February 2000 it entered into a Merger agreement where all of its shares were to be acquired by Hilltopper, an affiliate of the wealthy financiers Warburg Pincus. They would keep the same management team and Hilltopper would be merged into Centennial.
Hilltopper paid US $5.50 a share, one third of the US $16 offered by Carson, Anderson & Stowe a year earlier. Some shareholders were unhappy about the way this was done and commenced a class action accusing Centennial's directors of breaching their fiduciary duty.
By March 2000 Centennial was having some
difficulty with its financial reserves, but it seems to have managed.
The Merger was completed in June 2000. Centennial became a private
company and removed its name from the stock exchange.
Centennial is one of the companies being
investigated for fraud by the US government. It disclosed this in
March 1999. The nature of the fraud and its extent is not clear from
the press reports and there is no information about the progress of
I have no reports describing unsatisfactory care in Centennial facilities.
A September 2001 report documents that three employees won roughly US $450 million in a claim that two were fired by a Centennial facility because of their age and a third was sexually harassed.
In December 2002 Centennial defaulted on its US $900,000 monthly rent to Health Care Property Investors. Three weeks later on 20 December it filed for voluntary Chapter 11 bankruptcy reorganisation. In August 2003 it is still in chapter 11 and selling off facilities.
In providing reference material I have taken extracts from the published material in order to give some idea of the content as I interpret it. I have sometimes made a few comments to give perspective and explain the context.
The extracts on these pages are from copyright material. They are reproduced for educational purposes and to stimulate public debate about the provision of health care. I consider this to be "fair use" and in the public interest. They should not be reproduced for commercial purposes.
Disclaimer: - The material in these pages is selective and not all-inclusive. The extracts do not necessarily reflect the full perspective of the original. Corporate denials and explanations have not been included. No claim is made that all of the matters referred to are true. The intention is to give the flavour of the material and an idea of the extent of the allegations.
CLICK HERE to go to the Centennial reference page.
Centennial's Web Site @ http://www.centennialhc.com