Thanks to impactful, large-scale transactions over the last decade, the collective face of home-based care has changed forever.

Traditional providers in both home health care and personal home care have merged. Payers became involved in the home-based care space like never before. Of late, retailers have too.

But it’s often easy to forget how the current landscape became what it is.

Below, Home Health Care News takes a look at some of the most important and impactful deals in home-based care over the last decade – deals that explain, in part, where the home health and home care industries are today.

‘Big time’ provider deals

This past decade’s first blockbuster remained one of the most impactful throughout the last 10 years.

In 2014, April Anthony’s Encompass Home Health & Hospice was acquired by HealthSouth Corporation for $750 million. HealthSouth took a swing at home health and hospice, merging an in-patient facility business with a post-acute care business.

Four years later, HealthSouth would rebrand completely, taking on the home health and hospice entity’s name. Encompass Health Corp. (NYSE: EHC) still exists today, but is again without post-acute care capabilities.

The HealthSouth-Encompass deal is like a few other deals in home health care, in that it set off a domino effect and a winding life cycle of a home health entity.

Anthony left Encompass Health in 2021, and after her home health and hospice company operated as a segment within the larger organization for nearly a decade, Encompass Home Health & Hospice was spun off into its own public company: Enhabit Inc. (NYSE: EHAB).

That happened in 2022, and two years later, Enhabit may land in the hands of a different owner after it concludes its own strategic review. Anthony now runs VitalCaring, which is backed by her, The Vistria Group and Nautic Partners.

Over the decade, larger health care organizations like Encompass Health have also bundled up services, and also unbundled them.

For instance, Brookdale Senior Living (NYSE: BKD) had one of the largest home health footprints for a long time. After COVID-19 woes, however, it offloaded that to a health system eager to get into home health care: HCA Healthcare (NYSE: HCA). LHC Group would later acquire some of the assets jointly owned by Brookdale and HCA Healthcare.

Ascension Health, too, teamed up with TowerBrook to buy the home health and hospice provider Compassus in 2019.

A theme that has been a mainstay, and will likely remain a mainstay, is health systems changing course on their strategic planning – and deciding whether to own home health care themselves or focus on core operations and partner with home health care instead.

“You’re seeing a lot of these facility-based providers divesting or spinning off assets,” Chaz Bauer, director at Fifth Third Securities, told Home Health Care News. “They realize they have fundamentally two different businesses. They’re very related and intertwined. But fundamentally, you have these facility-based businesses that are very centralized models, very capital intensive. Whereas home-based care businesses, they’re very decentralized; they’re very capital-light. Part of the motivation there – in unbundling – is they can unlock value for their shareholders by splitting those businesses.”

But then there’s the M&A that has come from within the home health sector itself.

For instance, “the merger of equals” that turned LHC Group into a true home-based care powerhouse.

In late 2017, LHC Group agreed to merge with Almost Family in a $2.4 billion transaction. A straight line can be drawn from that deal to UnitedHealth Group’s (NYSE: UNH) acquisition of LHC Group, which was finalized in 2023.

LHC Group and Almost Family’s merger is not an anomaly, either. Not long after, Great Lakes Caring, National Home Health Care and Jordan Health Services combined in a three-way merger to create another one of the largest home health companies in the U.S.: Elara Caring.

That deal was powered by the PE firms Blue Wolf Capital Partners and Kelso & Company.

PE money in home-based care has turned a lot of sizable providers into powerhouses. The aforementioned PE firms – Blue Wolf, Kelso, Vistria and Nautic – have all played a part in that, in the transactions mentioned already and otherwise.

That will also continue, particularly as some of the holding periods of the largest companies turn over. There’s also a chance, however, that PE firms direct more attention to other parts of home-based care – like personal care – given the uncertainty surrounding home health payment rates.

In home care, Vistria and Centerbridge Partners uplifted Help at Home, turning it into one of the largest providers of home- and community-based services (HCBS) in the country.

