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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The company has acquired AccordCare’s personal care division in Connecticut, which operates under the brands Companions & Homemakers and Companions Forever. The acquisition will bring HouseWorks into Connecticut for the first time, and further expand its footprint in the Northeast.

HouseWorks has now made nine acquisitions since 2021.

“We’ve been watching this asset for the past three years,” HouseWorks CEO Mike Trigilio told Home Health Care News. “Our main objective within our M&A growth strategy is to build out density and structure in the Northeast.”

Backed by InTandem Capital, HouseWorks is a Greater Boston-based home care company that also provides meal delivery and laundry services. Along with Massachusetts and now Connecticut, it also has a footprint in Maine, New Hampshire, New York, Pennsylvania and Tennessee.

The Marietta, Georgia-based AccordCare, meanwhile, is a home-based care company with a footprint in Georgia, Alabama, Florida, New Jersey, New York, North Carolina and South Carolina.

As part of the deal, the local leadership teams at Companions & Homemakers and Companions Forever will remain in place. AccordCare originally acquired Companions Forever in December of 2020, and then acquired Companions & Homemakers in October of 2022. Both of those brand names will remain past the integration stage with HouseWorks.

“It’s a great opportunity in the state of Connecticut for us to continue to grow there and expand our footprint,” Trigilio said. “It puts us in a position to be a leader in the state, Day One. And it gives us that density with a large caregiver network across the entire state.”

The Companions & Homemakers and Companions Forever businesses are entirely driven by Medicaid home- and community-based services (HCBS) business. Over the past few years, HouseWorks’ revenue mix has become far more tilted toward Medicaid, though the company still does plenty of private-pay work.

“We want to be operating in a very strong HCBS market, which we’re doing here,” Trigilio said. “As we continue to look at transactions, it’s important that we see opportunities that can fold into our HouseWorks infrastructure. We know that not all transactions are easy to integrate. This is a carve out. We’ve successfully completed a few carve outs and those do get complicated, but we make sure that we can integrate those businesses quickly into our HouseWorks Hub.”

Connecticut is a $2 billion HCBS market and has increased rates by 20% since 2020, according to HouseWorks.

Moving forward, the company plans to implement some more back-office functions and IT support in its new Connecticut locations.

It also plans to execute on more deals in 2024.

“We have been actively trying to execute a transaction every three to four months for the last few years,” Trigilio said. “And we have quite a bit in the pipeline right now.”

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All three companies are doing unique things to maintain growth in 2024, however.

Firstly, over the last few years, there has been a vast chasm between buyers and sellers. That gap may be beginning to close, however.

“That gap between expectation, and what buyers are willing to pay, has closed considerably,” Cameron Cordts, corporate development manager at PurposeCare, said during a panel discussion at Home Health Care News’ Capital + Strategy conference. “I think PurposeCare found more success on the proprietary lead side as well.”

Cordts noted that the majority of PurposeCare’s growth has come from harvesting these proprietary leads.

Backed by the health care-focused private equity firm Lorient Capital, PurposeCare delivers both clinical and non-clinical home-based care. The company has been very bullish when it comes to M&A. Since the PurposeCare’s launch in 2021, the company has completed 14 acquisitions, mostly, across the Midwest.

On its end, HouseWorks self-sourced eight of its last ten deals, according to CEO Mike Trigilio.

The InTandem Capital-backed HouseWorks has earned a reputation for being one of the most active buyers in the home-based care space — ballooning it into a $400 million company. HouseWorks delivers in-home care and has meal delivery and laundry businesses. The company is also involved in the adult day space.

“We are trying to be a solution provider for the payer versus just delivering home care,” Trigilio said during the discussion.

Over the last six years, Care Advantage has closed 21 deals. When it comes to acquisition targets, the company has focused on personal care and other complementary services.

“How can we do some of those things that aren’t a hop, skip and jump away from [personal care], but a step away from that?” Jaron Clay, VP of integrations at Care Advantage, also said. “So we’ve also dipped our toes into adult day. We’re focusing on companies that really target non-English speaking populations, who are otherwise excluded from the care continuum. That has proven to be a very sticky, and profitable business for us, but most importantly, a really rewarding one.”

Richmond, Virginia-based Care Advantage is a home-based care company that has more than 45 locations throughout Virginia, Maryland, Delaware, Washington, D.C., and North Carolina. The company offers both personal care and home health care services.

Clay knows that a potential acquisition target is a good fit when the company aligns with Care Advantage’s drive to grow.

“Do they have that same attitude?” he said. “Are they happy with exactly how their company is today, or are they chomping at the bit to grow, and have the tools they need to make their company bigger to plug into our power grid? We’ve absolutely walked away from deals that looked excellent on paper because that attitude was not there when we went to meet that leadership team that was going to stay on.”

Though HouseWorks typically avoids acquisition targets that could be categorized as distressed, the company sees an opportunity in its ability to streamline an organization.

“We do like looking at those businesses and saying, ‘What’s wrong?’” Trigilio said. “‘What are the pieces that we can fix?’ A lot of it revolves around our technology and our solutions that we put into play, basically day of close. Some of those things can be mitigated very quickly.”

Similarly, Care Advantage has been able to help acquisition targets solve key challenges.

“There are companies that have been able to identify a problem, and we felt we had a quick solution for them, particularly around talent acquisition,” Clay said. “That is just what we hear over and over again, ‘It’s so hard to get caregivers.’ We’ve done a lot of investments around that at Care Advantage. We think we have a better mousetrap, so we’re open to companies that need a little help, but don’t have a litany of problems.”

At PurposeCare, a strong org chart and a company with aggressive growth goals is the main identifier for if an acquisition target is a cultural fit for the company, Cordts noted.

Looking ahead, HouseWorks M&A focus is fixed on the Medicaid space, and finding opportunities to add auxiliary services to its overall offerings.

On its end, PurposeCare is watching out for regulatory updates that could impact business, such as the Medicaid Access Rule and the upcoming home health proposed payment rule.

At Care Advantage, the focus remains on culture.

“It goes back to that culture — always,” Clay said. “Are you doing an excellent job lifting up your communities? Are you doing an excellent job for your clients? If not, this is probably not going to be a fit for us, because we’ve worked very hard to have the reputation and the outcomes that we do. We’re not willing to lose those for a quick win.”

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Transaction volume for home health, home care and other in-home care businesses dipped in 2023, with inflation, higher interest rates and global unrest contributing to the downturn.

Many home-based care stakeholders anticipated M&A to rebound in 2024, however, thanks to increased loan activity in January, greater buyer-seller consensus and private equity’s record-high levels of “mature” dry powder.

With 2024’s first quarter in the rear-view mirror, the home-based care dealmaking outlook still looks to be a bit of a question mark.

“Things can change in a short amount of time and have a profound impact on the marketplace,” Mark Kulik, senior managing director at M&A advisory firm The Braff Group, said last week at the Home Health Care News Capital + Strategy Conference in Washington, D.C.

