BrightSpring Health Services completes Haven Hospice acquisition

BrightSpring Health Services (Nasdaq: BTSG) announced earlier this month that it has finalized its $60 million acquisition of the assets of North Central Hospice and Haven Medical Group, which collectively make up Haven Hospice.

The deal was first announced in June, and was finalized as of Sept. 1.

Importantly, the deal helps BrightSpring bolster its hospice footprint in Florida, which is a Certificate of Need (CON) state.

“We are excited to welcome Haven Hospice into BrightSpring, expanding our existing hospice services into the CON state of Florida,” BrightSpring President and CEO Jon Rousseau said in a statement. “The delivery of compassionate hospice care is critical for patients and their families, and we’re committed to delivering that to high-need Floridians. Our hospice services have been rated in the top five percent for quality in the industry, and with this expansion of services to Florida, we can provide high-quality care to more patients and their families during the most difficult time in their lives.”

BrightSpring, since going public earlier this year, has been an active acquirer. The Louisville, Kentucky-based company provides a wide range of home-based care services across all 50 states.

Compassus, OhioHealth finalize partnership

Compassus – one of the largest home health providers in the country – has finalized its partnership with OhioHealth.

Under the partnership, Compassus has acquired ownership interest in four home health locations and three hospice locations that were formerly led and managed by Ohio Health, which is a large nonprofit health system.

The partnership between the two will be dubbed OhioHealth at Home in partnership with Compassus. It was originally announced in June.

“We are excited to officially launch OhioHealth at Home in partnership with Compassus, bringing high-quality, patient-centered home health and hospice care to our communities,” Compassus CEO Mike Asselta said in a statement. “Our coordination with the community and OhioHealth hospitals in Marion, central Ohio Lexington and Athens will ensure patients receive seamless, comprehensive care right in the comfort of their homes.”

Compassus provides home health, home infusion, palliative, hospice and home care services across 30 states.

One of its main growth drivers over the years has been joint ventures and partnerships with large, regional health systems like OhioHealth.

Agape Care Group bolsters hospice footprint in four states

Agape Care Group, which is a portfolio company of Ridgemont Equity Partners, has acquired Crossroads Hospice locations in Oklahoma, Missouri, Kansas and Georgia.

Based in Spartanburg, South Carolina, Agape provides home-based hospice and palliative care services. Its family of brands already provided care across South Carolina, Alabama, Georgia, North Carolina, Kansas, Louisiana, Missouri, Oklahoma and Virginia.

Crossroads Hospice will continue operating independently in Tennessee, Ohio and Pennsylvania.

“The addition of Crossroads Hospice solidifies our decision to expand into the Kansas, Missouri and Oklahoma markets, where we have spent more than a year building the infrastructure to support this acquisition,” Agape Care Group CEO Troy Yarborough said in a statement. “We welcome the talented team members from Crossroads and look forward to focusing on care delivery and better serving patients in the Kansas City, St. Louis, Lenexa, Warrensburg, Oklahoma City and Atlanta markets.”

Advanced Home Health Care acquires Mobile Nursing Services

Advanced Home Health Care earlier this month announced that it has agreed to acquire Mobile Nursing Services, a home health provider based in Fort Madison, Iowa.

Based in Burlington, Iowa, Advanced Home Health Care provides services across the Southeastern part of the state.

“The acquisition allows Advanced Home Health to consolidate resources and provide the high-level of services both Advanced Home Health and Mobile Nursing customers rely upon to stay at home,” according to local news reports.

Advanced Home Health provides a variety of services in the home, including home care, home health care and pediatric care.

Cardinal Health to buy Integrated Oncology Network for $1.1 billion

Cardinal Health (NYSE: CAH) announced last week that it has agreed to acquire Integrated Oncology Network (ION), which is a physician-led independent oncology network. The deal is worth $1.115 billion.

Based in Dublin, Ohio, Cardinal Health is one of the largest health care companies in the country. Of late, it has significantly expanded its At-Home Solutions business. Now, it is diving deeper into oncology, which has also shifted further toward home- and community-based settings in recent years.

ION has more than 50 locations across the country. It provides “a complete and integrated continuum of care,” including diagnostic testing, radiation oncology, medical oncology, urology and other ancillary services.

As part of the transaction, ION will become part of Navista, Cardinal Health’s oncology practice alliance.

“Driving growth in specialty continues to be a top priority, and we’ve made investments to expand our offerings through both Navista and our acquisition of Specialty Networks,” Cardinal Health CEO Jason Hollar said in a statement. “With their proven model providing extensive support of community oncology across the cancer care continuum and healthcare ecosystem, we’re confident Integrated Oncology Network will further accelerate our oncology strategy and enable us to create value for providers and patients.”

Part of ION’s business model is “meeting patients where they are.”