Waud Capital recently acquired the large home care franchise Senior Helpers. Wellspring Capital Management acquired Interim HealthCare’s parent company Caring Brands International in 2021. Last September, The Halifax Group acquired Comfort Keepers from Sodexo.

PE has always been involved in home care. Bain Capital’s 2018 creation of Arosa, one of the largest non-franchised home care companies in the country, is one past example.

In the future, it’ll be interesting to see if PE will drive more large-scale, impactful deals like it has in home health care over the last decade.

Payers enter the fold

Any commentary on the biggest deals in home-based care over the last decade needs to note increased payer involvement.

Enter Humana Inc. (NYSE: HUM).

When people think of the company’s home-based care investments, most go straight to its takeover of Kindred at Home.

But let’s take a step out of the last decade, just for a second.

In 2011, Humana acquired the home-based care provider SeniorBridge, which was doing just $72 million in annual revenue at the time. When that deal was announced, it was not exactly frontpage news. But one could argue that kickstarted a chain of investments that changed the M&A landscape in home-based care forever.

“SeniorBridge fills a growing market need and is consistent with Humana’s focus on delivering clinical care for seniors in their homes,” Michael B. McCallister, Humana’s chairman and CEO at the time, said in a statement. “Acquiring SeniorBridge will immediately expand Humana’s existing clinical capabilities with the addition of SeniorBridge’s national network of 1,500 care managers. The company does a terrific job of reducing hospital readmissions and emergency-room utilization, all while helping seniors achieve lifelong well-being.”

Humana’s home-based care thesis was already there, but the SeniorBridge deal was likely the deal that set the stage for what eventually became CenterWell.

“The deal was a game changer. I was initially surprised by the size of the transaction. It was pretty small by Humana standards,” Mertz Taggart Managing Partner Cory Mertz told HHCN. “It didn’t take long for Humana to tout the savings SeniorBridge created for their membership, saving it billions of dollars within the first couple years of the deal, by keeping their members at home and out of the hospital.”

Nearly 13 years later, Humana is one of the largest home health providers in the country through CenterWell Home Health.

The company, with the help of the PE firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS), acquired and merged Kindred at Home and Curo Health Services. Yet another home health and hospice powerhouse was formed, this time under the watch of one of the largest payers in the country.

In 2021, Humana opted to take over a remaining 60% of the enterprise (it had previously owned 40%), which was worth over $8 billion at the time.

In 2022, it divested the hospice and home care operations of Kindred to Clayton, Dubilier & Rice (CD&R). Those divested assets became what is now known as Gentiva, led by David Causby, the former CEO of Kindred at Home.

The home health assets Humana held onto are now under CenterWell Home Health. CenterWell, overall, includes primary care, pharmacy and home health services.

In 2024, most large payers – namely the ones with large MA memberships – have some sort of home-based care capabilities. That was not the case when Humana acquired SeniorBridge way back when.

“This has been an ongoing development, and it’s really just vertical integration,” Bauer said. “The thought is: why not get into that downstream, and then be able to more directly control those costs and quality outcomes on the payer side?”

The other heavily involved payer is the only one that has a leg up on Humana in MA: UnitedHealth Group.

UnitedHealth Group’s Optum already had a variety of health care provider assets, but it decided to make its first big home-based care splash early in 2022 when it announced the $5.4 billion acquisition of LHC Group.

While payers liked the thought of vertical integration, large providers like LHC Group were also recognizing an existential threat to home health business: MA penetration. More MA beneficiaries meant fewer traditional Medicare beneficiaries, which meant a less sturdy financial leg to stand on.

UnitedHealth Group further cemented its interest not long after, when it made a $3.3 billion all-cash offer for Amedisys. That deal was agreed to in June of 2023, but is still pending.

Though UnitedHealth Group may have to divest some Amedisys assets to finalize the deal, the company will most likely have the largest home health market share when that deal closes. Estimates suggest Optum will have about 10% of the U.S. home health market under its belt.