While it may be too soon to call 2024 a bull or bear market for M&A, I am starting to notice a few interesting trends, many of which surfaced at the Capital + Strategy Conference. Some of those trends include:

– The 2024 forecast for home-based care transaction volume is cloudier than just a few weeks ago, with the Federal Reserve seemingly more wary of interest-rate cuts.

– Buyers and sellers are increasingly aligned, though some sellers are still holding out for 2020- and 2021-level valuations. Some are bridging the buyer-seller gap with earnout structures.

– Investors are more optimistic about the current in-home care staffing environment, with many seeing labor pressures alleviating compared to the historically challenging stretch coming out of the public health emergency.

– While some buyers remain focused on a particular care lane, others continue to pursue continuum and diversification strategies.

– More acquirers are touting their proprietary M&A strategies. Unsurprisingly, the No. 1 business characteristic buyers are targeting: quality.

In this week’s exclusive, members-only HHCN+ Update, I share some of my biggest takeaways from our conference.

Monetary-policy whiplash

Home-based care transaction volume plummeted in 2023, mirroring the broader global health care dealmaking trend. Some of the dip was a return to mean, with 2021 experiencing record M&A activity and 2022’s action robust as well.

The cost of capital was arguably the primary hindrance to dealmaking, with the Federal Reserve attempting to control inflation via its most impactful economic tool: interest-rate policy. From March 2022 through July 2023, the U.S. central bank has raised the fed funds rate by more than five percentage points, making no fewer than 11 individual hikes.

“This is akin to the Fed jamming the brakes on the monetary policy to help slow down the economy because inflation was occurring,” Kulik explained at the Capital + Strategy Conference.

Going into 2024, the Federal Reserve had signaled intentions to cut rates, with relief possible coming in the second or third quarter. That gave home-based care buyers and sellers reason for optimism.

That excitement has dissipated over the last week. As recently as Tuesday, officials explained that inflation remains more stubborn than they anticipated, meaning interest rate rates will likely stay high.

“Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” Federal Reserve Chair Jerome Powell told a forum in Washington.

At the Capital + Strategy Conference, it felt like the discussions around the broader U.S. economic climate were giving buyers and sellers whiplash. In turn, I see buyers and investors operating with the same conservative mentality on display in 2023.

Still, one factor that could mitigate that is the ample dry powder that private investors are sitting on, according to Bain & Company data, which Kulik cited during a presentation at our event. With about 26% of global buyout dry powder now four years or older, some are feeling heightened urgency to get deals done.

“Investors gave them money to invest in buy, and they didn’t deploy it,” Kulik explained. “And there’s pressure on private equity to deploy that cash because investors want a return on their money. They don’t want to just let it park in a savings account in a bank.”

Narrowing the gap

Home-based care sellers in 2023 valued their businesses at 2020 and 2021 levels, when valuations for home health, home care and hospice providers were extremely high. There is still a gap between today’s more conservative buyers and hopeful sellers, but it’s beginning to shrink, multiple executives said at the Capital + Strategy Conference.

“I do feel like that gap between expectation and what buyers are willing to pay has come closer – considerably,” Cameron Cordts, corporate development manager for PurposeCare, said at the event.

Backed by Lorient Capital, PurposeCare is a home health and home care provider focused on building density in the Midwest. The provider has announced several acquisitions over the past couple years, including three at the start of 2024.

In some cases, the gap is closing because of segment-specific factors, such as fee-for-service Medicare rates or the looming 80/20 rule in Medicaid. These and similar industry-specific challenges become the final straw for some prospective sellers.

In others, sellers have finally come to realize that buyers aren’t willing to pay 2020 and 2021 terms. Having been on the market for an extended period, these sellers have now accepted their fate.

“It is starting to shift a little bit,” Mike Trigilio, CEO of HouseWorks, said at the Capital + Strategy Conference. “There are some [sellers] coming on the market in the last few months that probably waited through 2023, that weren’t around last year. We’re seeing tons of opportunity.”

The InTandem Capital-backed HouseWorks has been one of the most acquisitive home-based care companies since late 2021, with its purchases including the personal care division of Amedisys (Nasdaq: AMED), Elite Home Health Care and several others. Service and payer diversification have been two of the company’s core M&A pillars.

Some buyers are taking it upon themselves to bridge the divide between acquirers and sellers. One way to do so is through deal earnout structures.

Care Advantage – the home-based care company backed by Searchlight Capital – has been successful with this approach, according to Jaron Clay, the company’s VP of integrations. Care Advantage has completed close to two dozen transactions since 2018, with Nova Home Health Care one of its more recent acquisitions.

Four of its last five deals have included earnout structures, Clay noted.

“We’ve pushed a lot more toward doing earnout structures on a lot of our deals,” he said at the event. “That’s a way for us to have the certainty that we want around this business not falling off the cliff when the owner/operator leaves. But it also is a way for us to actually give that person more money – maybe not all on Day 1. They’re getting some of it 12 months or 24 months down the road.”

I do feel like that gap between expectation and what buyers are willing to pay has come closer – considerably.”

– Cameron Cordts, corporate development manager, PurposeCare

Staffing success paying off

Another frequent comment I heard during the Capital + Strategy Conference: Home-based care staffing challenges are leveling off.

“Across our portfolio, we’ve seen improvements,” Scott Plumridge, managing partner at the Halifax Group, said at the conference. “I think our operators would characterize it as easier, but still not easy.”

The Halifax Group in September acquired the worldwide home care division of Sodexo, including the Comfort Keepers brand.

Contextually, home health, home care and hospice agencies have long faced a staffing deficit. Demand for aging-in-place and end-of-life care services is increasing faster than supply – and that will remain true as baby boomers transition into their 65+ era.

But the overall labor market is improving, and home-based care providers are also getting better at attracting and retaining talent.

Altarum’s most recent Health Sector Economic Indicators brief supports this notion. In March, the seasonally adjusted change in employment was 8.5% for home health care services, up from the 24-month mark of 6.6%.

That’s among the strongest employment gains in all of health care.

Kenneth Hammond, the chief investment officer for Kaltroco, echoed Plumridge’s comments.

“2022 was the moment of the most intense [staffing] pressure,” said Hammond, whose organization is the investment partner of New Day Healthcare. “And certainly, the situation has gotten better.”

While overall labor-market improvement is helping the staffing situation stabilize, the provider-driven efforts making a dent include sign-on bonuses and other enhanced benefits, smarter scheduling, the automation of non-care functions and more.

The continuum of care

Although there are certainly still buyers that prefer to focus on one core service, forward-looking in-home care operators continue to build out a complete continuum of care. I view this strategy as a long-term trend propelled by value-based care and the consumerization of health care.

New Day is among the home-based care companies that consider the care continuum in M&A opportunities.

“We are open minded to good businesses across the board, from skilled home health, to Medicaid [personal care], to hospice,” Hammond said. “From a platform standpoint, as we enter new states, we like businesses that have begun to solve that [continuum] problem, right? We look for companies that have at least two of the three legs of the stool, so that we can deploy organic growth to go pursue that continuum strategy that we bring data into.”