“Integrated Oncology Network and Cardinal Health share a mission of helping community oncology practices deliver world-class patient care and a world-class patient experience to patients and families close to home,” ION CEO Barry Tanner said in a statement. “This partnership will give community practices the tools and technology they need to enhance and grow that mission and make a positive impact on patient outcomes.”

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It’s the interest rate, stupid.

Home health, home care and hospice industry voices – including myself – have regularly pointed toward internal factors affecting M&A over the last two and a half years. In the end, the overarching, main headwind was always the extremely high interest rates that were put forth by the Federal Reserve to combat inflation.

Those internal factors had an effect on the specific M&A that did occur, and they will have a major effect on the M&A activity that occurs moving forward.

But searching for internal reasons to find out why M&A had cooled since early 2022 was largely a fool’s errand.

In March of 2022, the Fed started moving historically low interest rates up a notch. Specifically, on March 17, 2022, the federal interest rate moved from near-zero to 0.50%. Then, those hikes continued on a consistent basis, up until July 26, 2023, when the federal interest rate hit 5.50%. 

On Wednesday, the Fed announced a half-percentage point cut to the interest rate, in what is expected to be the first of a few cuts as it now turns its eyes toward other problems outside of inflation.

Meanwhile, the trend line for home-based care M&A ran diametrically opposed to the interest rates. As interest rates rose, home-based care M&A fell, besides a few small spikes in a quarter or two.

“I believe the interest rate environment has really been more significant than perhaps people have acknowledged,” Les Levinson, partner and co-chair of the Transactional Health Law Group at Robinson + Cole, told me this week on a webinar. “When you were doing deals in 2021 and 2022 – at what was functionally equivalent to a zero interest rate environment – you needed a lot less equity to do a deal. And the risk in that transaction was being basically covered by debt coverage. That evaporated as interest rates shot up.”

In this week’s exclusive, HHCN+ Update, I’ll dive into the interest rate cut and what it will mean for the home-based care M&A market in the near-term future.

Rate cut kickstart

All signs point to Wednesday’s rate cut being the first of a few, as the Fed begins to focus more on unemployment and less on inflation.

Based on the last couple of years, that would suggest that we’ll see far more transactions in home-based care in the near-term future.

After that first hike in March 2022, things changed in the formerly robust M&A landscape.

In Q3 and Q4 of 2020 alone, there were 95 total transactions in home health, home care and hospice, according to the M&A firm Mertz Taggart. Over the same time period in 2021, there were 106 transactions.

Then, in 2022, after the first rate cut, Q3 and Q4 saw 50 total transactions, an over 50% decrease compared to the year prior.

Outside of a few quarters with modest spikes, M&A has stayed historically down, up until present day.

Private equity-sponsored deal counts, too, were historically low.

Now that the interest rate trend line is on the other side of the mountain, expect home-based care activity – and PE-backed activity – to pick up.

“We’re at the tail end of an almost five-year cycle that started with COVID and the Fed stimulating the economy,” Mertz Taggart Managing Partner Cory Mertz told me on the webinar. “Interest rates went to about zero. Sellers were burned out. They wanted to get out early before the election and a new administration increased the capital gains tax rate. It was really a perfect storm of activity, and it was, quite frankly, a bubble. The Fed raised fund rates at a pretty healthy clip starting in 2022, and that really slowed everything down for a couple of years. But now, we’re starting to see signs of life.”

The Fed was expected to lower rates Wednesday, and most were waiting to see whether it was by a quarter or half of a percentage. Its decision to go the latter route will open things up even further than previously expected.

Over the next year or two, it’s likely the rate will continue to tick down toward around 3%.

During the quiet period, demand for quality home-based care assets has not been down, according to Mertz. Instead, the market conditions have kept transaction levels down. Those market conditions also include the fact that, with near-zero interest rates and a rush toward home-based care during the pandemic, multiples climbed significantly.

Since then, buyers have waited for the multiple expectations to normalize.

“These same buyers have still been hungry for quality deals,” Mertz said. “They don’t want to, and they’re not willing to, pay a premium for deals that don’t warrant a premium [price]. Now, premiums today compared to premiums in 2021 or 2022 are down a little bit, but not a whole lot. For a quality agency, at least. That’s my experience.”

As multiple expectations are balanced out, though, it’s likely that demand finally rises up and brings deals to fruition.

But active, quality home health agencies – in particular – have become more scarce over the last few years.

“A quality home health asset, I think, is the premium in post-acute care,” Choice Health at Home CEO David Jackson told me on the webinar. “Hospices have a really nice base. Home care [agencies] have really steady valuations, much more steady than the others. They don’t go up and down as much as a premium home health care asset that is doing well from a compliance, quality and financial perspective. Those are becoming more and more rare every day, and that’s because it’s a very difficult industry.”