Not only are payers now involved in the home health industry, but they are also creating scale.

“You can make an argument that Optum acquiring LHC group, and now Amedisys, is a scale transaction, like ones we’ve seen before,” Bauer said. “Because it puts together two of the largest providers to make an industry leader.”

New kids on the block

Like payers before them, another group of companies is now firmly involved in home-based care investment: retailers.

In fact, they’re so invested, they may not be labeled as just retailers five to 10 years from now.

CVS Health (NYSE: CVS) has a new health care services segment dubbed CVS Healthspire. Walgreens Boots Alliance (Nasdaq: WBA) has the same with its U.S. Healthcare segment.

Both of those segments are arguably the future of their respective parent organizations. And both include home-based care services.

Payers and retailers have different business models, but tend to want the same thing: pharmacy, primary care and home-based care services.

In 2020, Walgreens made an over $1 billion investment in VillageMD, a home- and community-focused primary care provider. After subsequent investments, it has backed VillageMD with over $6 billion.

After that, Walgreens found its next health care services asset in the health-at-home solutions platform CareCentrix. Though he is no longer in the position, CareCentrix’s former CEO, John Driscoll, was the initial leader of Walgreens new U.S. Healthcare segment.

“We continue to see strong results and potential for growth from our partnership with CareCentrix. Our full acquisition further accelerates our transformation to become a consumer-centric health care company, leveraging innovative platforms that extend our capabilities into fast-growing segments of health care,” former Walgreens CEO Roz Brewer said at the time. “CareCentrix is key to offering services to our patients at every stage of the care continuum, and to driving long-term, sustainable growth as part of our U.S. Healthcare strategy.”

Not to be outdone, CVS Health agreed to acquire the home- and value-based care enabler Signify Health in 2022 for $8 billion. Shortly after that, it got its primary care provider, too, with the over $10 billion acquisition of Oak Street Health.

While none of these assets are traditional home health or home care assets, this retailer involvement represents a seismic change in U.S. health care – and home-based care is a major part of it.

These companies could go after more assets in the future, or they could become major partners for those traditional providers.

Honorable mentions

It’s impossible to highlight every deal, but there are some that don’t fit perfectly into “themes” that are still worth mentioning.

The home care technology company Honor acquired the home care franchise brand Home Instead in 2021, for instance. In lieu of strictly partnering with providers to see its vision through, Honor opted to purchase Home Instead to speed up the process. The jury is still out on that deal, however.

Prior to agreeing to become a part of Optum, Amedisys also made plenty of deals that turned it into a multi-billion-dollar business.

It acquired the hospital-at-home platform Contessa Health in 2021 for $250 million.

It acquired Compassionate Care for $340 million in 2018, and AseraCare Hospice in 2020 for $235 million. Those two deals significantly bolstered its hospice arm.

Modivcare (Nasdaq: MODV) entered into the personal care game in a real way with its $575 million acquisition of Simplura Health Group in 2020 and its $340 million deal for CareFinders Total Care in 2021.

BrightSpring and PhaMerica completed a merger in 2019 that eventually led to today’s BrightSpring Health Services (Nasdaq: BTSG), which is now a public home-based care company.

Finally, Aveanna (Nasdaq: AVAH) – formerly a pediatric provider – entered into the home-based senior care world with its $345 million acquisition of Comfort Care Home Health in 2021 and its acquisition of Accredited Home Care for about $200 million later that year.

Addus Homecare Corporation (Nasdaq: ADUS) has executed several high-profile transactions of its own, most recently acquiring Tennessee Quality Care in a $106 million deal.

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The Maryland-based franchise – which was previously owned by the health system Advocate Health – will be the foundation of Waud Capital’s home care platform moving forward. Overseeing that platform will be Steve Jakubcanin, the home-based care veteran and former CEO of Cornerstone Healthcare Group.

Here are five important things to know about Senior Helpers as it takes a different direction under new ownership.