Having a continuum of home-based care service lines allows providers to maintain longitudinal relationships with clients. An older adult may turn to non-medical home care for activities of daily living (ADL) support, but that could eventually turn into a home health or hospice relationship.

Payers also appreciate providers with diverse service offerings.

“Our goal is to create a continuum of care, primarily leading with home care on the non-skilled side, then supplementing with home health care,” Cordts said.

At the Capital + Strategy Conference, it was evident to me that continuum and diversification strategies included far more than just home care, home health and hospice. Companies such as Care Advantage, for instance, are working to build care continuums for specific populations.

“We’ve really been focusing on being disciplined around what we’re very, very good at, which is personal care,” Clay said. “How can we do some of those things that aren’t a hop, skip and jump away from that, but a step away from that?”

An example: Care Advantage has acquired home care providers that specialize in certain cultural demographics. This creates strong provider-client relationships while also differentiating Care Advantage in those markets.

“That has proven to be a very sticky business, a very profitable business for us,” Clay continued. “But most importantly, a really rewarding one.”

We’ve really been focusing on being disciplined around what we’re very, very good at, which is personal care. How can we do some of those things that aren’t a hop, skip and jump away from that, but a step away from that?

– Jaron Clay, VP of integrations, Care Advantage

Active acquirers tout DIY M&A

The M&A process can be a taxing one, so it’s not a shock that many buyers and sellers enlist the help of an expert dealmaking facilitator. That’s not always the case, though, with even some of the largest in-home care providers in the country previously touting their internal M&A efforts.

While at the helm as the CEO of Amedisys, Paul Kusserow was always keen on highlighting the provider’s proprietary M&A process.

“We built our own proprietary M&A function that can find these assets,” Kusserow told me in 2018. “We bought [Compassionate Care Hospice] way below what the market has been trading at for these assets. Hopefully this will start a trend where people are not overpaying for these things because some of the prices that have been out there are ridiculous.”

At the Capital + Strategy Conference, it felt like more providers were making similar remarks.

At HouseWorks, a majority of the company’s previous 10 deals were sourced internally, Trigilio said. Quality is usually the starting point in those processes, he added.

“The key ingredients are compliance and quality,” he said. ”The care delivery is always at the beginning of all these transactions.”

The same holds true for PurposeCare, according to Cordts.

“They’re not as competitive, but typically involve maybe a little bit more time for my team, and myself, bringing that seller along in the process,” he said. “That’s been the majority of our growth in the last year or so – harvesting those proprietary leads and educating sellers on where the market is at, and what those expectations can lead to.”

The post ‘We’re Seeing Tons Of Opportunity’: Home-Based Care Buyers Deploy DIY M&A, Earnout Structures In 2024 Dealmaking Strategies appeared first on Home Health Care News.

Just a few years ago, the Greater Boston-based HouseWorks brought in about $25 million in annual revenues, with nearly all of that coming from private-pay home care services. Now, with 2024 in sight, the provider is approaching $400 million in revenue with a diversified payer mix increasingly weighted toward Medicaid.

The keys to HouseWorks’ astronomical growth in such a short period: the implementation of new core systems, an experienced leadership team and, in InTandem Capital Partners, a market-savvy financial sponsor. The development and implementation of eCaring, a home care technology platform acquired and fine-tuned by HouseWorks, likewise played a major role, according to CEO Mike Trigilio.

“This pivotal evolution marked a transformative moment for the organization,” Trigilio told Home Health Care News.

Trigilio was named CEO of HouseWorks at the beginning of April 2021, taking over for Andrea Cohen, the company’s founder and former top executive. He came to the home care provider from Amedisys Inc. (Nasdaq: AMED), where he ran a personal care division that was largely built on top of Associated Home Care, which Trigilio previously led.

“When I looked at HouseWorks, it reminded me of Associated, and I saw a lot of parallel opportunities to grow it quickly,” Trigilio explained. “I thought if we could put systems in place here at HouseWorks, we could ultimately scale this business, much like we did with Associated.”

HouseWorks’ growth is one of the home care industry’s best-kept secrets of 2023. And it’s a case study for other home care operators, along with investors, hoping to achieve similar results in 2024 beyond.

“I thought if we could put systems in place here at HouseWorks, we could ultimately scale this business, much like we did with Associated.”

– HouseWorks CEO Mike Trigilio

Building the foundation

Prior to April 2021, when HouseWorks’ annual revenue clocked in around $25 million, it delivered around 13,500 hours per week of home care services via a team of about 300 caregivers. Most of that business, again, was from private pay.

To take HouseWorks to “the next level” and gear up for an aggressive M&A push, Trigilio and his leadership team knew they needed to reinforce their organization’s foundation. That was done, in part, by implementing improved scheduling and billing software while “solidifying the caregiver experience” by increasing pay rates, offering enhanced benefits and investing in career-development programs.

Integrating eCaring’s data capabilities was another priority. HouseWorks was an early investor in eCaring under the leadership of former-CEO Cohen in 2020. HouseWorks later acquired a majority stake in eCaring in connection with InTandem’s investment in late 2022.

“The technology industry has been pushing out products, but they are finding it difficult to refine and integrate them into supporting seniors in the home,” Cohen told HHCN after the deal was announced. “It’s hard for them to find partners to experiment with. We felt that in order to be successful moving forward, we have to integrate technology to enhance the experience of our customers.”

While all of that was taking place, Trigilio and the HouseWorks executive team were simultaneously working on an M&A playbook that took the lessons learned from a series of smaller acquisitions the company completed over the years and outlined areas for improvement.

The playbook also pulled from what Trigilio had learned from his time at Amedisys, from due-diligence best practices to how buyers should handle the first 30, 60 and 90 days post-acquisition.

“I learned quite a bit while I was working there, especially the focus on systems and repeatable structure,” Trigilio said.

Even with the long list of to-dos, a lot of that foundational work happened over a three-week period.

“We put together a 21-day sprint document that analyzed all the things that we needed to update within the infrastructure of the company,” Trigilio said. “From there, we addressed where the biggest holes were, what we could handle internally versus externally, where we needed to go as far as bringing in additional help.”

The fruits of that labor began to come that fall.

In October 2021, HouseWorks acquired Atlantic Homelife Senior Care, which has locations in New Hampshire and Maine.

Less than a month later, it announced a deal to buy the Eastern Massachusetts-concentrated Connected Home Care, propelling HouseWorks into the Medicaid space in a significant way for the first time. By strategically expanding into Medicaid, HouseWorks was able to diversify its revenue while adding a greater degree of stability to its business, Trigilio said.

“[Private pay] is a great business, but it also has some ups and downs,” he noted. “It’s more bumpy, and your revenue per client can really move your business around a bit. It’s much harder to predict.”

In early 2022, HouseWorks doubled down on Medicaid by buying Greater Boston Home Health Care Services. After executing that transaction, HouseWorks became several times larger than what it was just six months prior.

Its hours of care delivered per week jumped to 25,000, with its caregiver workforce climbing to 900. Its annual revenues rose to about $45 million.

Up until that point, HouseWorks had been backed by RAB Ventures. As Trigilio set his sights on 2023, however, he believed a new capital partner was critical to keep HouseWorks on the upswing.