Based in Tyler, Texas, Choice Health at Home provides a wide range of services in the home, including home health care, home care and hospice. Backed by Coltala Holdings and Trive Capital, the company has executed over 20 transactions in the last four years. In addition to Texas, it has a presence in Nevada, Utah, Colorado, Arizona, Oklahoma and Kansas.

In home health care, buyers generally prefer executing deals in the back half of the year anyway, and particularly in Q4. That’s because, after the Centers for Medicare & Medicaid Services (CMS) releases the final home health rule in October or November, there’s generally more certainty around payment.

A lot has changed

While deals have been put on ice, a lot has changed under the surface.

As buyers and sellers get back to the table, they’ll be discussing home-based care sectors that don’t look like they did three to four years ago.

In home health care, CMS has proposed three cuts to payment, and finalized two. More than 50% of Medicare beneficiaries are now underneath a Medicare Advantage (MA) plan, too. MA plans tend to be far less for home health services than traditional Medicare.

Home health providers – even the quality ones – are struggling to adjust to a world with a less certain payer landscape. They are dealing with CMS cuts to traditional Medicare, while also vying for higher rates from MA plans. Some have even cut ties with MA plans to prove a point, and also to allocate their resources to better payers.

In home care, the finalized Medicaid Access Rule included the 80-20 provision, which would mandate that 80% of reimbursement for home- and community-based services (HCBS) go to workers. That provision won’t be implemented for another nearly six years, but it is still likely to affect M&A.

For instance, on one end, many providers believe that scale is necessary to sustain business performance under such a provision. Addus Homecare Corp. (Nasdaq: ADUS) has stated this regularly and has also been a very active acquirer of late.

Outside parties, however, may see the provision as a reason to avoid HCBS – for now.

Addus has also benefited from the M&A downturn itself. While interest rates have been high, Addus has significantly expanded its home health and home care footprints.

“Realistically, over the last 12 to 18 months, we’ve not seen a lot of competition out there,” Addus CEO Dirk Allison recently said. “There’s been the occasional smaller strategic player that’s bought a few deals on a localized basis. From a PE standpoint, it’s really been very slow as far as competition for the last bit. Now, obviously, if rates come down in September, as everybody’s expecting, there’ll be a point where PE will come back in and that’s fine. It’s been a market in which up until the last year or so, we’ve always operated with competition from those folks.”

VitalCaring President Luke James also told me earlier this year that there were advantages to growing during an M&A and payment downturn. His company also recently agreed to acquire divested assets of Amedisys (Nasdaq: AMED), but that deal is contingent on the Optum-Amedisys deal closing first.

Either way, if the Fed continues on the path it set out on this week, times are changing.

When M&A ticks back up, buyers will have different factors to consider. But the buyers – the formerly dormant strategics and private equity players – will be back.

The home health and home care sectors have been labeled as ripe for consolidation over the last decade. But consolidation has not come as quickly as many believed it would.

Now that the dust is settling, however, M&A has the chance – again – to reshape the face of home-based care.

The post ‘Signs Of Life’: With Interest Rates Ticking Downward, Home-Based Care M&A Is Looking Up appeared first on Home Health Care News.

OHA’s Health Care Market Oversight (HCMO) program reviews health care business deals to ensure they do not harm the state’s citizens or communities. In July, both UnitedHealth Group and Amedisys submitted responses to the OHA’s request for information. The authority is still seeking public comments on this matter.

In addition to the issue in Oregon, the deal has faced scrutiny from federal antitrust regulators, including the U.S. Department of Justice (DOJ).

Amedisys and UnitedHealth agreed to sell certain locations to Dallas-based VitalCaring Group, likely to address those antitrust concerns. That deal is contingent on the UnitedHealth Group-Amedisys deal closing, however.

“On an antitrust perspective, a number of states have adopted enhanced transaction notice requirements,” Les Levinson, partner and co-chair of the Transactional Health Law Group at Robinson+Cole, said during a recent Home Health Care News webinar. “There is a heightened interest in agencies being subject to a higher regulatory review. I think it’s something we have to pay attention to.”

UnitedHealth Group first agreed to purchase Amedisys – one of the largest home health providers in the country – in June 2023 for $3.3 billion.

According to comments published on the OHA website, the deal is not well-received by some groups in Oregon.

Mid Valley Health Care Advocates, based in Corvallis, Oregon, urged the OHA to deny the acquisition application, for instance.

“We are concerned that [UnitedHealth] as an insurer, and through Optum as a clinical provider and potentially as a home health and hospice provider, have the incentive and the ability to unfairly disadvantage competing providers and drive them from the market, reducing consumer choice,” the group said in a statement.

Another comment by the Oregon Nurses Association (ONA) read, “[UnitedHealth’s] track record of driving up profit margins at the expense of patients is not in alignment with Oregon values. Oregonians deserve high-quality, affordable health services; we are concerned that [UnitedHealth] will fail to provide that care if doing so interferes with their profitability. ONA urges OHA to reject the acquisition of Amedisys.”

