What Sparked Gentiva Health Services, Inc. Stock's Surprising Surge

Gentiva shares soar after igniting a supposed bidding war for the company. Find out what this means for Gentiva's shareholders.

Jul 18, 2014 at 2:09PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Gentiva Health Services (NASDAQ:GTIV), a provider of home health and hospice care within the United States, soared by as much as 14% earlier this morning after confirming that it had received another buyout offer from an undisclosed suitor.

So what: According to Gentiva, the buyer, which it's refused to name but described as "a recognized owner, operator, and investor in the sector", is willing to purchase Gentiva for $635.5 million, or $17.25 per share. This would be superior to Kindred Healthcare's (NYSE:KND) recently increased offer which currently stands at $16 per share and has been previously upped twice already. Gentiva's board of directors noted that it would consider the new proposal and advised shareholders against tendering their shares in favor of Kindred's $16 per share offer.

Now what: I'd personally like to know what company is crazy enough to bid Gentiva even higher. I do understand that Gentiva would help a larger suitor expand its geographic reach and could potentially help position a buyer for success over the next two to three decades as baby boomers begin to retire. However, Gentiva is also sporting a not so takeover friendly $1.1 billion in net debt and is likely going to be pinched by declining Medicare and Medicaid reimbursements as the Affordable Care Act pushes health-based businesses slowly away from relying on government funds. In other words, Gentiva's growth outlook isn't all that great and its debt only compounds those concerns, so the fight to buy it makes little sense to me. With shares once again trading above the stated offer price I'd suggest keeping your distance as I just don't see how any more blood can be squeezed out of this turnip.

Gentiva could offer a suitor plenty of potential, but compared to the opportunity presented by this revolutionary product, Gentiva would likely be eating dust! 
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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