“We just needed a larger partner,” he said. “So the board and myself, we met mid-22, and we decided to run a process that would enable us to continue to scale.”

Taking the next step

That’s when InTandem Capital Partners entered the picture.

New York-based InTandem Capital Partners is a private equity firm that invests in small- to mid-sized health care services companies. Its portfolio includes senior primary care group Cano Health, fertility services leader Ivy Fertility and ambulatory infusion leader Vivo Infusion. Most relevant to HouseWorks, though, are its in-home care investments Providence Care and Pediatric Home Service.

Compared to other possible partners during the sales process, HouseWorks and InTandem had clear alignment on a growth roadmap and Medicaid expansion, Trigilio said.

As a cherry on top, Trigilio had an established rapport with InTandem Senior Partner Brad Coppens.

“We’ve known Mike for several years,” Coppens told HHCN. “Mike and his team were a key part of our conviction in starting our investment program with HouseWorks, which at the time of our original investment was a modest-sized company.”

InTandem officially invested in HouseWorks in December 2022. Almost immediately after that investment came, the pair sent a letter of intent out to Amedisys for the Baton Rouge, Louisiana-based provider’s $60 million personal care division – Associated Home Care, effectively – that Trigilio once headed.

The transaction netted more than a dozen care centers in multiple states.

“It’s been a whole lot of fun getting to see all those people again,” Trigilio said. “The business is in great shape.”

Any integration process is challenging – let alone a handful happening at the same time. But HouseWorks and InTandem weren’t done adding.

In May 2023, HouseWorks bought Care and Help Home Care in the Philadelphia area. A couple months later, HouseWorks landed Druk Home Care – another Pennsylvania provider.

Most recently – on Tuesday, in fact, – HouseWorks announced a definitive agreement to partner with Elite Home Health Care, a home-based care provider in New York. Elite – which cracked the top of Fortune Magazine’s “Best Workplaces in Aging Services” list – delivers care to close to 4,000 clients, primarily in the New York City metro area, plus the Rochester, Buffalo and Syracuse regions.

It’s important to note that all this dealmaking came at a time when home care-related M&A activity was somewhat depressed, at least compared to the pandemic-fueled run on home-based care assets in late 2020 and throughout 2021. More broadly, many PE firms have pulled back on health care investments due to macroeconomic challenges, including inflation and the rising cost of capital.

“Quite naturally, as the economic and capital markets picture became more complicated, it became more difficult to complete acquisitions,” Coppens said. “Fortunately, given our experience in this sector, we were very well-versed with regard to the provider landscape in these three major markets of New York, Massachusetts and Pennsylvania. We were able to evaluate and execute these acquisitions relatively easily.”

On the horizon

The fast-paced M&A strategy has transformed HouseWorks into the largest home care provider in Massachusetts, and one of the eight-largest providers in both New York and Pennsylvania. What’s more, along with scale, the dealmaking wave added new services to HouseWorks’ offerings.

Elite Home Health Care brought adult day services and a four-location caregiver-training school, for example. Care and Help included meal-delivery services, while Associated Home Care had a laundry business.

Being able to offer multiple aging-in-place services is a selling point with payers, Trigilio said.

“Instead of having three different providers providing three different things, it’s much cleaner to have one single organization doing that,” he said.

As HouseWorks closes out 2023, its revenue figures are “right around $400 million,” according to Trigilio and Coppens. And its team of caregivers – currently more than 12,000 in number – is delivering about 250,000 hours of care per week.

To continue hitting its ambitious growth goals, HouseWorks will likely target three to five additional transactions in 2024, Trigilio said. The company will keep its focus on the broad Northeast and mid-Atlantic markets, valuing density more than geographic coverage.

“We’re certainly looking for additional opportunities in New York and Pennsylvania,” Trigilio said. “And some parts of New Hampshire and Maine.”

Completing the integration of all of its recent purchases will, of course, remain a focus as well, the CEO said. The same is true for further investing in caregiver-support initiatives and beefing up the HouseWorks leadership team.

HouseWorks named Aveanna Healthcare (Nasdaq: AVAH) veteran Nick Sansone as its new COO on Monday. Since Trigilio took over as CEO, the company has also brought on a new CFO and CTO, while promoting internally across multiple leadership promotions.

“We’re really focused on caregiver retention, really focused on listening to our workforce and making sure that they’re getting what they need to provide the right level of care in the home,” Trigilio said. “Beyond that, our focus is on working with our payer partners and understanding the level of data they want.”

The post From $40M to $400M: How HouseWorks Dramatically Grew Its Business in 12 Months appeared first on Home Health Care News.

Home-based care dealmaking trends generally give a good idea of what’s going on in the space at large.

They show you where the money is headed, and where it’s not. They show you where the Centers for Medicare & Medicaid Services’ (CMS) stroke of the pen has impacted investment or transaction activity. The trends show you who’s hot in the home-based care space, and who’s not.

Therefore, close attention has been paid to the transaction dip in home care, home health and hospice this year. But, in the meantime, it’s possible that we’ve all been missing the forest for the trees.

While home-based care deals are down through the first half of 2023 (though slightly up in Q2), so are health care deals generally. In fact, transaction activity is down at a national level, across industries.

Interest rate increases, staffing shortages and even the Ukraine war have played a hand in a slower dealmaking year in home-based care. Those factors have also led to a 38% decrease in M&A activity globally, however, according to data from Refinitiv.

“It’s not even just health care,” Dexter Braff, the president of the M&A firm The Braff Group, told me. “If you look at different deal flows from the broader M&A market, you would see almost a mirror image of what we’re seeing in health care. This is being felt across the global mergers and acquisitions environment – in geography, and then across industries as well.”

If we can accept the premise that deal flow is largely being dictated by forces outside of home-based care companies’ control, we can enter a much more interesting conversation.

Of the deals that are getting done in home-based care, which are the most interesting – and why?

Finding the broader stories behind the most intriguing home-based care transactions thus far in 2023 is the goal of today’s exclusive, members-only HHCN+ Update.

Home-based care deal trends

The Federal Reserve announced this week that it would raise the interest rate by another quarter point, hiking it to 5.5%, the highest it has been in decades. It’s doing so to combat inflation, which has finally slowed of late.

For now, that still makes for a tough operating environment for potential buyers in the home-based care space, like private equity firms.

PE firms pulling back is due to the aforementioned factors impacting M&A as a whole. Therefore, health care services deal numbers mirror home health and hospice deal numbers.

“I think [those interest rates] are keeping buyers skittish, and they’re not quite ready to jump in feet first,” Braff said. “And the health care market is so tied in with private equity – we see that private equity across all of the health care services that we cover accounts for a little bit more than 50% of deal flow.”

But those PE firms eventually have to spend the cash they have on hand. That’s why Braff is bullish that dealmaking could tick up in the near-term future, despite any internal factors at play in home care, home health or hospice.