With all that said, it is possible that a DOJ clearance of the deal could ultimately influence OHA’s decision, and move up the timeline to closure.

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The two organizations had already merged – and named a new leader – but had not yet announced a new name or brand.

The National Alliance for Care at Home (the Alliance) aims to provide resources, education and information to assist members in expanding their organizations. Additionally, the Alliance will serve as the collective voice of the member community, advocating for policies that promote the delivery of high-quality care for patients and their families.

The logo of the National Alliance for Care at Home pays tribute to the past while also representing the future. It combines visual elements that symbolize NAHC and NHPCO, the legacy organizations that have merged to form this new alliance. The logo concept was developed based on input from a workgroup of members, who have had a significant influence on the Alliance’s brand.

The Alliance The Alliance

The Alliance also launched its integration website today at AllianceForCareAtHome.org. The new site not only provides information on the organization, but also serves as a single sign-on hub for members.

The new website includes an updated “Find a Provider” tool to assist consumers in locating home care, home health, hospice and palliative care providers. In the upcoming weeks, Alliance members will have access to a total of 29 online member communities, facilitating the professional exchange of ideas and best practices. A new website is set to launch in 2025 at the current URL, consolidating the key features from both NAHC and NHPCO’s legacy sites. Throughout the development of the new site, the Alliance’s integration site will act as a gateway to access resources from the two legacy sites.

“Providers offering various forms of care at home have always looked to our national associations to help create a shared vision for the future,” Kenneth Albert, chair of the Alliance’s transition board, said in a statement. “It took imagination, dedication and guts to take on the tough conversations about combining two organizations, each with more than 40 years of history. This Alliance will be the leading authority on transforming care in the home. We will implement that mission under a new name that welcomes providers across the care continuum to join–the National Alliance for Care at Home. The logo shows people coming together, hand in hand. That is exactly what we will do in this new Alliance–work collectively to imagine what the future of care in home settings can and should look like, and then to bring that vision to reality.”

In March 2023, NAHC and NHPCO announced they were exploring collaboration opportunities. This initiated a member consultation and input process which led to an agreement to combine the two organizations into a new Alliance, with integration work beginning July 1, 2024.

On Aug. 26, the Alliance announced that Dr. Steve Landers would become its first CEO. The Alliance will continue integrating NAHC and NHPCO operations into a single organization through the remainder of 2024 and into 2025.

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The company acquired Care By Your Side, One Care Health and AAMedcare, which are all home care providers based in Georgia.

“Bringing our unique value proposition to more Georgia communities enables us to provide great days and meaningful moments,” Help at Home Chief Operating Officer Ray Smithberger said in a statement. “We continue to focus on creating an environment that supports caregiver well being and satisfaction, which in turn enables them to deliver the highest quality of care to more clients who want to age in place at home.”

Based in Chicago, Help at Home is a personal care provider that mostly focuses on Medicaid home- and community-based services (HCBS). The company operates more than 180 branch locations across 11 states, with 67,000 clients and more than 58,000 caregivers. It is backed by The Vistria Group and Centerbridge Partners.

It already had a significant presence in Georgia, but mostly across the southern part of the state. Now, it will further its footprint in the Atlanta and Augusta markets. The acquisitions will also help the company “continue its commitment to its southern Georgia footprint,” according to the press release. 

Last month, at Home Health Care News’ FUTURE conference, Help at Home President Tim O’Rourke told HHCN that the company would be looking to expand its footprint in the near-term future. The recent activity in Georgia is further evidence of that.

O’Rourke also explained that the company would continue to focus on home care, as opposed to venturing into other service lines.

“Growth continues to be really strong in what we do, both organic growth and M&A activity,” he said. “We continue to see that as a big opportunity for us, not only today, but in the future. I think the biggest change that we continue to see is this ability to really connect home care into health care. Our ability to support our caregivers even more than they’ve ever been supported before – with this team of social workers, nurses, community health workers – and to start connecting folks back into the health care system is a really huge opportunity for us.”

O’Rourke also added that, while Help at Home is not focused on other service lines, it does want to create opportunities for wraparound services for clients – such as transportation, meals and pharmacy services, for example. 

“We’re always working to fulfill the growing demands of seniors and disabled individuals who want home care services allowing them to live as independently as possible in their own homes,” Help at Home Senior Area Leader Jennifer Clayton said in a statement. “We want to extend a warm welcome to caregivers, clients and our payer partners throughout the Peach State to Help at Home.”

The post Help at Home Announces Three Acquisitions, Expands In Key State appeared first on Home Health Care News.

The home health sector offers an attractive investment opportunity, but also comes with challenges. It is poised to benefit from an aging population and the shift toward value-based care, however, it is also influenced by factors such as rising interest rates, reimbursement difficulties and staffing shortages, all of which have affected the M&A market.

