Seller: Compassionate Care
Sector: Hospice, Home Health
Amedisys Buys Compassionate Care for $340M, Will Become Third-Largest US Hospice Provider
Amedisys Inc. (Nasdaq: AMED) is executing an industry-shaping deal with one of the country’s largest hospice providers, adding further fuel to a white-hot M&A market. Home health, hospice and personal care powerhouse Amedisys announced Wednesday that is has signed a definitive agreement to acquire Parsippany, New Jersey-based Compassionate Care Hospice for a fixed price of $340 million, inclusive of $50 million in payments related to a tax asset and working capital.
As a result of the deal, expected to close by Feb. 1 of 2019, Baton Rouge, Louisiana-based Amedisys becomes the third-largest hospice provider in the United States. The largest hospice provider was created earlier this year, when insurance giant Humana (NYSE: HUM) and two private equity firms acquired Curo Health Services, combining it with Kindred Healthcare’s hospice business. The second-largest provider is Vitas Healthcare, a division of Chemed Corporation (NYSE: CHE). Compassionate Care Hospice is the eighth-biggest hospice provider in the nation, according to most estimates.
Despite the deal’s magnitude, Amedisys’ acquisition bucks the trend of record-breaking valuations and double-digit multiples that the hospice industry has been seeing of late. While recent hospice deals have been placed between 16 and 19 times EBITDA, Amedisys was able to land Compassionate Care Hospice for a far smaller multiple, Paul Kusserow, the company’s CEO and president, told Home Health Care News shortly after the deal was announced. “We bought it for 8 times [EBITDA],” Kusserow said. “That’s half of what everybody else is paying.”
Founded in 1993, Compassionate Care Hospice currently provides services for about 3,300 patients daily across 53 locations in 24 states, generating roughly $188 million in annual revenues in the process. Post-closing, the companies’ combined hospice operations will include 136 care centers in 34 states with an average daily census of about 11,000 patients. Acquiring Compassionate Care Hospice propels Amedisys companywide into the new markets of Michigan, South Dakota, Minnesota and Nebraska, while also expanding its presence in Texas. “We really like Texas, and this gives us a nice footprint,” Kusserow said. “It also allows us to offer a full continuum of care in Florida, so we’ll have six hospices now in Florida, where previously we had none.”
Amedisys also recently announced that its subsidiary, Associated Home Care, closed a separate personal care acquisition for Bring Care Home.
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