“They have to spend money; they can’t just sit on their cash for long periods of time,” Braff said. “They will come back, if for no other reason than that they have to deploy their money. That would suggest to us that, sometime in 2024 – maybe it’s not the first quarter, maybe it’s the second quarter – we will almost assuredly see a ramp up. We’ll also see, particularly in the home health arena, rates settled.”

The most intriguing deals

Addus HomeCare Corporation (Nasdaq: ADUS) is a self-proclaimed conservative buyer.

Its leaders have reiterated over the last couple of years, however, that it plans to increase its value-based capabilities by layering home health services on top of personal care services in its biggest markets.

It did just that in the second quarter with the acquisition of Tennessee Quality Care in a $106 million deal.

Addus already has eight locations of its own in Tennessee, and will now be adding Tennessee Quality Care’s 17 locations and 1,800 daily patients to its portfolio. While Tennessee appears to be a sizable, quality home health care provider – an increasingly rare find – it also operates in a certificate-of-need (CON) state.

Through the acquisition, Addus has accomplished its stated goal in another state.

While CMS proposals in both home health and personal care threaten to damage the company’s business, it is setting itself up to be a future-facing, value-based player.

Earlier in the year, another home health care provider – Amedisys Inc. (Nasdaq AMED) – honed in on its core service lines by offloading its personal care business to the Massachusetts-based HouseWorks.

Backed by InTandem Capital, HouseWorks is a mostly regional home care provider with optimistic growth plans for the future. In the Amedisys deal, it took over 13 care centers.

While the home care industry is incredibly fragmented, most of the largest providers are franchises. HouseWorks is not.

In Braff’s opinion, its deal with Amedisys is one of the most interesting of the year thus far.

“There has been a fair amount of private-duty transactions, but not of that scope,” he said. “That’s significant in terms of the confidence [InTandem] had in the private-duty market. But also, HouseWorks had more of a private-pay focus, but with the Amedisys acquisition, they’re now significantly in Medicaid as well.”

HouseWorks CEO Mike Trigilio also drew excitement from that payer diversification opportunity after the deal.

“Now there’s going to be data connectivity through such a large employee base that’s going to be consistent,” he told me in February. “In Massachusetts, there are roughly 35 different types of payer contracts that are signed between Associated Home Care (AHC) and HouseWorks. Imagine a world where you have 4,000 to 5,000 caregivers delivering the same care, on the same platform, to all of those payers. There’s a great value in that data that we’re able to give to them.”

Amedisys – unbeknownst to most at the time – was also on the verge of selling its entire business. Originally, Option Care Health (Nasdaq: OPCH) entered into an agreement to acquire the company. Then, UnitedHealth Group’s (NYSE: UNH) Optum swooped in and won out on the bidding process.

That deal has been covered extensively, as Optum also completed its acquisition of the home health giant LHC Group earlier this year.

What I was more curious about – which hasn’t been explored yet – is what effect Optum’s entrance could have on the broader home-based care M&A market.

“If one or two PE firms jumped into a market that nobody else has jumped into in any significant way, the follow-the-leader activity is typically extraordinary,” Braff said. “With UnitedHealth Group, they’re such a unique and strategic buyer that something that they do would not, in my mind, change behavior.”

The first half of 2023 also brought us CenterWell Home Health’s first major transaction since the dust settled on its rebranding. A part of Humana Inc. (NYSE: HUM), CenterWell Home Health is made up of the assets of what was formerly Kindred at Home.

Specifically, CenterWell Home Health bolstered its footprint in a very crowded and competitive Florida market through the acquisition of Trilogy Home Health. Based in West Palm Beach, Trilogy has 11 locations across Florida and offers home health, home care and care management services.

It had been unclear how aggressive Humana and CenterWell would be acquisitively. But the Trilogy deal was a sizable one, and a sign that if there’s a good target out there, they’re willing to strike.

The post The Most Intriguing Home-Based Care Deals of 2023 appeared first on Home Health Care News.

The home care industry, so far, has had a relatively quiet 2023.

Over the past few years, the home care space has been defined by ample private equity investment, aggressive provider roll-ups, exciting Medicare Advantage (MA) developments and innovative cross-continuum partnerships. There has been much less action this year, despite the continued focus on social determinants of health (SDoH), activities of daily living (ADLs) and non-medical services throughout the senior care world.

A number of providers have had interesting starts to 2023, however, with revitalized M&A strategies, key leadership changes, creative staffing investments and other factors making them home care companies to watch.

Home Health Care News is highlighting seven such organizations in this exclusive, members-only HHCN+ story. For the purposes of this article, “home care” broadly includes private-pay home care, Medicaid personal care services and adjacent non-medical in-home care services.

Addus

Addus HomeCare Corporation (Nasdaq: ADUS) is an in-home care provider that delivers services to more than 47,500 clients across nearly two dozen states. The Frisco, Texas-based company has steadily expanded into home health and hospice services, but the bulk of its business remains in the personal care field, supporting individuals with activities of daily living (ADLs) and their chronic conditions on a longitudinal basis.

On one hand, Addus is a company to watch simply because it has been such a rock-solid operation through turbulent times, positioning itself for future dealmaking and growth in months to come.

“[With] its clean balance sheet, ADUS will likely get more aggressive this year in pursuing acquisitions, including larger transactions, which should drive EBITDA upside/boost growth,” an April analyst note from Jefferies stated.

Prior to the COVID-19 pandemic, Addus was growing upwards of 20% annually, with a good chunk of that through deals. That pace has lessened, but M&A – particularly in home health care – remains a key part of its growth strategy, according to CFO Brian Poff.

“On the home health side, I think, obviously, that’s been a focus for us,” Poff said during a recent investor presentation. “We’ve talked about that over the last year. I really think that’s complementary to the things we’re doing in the value-based arena. We still would like to add clinical assets, specifically in skilled home health, where we have a strong personal care presence.”

Medicaid rate tailwinds in many of its markets will help Addus invest in its recruitment and retention efforts, too, further supporting organic growth. Already, the provider has started to see improvements in its labor force.

On the other hand, though, Addus is a home care company to watch because of a proposed rule from the U.S. Centers for Medicare & Medicaid Services (CMS).

In April, CMS proposed a series of sweeping Medicaid changes pertaining to home- and community-based services (HCBS). Among them: a provision mandating that at least 80% of Medicaid payment go toward worker compensation in personal care, homemaker and home health aide services.

If finalized, the proposed rule would effectively create a margin cap for HCBS providers such as Addus. At the same time, it could put pressure on some operators, leading to more consolidation opportunities for those that can weather the storm.

“If it goes through at 80%, you’re going to see a vast majority of the small mom and pops go out of business,” Addus Chairman and CEO Dirk Allison recently said. “In states like Illinois, they’ll probably do OK, and maybe New York and Washington because you’re already there. In these other states, mainly the Southwestern states where you’re paying $7.25 an hour minimum wage, that’s where you’re going to have difficulty.”

BrightStar Care

BrightStar Care CEO Shelly Sun, like most home care leaders, is worried about rising billing rates in the home care industry.

Her approach to that issue is a little different than others, however.