“I have observed several cycles in M&A volume and valuations,” Cory Mertz, managing partner at Mertz Taggart, told Home Health Care News. “Volume is still lower compared to the past few years, for various reasons, such as buyers’ limited access and higher cost of debt. Valuations are still historically strong, not reaching the peak levels of 2021, but stronger than any period prior. This is influenced by robust multiples of public companies and demand from private equity.”

Fort Myers, Florida-based Mertz Taggart is a health care M&A advisory firm focused on home health, home care, hospice and behavioral health.

With a valuation of $152.9 billion in 2024 and a projected growth of $253.4 billion by 2030, home health care presents significant growth potential, as indicated by research from Grand View Research.

“Private equity firms that understand health care services appreciate home health because it has the potential to save the health care system money,” Mertz said. “As the aging population grows and technology continues to advance, enabling elderly individuals to stay at home instead of in facilities, home health is seen as a key part of the solution.”

The COVID-19 pandemic raised expectations and led to an influx of capital. This resulted in a prolonged period of low interest rates, which persisted through 2022 and early 2023, significantly affecting valuations. As interest rates rose, the transactional value and number of transactions decreased.

“If companies have to borrow at higher costs, they may not want to take on the debt obligations that they were willing to incur earlier,” Les Levinson, co-chair at Robinson+Cole, told HHCN.

Robinson+Cole is a New York City-based law firm, serving eight states and the District of Columbia.

“If we do see a rate cut that portends to a softening in the interest rate environment, I think we’re going to see a strong pickup in the M&A market,” Levinson said. “If interest rates continue to improve, there’s a likelihood that we’ll start to see a cycle where capital is being returned to investors, allowing them to consider other transactions.”

Aside from interest rates, investors are also concerned about the uncertain regulatory environment.

In the final rule for 2024, the Centers for Medicare & Medicaid Services (CMS) increased reimbursement for home health agencies by 0.8%, which amounts to approximately $140 million more than in 2023. This increase was better than the originally proposed 2.2% cut, but still faced opposition due to concerns about inflation.

“Every year, the proposed new rule for home care comes out and creates uncertainty in the marketplace,” Levinson said. “And that is potentially a valuation ding.”

In addition to CMS reimbursement rates, some states have aggressively regulated transactions. California, Oregon and Indiana are three states that have been active in regulating transactions that they think may not be helpful in their states.

Staffing concerns impact values

In addition to rates, regulation and inflation, staffing shortages continue to plague the industry, causing even more uncertainty.

Levinson said that staffing shortages in the home health care sector affect valuations and raise questions about a company’s ability to grow.

When assessing a home health care agency, it’s essential to consider its capacity to attract and keep employees in a competitive labor market. Elevated labor costs affect profit margins by raising expenses and constraining the company’s ability to care for patients, limiting its growth potential.

“It’s the ability to staff cases and continue staffing those cases,” Levinson said. “[Companies are] competing with other providers in the marketplace, in some cases for the same workers, so that has driven up wages beyond the market norm in some areas.”

EBITDA and technological efficiencies make for unique situations

A company’s valuation is typically based on a multiple of earnings before interest, taxes and amortization (EBITDA). EBITDA removes the company’s cost of selling a product or service and shows how much money is made after deducting all expenses except taxes, interest or amortization. This indicates the quality of the profit that a company makes after expenses.

However, Levinson said valuation is not always strictly based on EBITDA because of adjustments that make companies unique.

“Investors often consider the components of the EBITDA number,” Levinson explained. “Factors such as staffing levels, borrowing costs, market rates and overall market conditions are frequently discussed. They evaluate whether there is an oversupply of providers in the market and if there is competition for staff. All of these factors contribute to dynamic valuations.”

When considering a company’s EBITDA, technology is becoming increasingly important.

Technology is playing a more significant role in M&A than ever before, especially in improving efficiency, according to Levinson. While staffing impacts home health care because it is a person-to-person industry, technology can help address some of the concerns caused by staffing shortages regarding growth and the ability to provide services to clients.

“Technology can be helpful, as some cases can be treated with a phone call or an intervention over Zoom,” Levinson said. “If that’s the case, then perhaps it means a worker doesn’t have to go to a home or spend more time there and can go to another patient in need of care.”

He explained that if caregivers spend less time on paperwork that can be done with AI, it creates efficiencies and allows for more time with patients.

“I believe that technology will continue to improve efficiency and reduce costs while addressing staffing shortages we’ve experienced over the past few years,” he said.

The post How Home Health Valuations Are Shaping Up In 2024 appeared first on Home Health Care News.

