For $5.5 billion, Skilled HealthCare Group and Genesis Healthcare Group merged in an all-stock deal to create one of the largest U.S. operators of long-term care facilities.

Skilled Healthcare shareholders will own 25.75% of the equity in the combined company. Genesis shareholders will own the other 74.25%.

Under the Genesis HealthCare name, the combined company will have approximately 95,000 employees and operate more than 500 nursing homes, assisted-living facilities and rehab centers in 34 states.

As a result of President Barack Obama’s Affordable Care Act tying payments to improved patient outcomes and cuts in Medicare insurance reimbursement rates, hospitals and healthcare providers are being driven to consolidate. 

George V. Hager Jr., CEO of Genesis, and who will be the CEO of the combined company, said the merge evolved as a result from the challenges in the post-acute health care industry created by a, “constantly changing health care environment.” The deal will allow Genesis, a privately held company, enter the public domain and enter new markets with its sub-acute, long-term care facilities and rehabilitation services.

Skilled Healthcare CEO, Robert Fish, who happens to be the former CEO for Genesis said he believes “scale and the ability to drive efficiencies will be critical to future growth,” stressing the need for consolidation.

“The combination will expand our core business lines, significantly diversify our markets, provide opportunities for increased efficiency and enhance our collective ability to provide the highest quality patient care,” Fish said.

The deal is expected to close in early 2015 after it passes regulatory approval.

A filing with the Securities and Exchange Commission denotes, Genesis obtained $1.15 billion in debt financing commitments to cover the costs of the merger with Skilled Healthcare Group, which includes paying Skilled Healthcare Group’s debt.