Traditionally a private-pay home care provider, Sun wants to invest in Medicare Advantage business as MA plans gain a more considerable hold on Medicare beneficiaries. More than half of all Medicare beneficiaries are now under MA plans.

Home care providers are now able to access beneficiaries through MA’s supplemental benefit offerings, which include in-home support services. The goal for BrightStar is to meet these patients where they are now, hoping to convert them to private-pay clients down the line. MA doesn’t pay well for home care, so the company takes a near-term hit to deliver on a long-term goal.

“I think that it’s really important that we have a seat at the table,” Sun told HHCN last year. “We’re seeing that about 5% to 10% of our Medicare Advantage enrollees from two years ago are now coming back and becoming private-pay clients. So those successes are starting to occur.”

HHCN photo HHCN photo

Sun said that converting MA beneficiaries to private-pay clients generally takes 18 to 30 months.

The Chicago-based BrightStar is a provider of home care, senior living and supplemental staffing. It has 380 total locations in its network, along with 15,000 caregivers and 5,700 registered nurses.

BrightStar is a franchise, which has made its MA strategy a bit tougher to implement nationwide. Franchisees aren’t always psyched about the idea of taking short-term losses when private-pay home care is as lucrative as it’s ever been.

That’s why BrightStar has significantly increased its company-owned footprint of late, so it can innovate in those locations and eventually prove its strategies to franchisees. As of April, nearly 10% of BrightStar’s network was company-owned.

The company is innovating in other areas, too. For instance, it does have its senior living footprint, which it created due to the overwhelming amount of home care clients asking for senior living recommendations.

It also has a partnership with Chamberlain University aimed at increasing the pool of young home care workers in the U.S.

Care Advantage

Care Advantage is a home care provider to watch because of the success it has had establishing pay-for-performance and value-based care arrangements with payer partners – something difficult to do in long-term care.

Its relationship with the Virginia Anthem HealthKeepers plan is the perfect example of that success.

“Value-based payments, risk sharing, alternative payment models, whatever verbiage you use, it’s really difficult to do in the LTSS world,” Jamie Swann, director of LTSS services for the Virginia Anthem HealthKeepers, previously told HHCN. “Because especially around personal care, what are you looking at? What do you measure that is fair to the provider?”

In 2021, Care Advantage CEO Tim Hanold explained to HHCN how that arrangement incorporated multiple performance measures, such as in-patient utilization and ER usage, along with caregiver training and consistency. In a lot of ways, it offers a roadmap for other providers attempting to move into value-based care.

Care Advantage is also exploring creative ways to retain its caregivers. Those ways include a form of “gamification,” or rewarding employees for when they hit key metrics or milestones.

“We wanted to cut through the clutter and be more attractive to the caregiving talent pool,” Hanold previously told HHCN. “We also wanted to create more stickiness with our caregivers, that retention piece.”

HHCN Photo HHCN Photo

Finally, Care Advantage is worth following because it, too, could ramp up M&A in 2023. The provider, backed by PE firm Searchlight Capital Partners, has completed at least 19 acquisitions since 2018.

Overall, Richmond, Virginia-based Care Advantage has more than three dozen locations throughout the Mid-Atlantic region.

Gentiva

“Gentiva Health Services” was the name of the home-based care company acquired by Kindred Healthcare in 2015 for $1.8 billion. That “Gentiva” name was nearly forgotten, but now it’s coming back.

Humana Inc. (NYSE: HUM) completed its divestiture of Kindred at Home’s hospice and personal care divisions in August 2022, selling a majority stake to Clayton, Dubilier & Rice (CD&R), which restructured the assets into a standalone company. The new company’s name: Gentiva.

“Our dedicated hospice and personal care company is focused on improving access, equity and quality of care for patients while remaining an employer of choice for health care professionals,” Gentiva CEO David Causby, who previously helped lead Humana’s internal home health business, said at the time.

Gentiva’s backstory alone – and official coming out party toward the end of last year – make it a home care company to watch in 2023. Its standing is bolstered by some splashy moves of its own.

In February, Gentiva announced an agreement to buy ProMedica’s Heartland home health and hospice assets for $710 million. That deal gives Gentiva care capabilities across the acuity spectrum, adding 15 Medicare-certified home health agencies to its mix to pair with lower-acuity personal care and end-of-life care.

“Gentiva will gain the additional scale needed to expand into new markets, bolster our palliative capabilities, accelerate innovation, and continue adding to our clinical care team, all of which will help provide even more patients with our high-quality care,” a Gentiva spokesperson told HHCN shortly after the deal was announced.

As a result of the deal, Gentiva’s footprint went from 380 locations to 500, and its patient census jumped from about 25,000 to 34,000.

With Causby at the helm armed with capital support from CD&R and Humana, which retains a 40% stake in Gentiva, the company is poised to make additional moves in 2023.

HouseWorks

Boston-based HouseWorks is one of the larger independent home care providers in what remains a highly fragmented market. Andrea Cohen founded the business over two decades ago, differentiating HouseWorks from its peers through a mix of traditional home care support and home-modification services (it no longer provides the latter).

“I would say we’re known as innovators,” Cohen said at HHCN’s 2021 Home Care Conference. “We thought a lot about technology before it was what you’re supposed to think about. We’ve thought a lot about how to support the caregiver, how to empower the caregiver and how to listen to the customer.”

In January, InTandem Capital Partners completed a majority investment in HouseWorks. At that time, the provider’s CEO, Mike Trigilio, told HHCN that new capital would partly go toward expansion.

“There are tremendous opportunities to expand HouseWorks across the Northeast, both through de novo locations and our proprietary M&A pipeline,” Trigilio said.

HouseWorks began realizing those ambitions roughly a month later, announcing an agreement to acquire the personal care business of Amedisys Inc. (Nasdaq: AMED). The transaction, which had a reported price tag of $50 million, included 13 Amedisys care centers in three states.

There are tremendous opportunities to expand HouseWorks … .

– HouseWorks CEO Mike Trigilio

But Trigilio and his team weren’t done.

At the start of May, HouseWorks announced the purchase of personal care business Care and Help Home Care, expanding its footprint in Pennsylvania. Terms of that transaction were not disclosed.

“HouseWorks has the potential to partner with great home care agencies across the region and deliver on a better way of doing business and better way of caring for patients,” Brad Coppens, senior managing director with InTandem, told HHCN. “Our capital is backing Mike’s plan, but also providing him capital to expand in ways that might be difficult on a stand-alone basis for him and his team.”

HouseWorks’ M&A progress in 2023 bucks industry trends.

The fourth quarter of 2022 and this year’s first quarter each tallied nine home care-related transactions, according to data from M&A advisory firm Mertz Taggart. Prior to that, no quarter had single-digit home care transaction volume since the third quarter of 2020.

HHCN will be watching HouseWorks to see what other moves it has up its sleeve in 2023.

Papa

Papa is an in-home care company that delivers companionship services to older adults and their families. Its companions, or “Papa Pals,” help Papa clients by taking them to appointments or the grocery store, or by simply starting a meaningful conversation to alleviate feelings of loneliness.