Pennant completes acquisition of Signature assets

The Pennant Group (Nasdaq: PNTG) has completed its acquisition of Signature Healthcare at Home’s Washington and Idaho assets. With an $80 million purchase price, the transaction was the largest in Pennant history.

The deal was first announced in early July, and is just one of many deals Pennant has recently executed on.

“This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries and a disciplined – yet bold – growth company with the sophistication and adaptability to become a key solution in the health care continuum,” Pennant Group CEO Brent Guerisoli said on the company’s second-quarter earnings call. “Since the beginning of the year, we have entered into the Muir Home Health joint venture; closed an additional two home health and two hospice transactions; initiated a management agreement with Hartford HealthCare; announced the largest acquisition in our history with the Signature transaction; and completed three senior living deals.”

Based in Eagle, Idaho, Pennant is a holding company with independent operating subsidiaries that provide health care services through 117 home health and hospice agencies and 54 senior living communities across 13 states.

Pennant had previously acquired other Signature assets in 2020.

The transaction allows Pennant to expand further in the Pacific Northwest, where it already has a strong footprint. It also allows it to expand its home health footprint in Certificate of Need (CON) states.

Aging Advocates CNY acquires Senior Home Care Solutions

The care management practice Aging Advocates CNY announced in late July that it had agreed to acquire Senior Home Care Solutions. The deal goes into effect on Jan. 1, 2025.

Based in New York, Senior Home Care Solutions is a non-medical home care provider led by Sheila Ohstrom, who will stay on as a consultant post-acquisition.

“This is an exciting time for both organizations and the Central New York area,” Ohstrom said in a statement. “By combining our strengths, we can better serve our clients and help more seniors remain in the safety and security of their own homes for as long as possible.”

As part of the deal, Aging Advocates will gain 60 employees from Senior Home Care Solutions, including caregivers and an office management team.

“This acquisition aligns with our mission to promote dignity and independence for our clients while providing peace of mind for their families,” Aging Advocates founder and CEO Melissa Murphy said in a statement. “We have a great working relationship with Senior Home Care Solutions and deeply respect their service to the community. As our population ages, it’s crucial to maintain quality in-home care providers in Central New York.”

Cardiovascular Associates of America acquires home-based care company

Earlier this month, Cardiovascular Associates of America (CVAUSA) announced the acquisition of Novolink Health, which provides care services to complex patients in the home.

Based in Orlando, CVAUSA is a physician-centered cardiology company with a mission of “saving lives, reducing costs and improving patient care through clinical innovation.” The Fort Lauderdale, Florida-based Novolink, meanwhile, aims to fill care gaps between the hospital and home. As a division of CVAUSA, it will “offer a proven alternative to traditional hospital-based care,” according to a press release.

“Our mission has always been to provide exceptional and personalized care to our patients. Joining CVAUSA, one of the largest US cardiology networks, allows us to leverage the extensive resources and reach in our journey to revolutionize healthcare delivery,” Novolink President and Chief Medical Officer Michael Shen said in a statement. “We are very excited to work closely with Tim and the CVAUSA family to bring our innovative model to more communities and improve the quality of care for all patients in the comfort of their homes.”

Prior to the COVID-19 pandemic, Novolink developed a “high-risk care at home” model, which piqued CVAUSA’s interest in the company.

“I have known Dr. Shen since 2005. He’s an excellent cardiologist and is always experimenting and exploring ways to provide better and lower-cost care,” CVAUSA CEO Tim Attebery said in a statement. “Years before the term ‘hospital at home’ was coined, Dr. Shen realized that remote monitoring technology and home-based diagnostic services could create an Amazon-type solution, allowing certain high-risk patients to receive high-quality and safe care at home instead of being in a hospital or skilled care facility.”

Adena Health and AHSN form home health, hospice JV

The Ohio-based health system Adena Health has agreed to form a home health and hospice venture with Alternate Solutions Health Network (ASHN).

The JV will be branded as Adena Home Health and Hospice, and will focus on caring for seriously and terminally ill patients in South Central and Southern Ohio.

“This is an exciting and significant step forward in our home health and hospice care delivery,” Adena Chief Clinical Officer Dr. Shaheed Koury said in a statement. “Building on our long-standing commitment to providing compassionate, patient-centered care to our communities and leveraging the breadth and experience of Alternate Solutions Health Network, our caregivers will be well-positioned to offer patients even more convenient and personalized care options.”

ASHN provides home health and hospice care primarily through partnerships. It has partnerships with more than 40 health systems and more than 90 home health and hospice providers.

Spectrum Brands plan to spin off home health, personal care business

In early July, Spectrum Brands Holdings (NYSE: SPB) – a “home essentials” company – announced that it had filed a confidential Form 10 registration with the U.S. Securities and Exchange Commission (SEC) to spin off its home care business.

“As previously announced, Spectrum Brands has accelerated its efforts to separate its HPC business from its remaining businesses through a spin-off, sale, merger or other strategic transaction,” the company wrote in a statement. “The filing of the confidential Form 10 registration statement with the SEC represents an important step forward in this process. The filing of the Form 10 registration statement does not obligate Spectrum Brands to complete the spin-off or engage in any other transaction.”

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There are certain headwinds affecting all home-based care providers right now, whether it be in payment, staffing or otherwise. Amid those challenges, the largest companies are all taking slightly different approaches to growth.

Enhabit Inc. (NYSE: EHAB), for instance, grabbed the attention of home health providers everywhere last week when it announced that it had terminated its contract with UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare. That move fell in line with its overarching “payer innovation” strategy.

Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) is also focusing on its “preferred-payer” strategy, which includes drawing a hard line on rates – as Enhabit is doing – but also advocating for proper reimbursement from states in home- and community-based services (HCBS).

Leaders from Amedisys Inc. (Nasdaq: AMED) have been quiet over the last year, given the pending UnitedHealth Group acquisition. But, when it comes to its payer strategy, the company’s numbers tell a story worth paying attention to.

Elsewhere, Addus Homecare Corp. (Nasdaq: ADUS) is taking advantage of the headwinds. High interest rates and payment uncertainty across home-based care has led to a slow M&A market, allowing the company to pounce on acquisition targets with little competition.

The Pennant Group (Nasdaq: PNTG) has done the same.

All of the aforementioned companies’ strategies differ to some extent, and yet all are in place to achieve growth during a somewhat turbulent time for home-based care.

What’s behind those strategies is the topic of this week’s exclusive, members-only HHCN+ Update.

Finding the right payers

Aveanna and Enhabit are both trying to turn around their businesses. Each saw their share price tumble after going public, and each has addressed that issue – at least in part – by revamping their payer strategies.

Enhabit’s payer innovation strategy has been well documented, and I covered its decision to walk away from UnitedHealthcare in last week’s HHCN+ Update.

“After over nine months of unsuccessful negotiations with UnitedHealthcare, we submitted our termination notice on August 1,” Enhabit CEO Barb Jacobsmeyer said last week. “We will dedicate our clinical resources to fee-for-service Medicare patients, and those members of the 68 favorable contracts. We remain committed to providing our strong quality of care to UnitedHealthcare members, if at some point they decide to contract with acceptable rates.”

Similar to Enhabit, Aveanna is taking back its most vital resource: frontline workers.

“By focusing our clinical clinical capacity on our preferred payers, we achieve solid year-to-year growth in revenue and adjusted EBITDA,” Aveanna CEO Jeff Shaner said on the company’s second-quarter earnings call. “We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts to those payers willing to engage with us on enhanced reimbursement rates and value-based agreements. While we continue to operate in a challenging labor and inflation environment, our preferred payer strategy allows us to return to a more normalized growth rate in our business segments.”

Aveanna posted solid year-over-year growth in all three of its segments – private-duty services, home health and hospice, and medical solutions – in the second quarter.

Enhabit has touted its 68 “favorable” non-Medicare agreements. Aveanna, too, is taking stock of the payers and states that are willing to pay it an adequate rate for home-based care services.

Aveanna said that no single payer makes up more than 10% of its business, which lends itself to a healthy business. At the same time, that means work is cut out for the company when it comes to renegotiating higher rates for services.

As seen above, Aveanna is set to triple and nearly triple its preferred payers and value-based care arrangements, respectively, by the end of 2024.

Traditionally, one concern in home-based care has been that at least one provider will be willing to accept substandard rates, making negotiations for the rest of providers tougher.

Now, though, the larger companies are leading by example.

“As we continue to grow, we are accelerating our preferred payer strategy and medical solutions by aligning our capacity with those payers that value our services and appropriately reimburse us for the care we provide,” Aveanna CFO Matt Buckhalter said on the call. “We continue to fight through a difficult labor environment while keeping our patients’ care at the center of everything we do. It is clear to us that shifting caregiver capacity to those preferred payers who value our partnership is a path forward.”

Amedisys is likely to be joining a payer itself by year end. But it has clearly been focused on winning better MA business over the last couple of years. In the second quarter, its non-Medicare home health revenue grew by 24% year over year.

Another study published this week suggested that MA members utilize home health care less than their traditional Medicare counterparts. While there’s likely a lot of reasons for that, it’s probably not a good long-term strategy for MA plans to cheap out on home health care, an essential and less costly service.

‘Bold’ M&A

One of the other most enlightening admissions of this past earnings season came from Addus, which suggested its recent M&A activity was partly made possible by less competition – particularly of the private equity variety.

Last year, Addus acquired Tennessee Quality Care for $106 million, enhancing its value-based care capabilities in the state. This year, it agreed to acquire Gentiva’s personal care assets for $350 million, allowing it to enter multiple new states.