Backed by prominent investors such as Tiger Global Management, SoftBank and Reddit co-founder Alexis Ohanian, Papa has raised more than $240 million since its 2017 launch – making it one of the most successful in-home care startups to date. The Miami-based company makes its money by partnering with a growing number of health plans, with Medicare Advantage payers more frequently including companionship services in their supplemental-benefits packages.

“We work with over 100 managed care organizations across the United States,” Papa CEO Andrew Parker told HHCN in August 2022.

In the past, Papa would have been a home care company to watch because of its unique business model, fundraising prowess and overall growth. It’s worth watching this year for very different reasons.

Last July, HHCN reported that Papa laid off 15% of its workforce, with Parker citing the macro-economic environment and the company’s long-term goals as the reasons why. Many venture capital-backed companies have found themselves in a similar position, with VC firms placing fewer and small bets.

“Our business continues to be very strong,” Parker told HHCN. “Our health plans continue to really be excited about it. Pals continue to be excited about it. And, of course, our members are as well, but, sadly, we had to make a reduction.”

This May, Papa again made headlines, with Bloomberg Businessweek publishing a report documenting abuse claims from both Papa clients and companions. The report was based on 1,200 confidential complaint reports logged by Papa over the past four years.

“The logs show what can happen to both Papa’s elderly clients and its contractors when the company offers little training or oversight,” Businessweek wrote.

It will be worth following Papa to see how it rebounds from the layoffs and negative press. The company has contributed to the progress home care groups have made working with MA plans, so any setback for Papa in those relationships could be a setback for home-focused supplemental benefits more broadly.

Contextually, Papa says it has facilitated about 1.5 million visits between members and its Papa Pals. The 1,200 complaint reports reviewed by Businessweek included 638 individual complaints, according to the publication.

Right at Home

Since the start of 2022, home care franchise company Right at Home has brought in a new CEO, chief growth officer and, most recently, COO. The evolving leadership team makes Right at Home a home care player to keep an eye on in 2023.

Omaha, Nebraska-based Right at Home has over 600 franchise locations in the U.S. and seven other countries.

Margaret Haynes, previously Right at Home’s COO, took over as top executive in April of last year. Among her immediate goals have been better understanding changing consumer preferences and finding creative ways to mitigate the industry’s caregiver shortage.

HHCN photo HHCN photo

“I’ve challenged the team, our franchise owners and our network, broadly, to view this caregiver shortage not as a barrier, or an obstacle, but actually as an opportunity,” Haynes told HHCN a month after transitioning into the CEO role.

Helping Right at Home’s owners navigate rising costs in home care, along with changing billing dynamics, has also been a focus.

Meanwhile, Right at Home’s new chief growth officer, Brady Schwab, is doubling down on the franchise company’s corporate-owned footprint expansion. Adding more company-owned locations is important, Schwab previously explained to HHCN, because it accelerates Right at Home’s ability to enter into new markets and offers a “testing bed for innovation.”

“We strive to bring innovation into the system and that requires a level of risk-taking and putting our money where our mouth is that we don’t want to assign or ascribe to the system, especially early on in an innovation process,” he said.

Right at Home’s new COO is Rod Roberts, who has over 37 years of experience in the franchising world – both on the corporate and franchisee level. Roberts’ previous home care experience includes several years in the Home Instead Senior Care franchise system, leaving that organization as vice president of franchise operations.

Moving forward, it will be worth watching Right at Home to see how these leaders make their mark on one of the industry’s largest franchise systems.

Additional contributions to this story by Andrew Donlan.

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HouseWorks acquires Care and Help Home Care, Amedisys’ personal care division

The Massachusetts-based HouseWorks is expanding its footprint in Pennsylvania by acquiring Care and Help Home Care.

Care and Help Home Care is a privately-owned personal care provider serving the greater Philadelphia area.

“We are excited to welcome the Care and Help team to the HouseWorks family,” HouseWorks CEO Mike Trigilio said in a statement. “The acquisition of an organization driven by a talented team with a strong reputation for quality care will enable us to reach more clients and provide more services to seniors in need.”

Care and Help Home Care CEO Alex Berenson will stay on board and serve as a member of HouseWorks’ leadership team as the president of Pennsylvania’s operations.

Berenson founded the company in 2017 after trying to find personal care services for his dad.

“Recognizing the value that quality home care can provide seniors and their families, I founded Care and Help to allow more seniors to age in place,” Berenson said in a statement. “I am proud to help deliver the highest quality care to our clients through our network of dedicated and professional caregivers. HouseWorks is an ideal partner for Care and Help as our companies share a common mission of delivering the highest quality of care to those in need.”

The acquisition comes two months after HouseWorks acquired Associated Home Care (AHC), the personal care division of Amedisys Inc. (Nasdaq: AMED).

The home care provider has been on a bit of M&A frenzy following its partnership with InTandem Capital Partners, a health care services-focused private equity firm.

Pennant Group acquires Benefit Home Healthcare, Benefit By Your Side

The Pennant Group (Nasdaq: PNTG) has acquired the Colorado-based home health provider Benefit Home Healthcare and Benefit By Your Side, known together as Benefit.

Benefit offers skilled home health, private duty and community health services in Colorado Springs.

“We are pleased to expand our home health operations deeper into the state of Colorado,” Pennant CEO Brent Guerisoli said in a statement. “Benefit will be a great partner to our affiliates in the area as we further expand the continuum of care and provide life-changing service to the residents of Colorado Springs and its surrounding communities.”

The Eagle, Idaho-based Pennant has a network that includes 95 home health and hospice agencies and 49 senior living communities.

CenterWell Home Health acquires Trilogy

CenterWell Home Health – a part of Humana Inc. (NYSE: HUM) – has acquired the West Balm Beach, Florida-based Trilogy Home Health.

Kinderhook Industries, the previous owner of Trilogy, sold the provider for an undisclosed amount.

“Over the course of Kinderhook’s ownership, the Trilogy team completed nine add-on acquisitions and expanded its footprint to eleven offices,” Louis Aurelio, managing director at Kinderhook, said in a statement. “These investments combined with a premier management team created the largest independent home health provider in Florida. CenterWell’s expansive footprint and commitment to growth will fit perfectly with Trilogy’s culture.”

Trilogy has 11 locations across Florida. The company provides home health care, personal care and care coordination services.

On its end, CenterWell provides home health services to more than 350,000 patients per year across 38 states. It rebranded officially to CenterWell Home Health – after formerly being known as Kindred at Home – in September.

Chapters Health System, Capital Caring Health join forces

Chapters Health System and Capital Caring Health have finalized an official affiliation and will combine their respective resources.

The Tampa, Florida-based Chapters Health is a nonprofit, community-based health care services organization. Capital Caring Health, also a nonprofit, provides hospice, palliative care and counseling to nearly 120,000 patients.

“For the past several years, Chapters Health has been on an aggressive and ambitious trajectory to change the way chronic illness management and end-of-life care is administered in our communities,” Andrew Molosky, president and CEO for Chapters Health, said in a statement “We are thrilled to finalize the affiliation with Capital Caring Health, which for both organizations officially begin a new era in advanced illness care.”