Over the past two to three years, M&A has reached historical lows in the home-based care space. Activity across home health care, home care and hospice has fallen off a cliff since there was the flurry of activity in 2020 and 2021.

“Realistically, over the last 12 to 18 months, we’ve not seen a lot of competition out there,” Addus CEO Dirk Allison said on the company’s second-quarter earnings call. “There’s been the occasional smaller strategic player that’s bought a few deals on a localized basis. From a PE standpoint, it’s really been very slow as far as competition for the last bit. Now, obviously, if rates come down in September, as everybody’s expecting, there’ll be a point where PE will come back in and that’s fine. It’s been a market in which up until the last year or so, we’ve always operated with competition from those folks.”

The Pennant Group (Nasdaq: PNTG) has joined Addus in bucking the downward M&A trend. It has executed a slew of transactions over the past couple of years, including a large deal for Signature Healthcare assets in its current footprint, as well as a deal that will place it on the East Coast for the first time.

“This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries and a disciplined – yet bold – growth company with the sophistication and adaptability to become a key solution in the health care continuum,” Pennant Group CEO Brent Guerisoli said on the company’s second-quarter earnings call. “Since the beginning of the year, we have entered into the Muir Home Health joint venture; closed an additional two home health and two hospice transactions; initiated a management agreement with Hartford HealthCare; announced the largest acquisition in our history with the Signature transaction; and completed three senior living deals.”

Most of the largest home-based care providers recognize the need for two things in this market: better contracts with all managed care partners, and scale that will allow them to sustain success in the face of stroke-of-the-pen risk.

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The company provides – through multiple locations – home health, personal care, hospice and rehabilitation services. The organization collaborates with health care systems and payers to deliver care to patients in Indiana, Ohio, Michigan and Texas.

Wichita Home Health Services, based in Wichita Falls, Texas, has provided home care to patients in its surrounding communities since 1969. The business was founded by Dr. Ruth Constant, who developed the first home health agency certified under Medicare in 1966. She was also one of the founding fellows of the National Association for Home Care & Hospice (NAHC) and the Texas Association of Home Care and Hospice (TAHC).

Wichita Home Health is currently led by Chrystal Everett, who also serves as the president of TAHC.

“We are honored to be able to continue the legacy of the Wichita Home Health team,” LTM Group CEO David Kerns told Home Health Care News. “It will be an anchor within the Texas market with a goal of expanding throughout the southwest region. It also helps us expand our talented leadership team by adding some of the brightest minds in home care.”

Kerns said the company will continue operating under the Wichita Home Health Services brand, and all local leadership will remain the same. The acquisition agreement was finalized last week, and the transaction is set to be completed in the next quarter.

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One of the reasons Bridge City Home Care was an attractive acquisition target to HouseWorks was because of an existing relationship.

“Bridge City was owned by the same individual who previously owned Druk Home Care, which HouseWorks successfully partnered with in late 2023,” HouseWorks CEO Mike Trigilio told Home Health Care News in an email. “This existing relationship with the previous owner created a unique synergy, making it a natural progression for HouseWorks to bring Bridge City into our growing family of companies.”

Backed by InTandem Capital, HouseWorks is a Greater Boston-based home care company that also provides meal delivery and laundry services. The company delivers services across Massachusetts, Connecticut, Maine, New Hampshire, New York, Pennsylvania and Tennessee.

HouseWorks was also drawn to Bridge City Home Care’s growth track record over the last two years.

“Their commitment to a growth mindset and providing quality care to patients aligns perfectly with HouseWorks’ strategic vision,” Trigilio said. “By partnering with Bridge City, HouseWorks seizes the opportunity to further expand into the Pittsburgh market, solidifying our presence across the state.”

Indeed, the transaction is HouseWorks’ third in Pennsylvania.

In 2018, HouseWorks purchased Caring Friends Home Care in Philadelphia. Last year, the company acquired Care & Help, which is also based in Philadelphia.

Trigilio noted that Pennsylvania is a key market for HouseWorks.

“Pennsylvania continues to be a significant market of focus for HouseWorks and the team given the attractive HCBS environment within the state,” he said. “PA is one of the largest enrollees of HCBS participants, while also being a top ten state in terms of overall spend. The opportunity to continue to expand west, into key markets such as Pittsburgh, will also grow our Meal Delivery service and will be a key priority for the team as we finish 2024 and look to 2025.”

Moving forward, M&A will continue to play a significant role in HouseWorks’ growth strategy.

“While organic growth remains a top priority for the team, we are also committed to developing a robust M&A pipeline that aligns with our strategic vision,” Trigilio said. “Our focus will remain on continued expansion across the Northeast and mid-Atlantic markets, valuing density and the ability to provide high-quality care across our patient base. Identifying and partnering with strong regional operators will continue to be a focus as HouseWorks continues to expand its footprint.”

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