Together, the two companies will have 4,000 employees and 3,000 volunteers.

“Chapters Health and Capital Caring Health are changing the health care landscape by dramatically strengthening our combined not-for-profit missions,” Capital Caring Health President and CEO Tom Koutsoumpas said in a statement. “Together we provide the best possible outcomes for patients, families and our dedicated team members.”

The combination will allow the nonprofits to serve patients in Florida, Georgia, Maryland and Virginia.

Elara Caring to acquire Assisted Daily Living

Elara Caring has announced plans to acquire Assisted Daily Living, a Rhode Island-based home health provider.

While expanding Elara Caring’s footprint in Rhode Island, the acquisition also opens the door to expanding its presence into the bordering markets of Connecticut and Massachusetts.

“Elara continues to set important milestones as we look to transform the home health space, bringing our relationship-based approach, innovative platform and value-based model to markets across the country,” Elara Caring CEO Scott Powers said in a statement. “We look forward to providing Rhode Island patients and clients with the individualized, high-quality, compassionate home health services that have come to define the Elara experience.”

The Dallas-based Elara Caring is a home-based care company that currently has roughly 200 locations across 16 states.

The deal is expected to be finalized at the end of 2023.

“In agreeing to be acquired by Elara, Assisted Daily Living is enhancing our ability to serve patients with outstanding care while providing greater opportunities for our team members,” Assisted Daily Living President Debra Corey said in a statement. “Given our organizations’ shared mission and values, I have every confidence that this move will serve to benefit scores of Rhode Islanders.”

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HouseWorks announced earlier this week that it would be acquiring Associated Home Care (AHC), the personal care division of Amedisys Inc. (Nasdaq: AMED).

In addition to the two directly involved parties, HouseWorks CEO Michael Trigilio believes that the key winners from the deal are the caregivers and payers.

“The workforce is going to have great opportunities, from more training and supervision to a career ladder and increased wages — hopefully closer to $20 an hour,” Triglio told Home Health Care News. “With this scale, we can be really creative in trying to keep caregivers from leaving this industry, as they’ve been doing over the last few years.”

The second winner – payers, particularly in Massachusetts – will now have a major partner that can provide them with great information and data in the home through a larger network.

“Now there’s going to be data connectivity through such a large employee base that’s going to be consistent,” Trigilio said. “In Massachusetts, there are roughly 35 different types of payer contracts that are signed between Associated Home Care (AHC) and HouseWorks. Imagine a world where you have 4,000 to 5,000 caregivers delivering the same care, on the same platform, to all of those payers. There’s a great value in that data that we’re able to give to them.”

HouseWorks will take over the 13 care centers previously operated by Amedisys, adding to the company’s eight locations throughout Massachusetts, Southern New Hampshire, Southern Maine and the Greater Philadelphia area.

The makings of the deal

Near the end of 2022, HouseWorks — which also offers home-modification services — partnered with InTandem Capital Partners LLC, a health care services-focused private equity firm.

After that partnership was formed, Trigilio reached out to Amedisys.

Trigilio, who is also the CEO of eCaring, was formerly the president of the personal care division at Amedisys.

“With Amedisys indicating that they were focused more on their network versus operating personal care, we knew that there was an opportunity for us to go in and make this as easy as possible for all of their employees, their payers and, also, their corporate teams in Nashville and Baton Rouge,” Trigilio said.

Given the InTandem partnership and Trigilio’s familiarity with Amedisys, the deal – though competitive – was more seamless than it otherwise may have been.

“It was important for Amedisys, and for us, to ensure that we had the ability to announce this deal without a whole lot of strings attached,” Trigilio said. “Given the opportunity that we have with InTandem, we were able to walk them through what this would look like from Day One to Day 180. InTandem was well aware of how this would work if we were able to make the deal happen. It was important to have a partner that was going to be very comfortable going after something like AHC immediately.”

After about a month’s worth of talks, the deal became official. Earlier this week — in a reported $50 million deal — the home health and hospice giant Amedisys announced it would divest its personal care division to HouseWorks.

The personal care line of business HouseWorks will take over is primarily in the Northeast, Trigilio said, with an additional care center in Tennessee.

With the acquisition, HouseWorks will now have over 4,000 caregivers in Massachusetts serving over 15,000 clients. It will also become the largest provider of home care in the state, serving every zip code.

Further expansion

Looking ahead, Trigilio sees more opportunities for HouseWorks to build on its rapidly growing platform.

“With a partner like InTandem and the strong management team at HouseWorks — one that is growing pretty much daily — we fully anticipate having additional opportunities in adjacent states very soon,” Trigilio said. “It’s certainly our goal to continue to scale this business with our financial partner and the team that we have on board here.”

Continuity in the business and operations is something Trigilio is excited about. Just this week, he met with someone on the Amedisys team that he previously worked with for over two decades.

“Through this acquisition, we are acquiring a tremendous amount of personal care talent,” he said. “We’re going to use that talent to grow in Massachusetts, but also other states as well.”

Moving forward, Trigilio hopes that HouseWorks can close on at least a couple more deals in the next 12 to 24 months.

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As a company, Amedisys delivers a number of offerings, including home health, hospice, personal care and high-acuity care services. Home health and hospice are its two largest segments.

After Wednesday’s announcement, the plan is for the private equity-backed HouseWorks to take over Amedisys’ personal care division.

“Our personal care division was started with the sole mission to provide patients with a true continuum of care in the home,” Amedisys Chairman and CEO Paul Kusserow said in a statement. “We strongly believe in the value of personal care and this divestiture allows our personal care division to grow under a proven leader in the industry while Amedisys focuses our attention on our core business units of home health, hospice and high-acuity care.”

In fourth-quarter earnings disclosures, Amedisys reported that its personal care division brought in $15.9 million in revenue in Q4, and $61.4 million in revenue for all of 2022. The company also reported that billable hours and clients served fell by 9% and 2%, respectively, year over year.

Amedisys’ personal care footprint includes 13 care centers in three states.

Earlier this year, HouseWorks received a majority investment from InTandem Capital Partners LLC, a health care services-focused private equity firm.

The Massachusetts-based HouseWorks is a personal care company that also offers home-modification services.

HouseWorks CEO Michael Trigilio is the former president of Amedisys’ personal care division. Presumably, this made the deal more seamless and sensical for both sides. He is also the CEO of eCaring, which is now a part of HouseWorks network.

With Wednesday’s news, Trigilio will now be embedding yet another familiar home care division into the personal care company’s portfolio.

He told HHCN last month that the new influx of funds would allow HouseWorks to accelerate the company’s expansion efforts.

In the announcement, Amedisys announced that HouseWorks, in partnership with eCaring, will join the Amedisys personal care network and that a “care coordination partnership” will be formed.

Also on Wednesday, Amedisys announced a new agreement with BlueCross BlueShield of Tennessee to deliver home-based palliative care to the insurer’s millions of members.

This is a developing story. Please check back on homehealthcarenews.com the rest of the week for further updates.

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