Footprint and leadership

Currently, Senior Helpers has about 380 locations in 44 states, Australia and Canada.

Jakubcanin – who also spent time at AccentCare and Kindred Healthcare – will be the executive chairman of the board of directors at Senior Helpers. Waud Capital put $100 million behind him to kickstart a home care-focused platform back in February of 2023.

That won’t change Peter Ross’ role, however. Ross – the CEO and co-founder of Senior Helpers – will continue to lead the enterprise for the foreseeable future, he told Home Health Care News.

The Senior Helpers timeline

This will be the fourth major transaction that Senior Helpers has been a part of.

In October 2012, Levine Leichtman Capital Partners acquired a majority stake in the company. Then, in October 2016, Altaris Capital Partners acquired it.

In April of 2021, Advocate Aurora Enterprises acquired Senior Helpers. But about a year and a half later, in December of 2022, Advocate Aurora Health – the parent company of Advocate Aurora Enterprises – merged with Atrium Health.

That set the wheels in motion for the most recent deal, as Advocate Health (the combined organization) decided it wanted to partner with home care rather than owning it. Then, in March, Waud Capital announced it had acquired Senior Helpers.

Further acquisitions

It’s not yet clear whether Waud Capital has plans to inorganically add onto Senior Helpers through personal home care acquisitions elsewhere.

“That is to be determined,” Ross said.

But Waud Capital does already own other home-based care assets, such as: the home health provider Concierge Home Care; the home infusion companies PromptCare and CarePoint Partners; the physical therapy platform Ivy Rehab; Regency Hospital Company; and DS Medical, a home medical supplies company.

At the very least, Concierge Home Care and Senior Helpers will have a relationship off the bat. The two entered into a “strategic” partnership across Florida after the deal was announced.

“While this is not exclusive, we believe that this new partnership will benefit both companies moving forward,” Ross said.

New service lines

One of the more interesting items from the original press release was Ross’ indication that Senior Helpers could dive into more service lines under Waud Capital.

“We are very excited for our franchisee partners, teammates, caregivers, and clients,” he said in the press release. “The need for high-quality, in-home senior care has never been greater. We see opportunities to enhance our suite of senior services as part of the next phase of the company’s growth.”

When HHCN followed up with Ross, he did not offer any specific service lines just yet, but did say Senior Helpers would look at service lines “complementary” to its home care business.

The adult day operation

Speaking of other service lines, Ross already has Town Square, which is an adult day business.

Town Square, however, will not be affected by the Waud Capital transaction.

“I purchased Town Square from Altaris Capital in May of 2023,” he said. “Town Square is doing quite well. We are selling and opening new locations. I believe someday Town Square can be as successful as Senior Helpers.”

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Three years after being acquired by Advocate Aurora Health, Senior Helpers has a new home.

The personal care company has been sold to Waud Capital, a Chicago-based middle-market private equity firm. Senior Helpers declined to disclose the transaction purchasing price.

The wheels for the acquisition began turning following Advocate Aurora’s merger with Atrium Health in 2022, Senior Helpers CEO Peter Ross told Home Health Care News.

“After Advocate and Atrium merged … they began working on a new strategic plan,” he said. “As part of that plan, they felt they’d rather work as a partner with their outside assets, [instead of] actually owning them. They made the decision, and Senior Helpers was one of those outside assets.”

Maryland-based Senior Helpers is a home care company that operates over 380 franchise locations in the U.S., Canada and Australia. Senior Helpers is one of the largest franchise companies in the home care space. In fact, the company earned the #172 spot on Entrepreneur’s 45th annual Franchise 500 rankings this year.

Once the decision to go to market was finalized, Advocate Aurora got the ball rolling quickly.

“Once they selected a banker in May of last year, the books were put together,” Ross said. “We went out to market, I think, in August. The books went out, initial bids came in, interest came in, and then management presentations were scheduled. We went through that in late September, early October. Then final bids and final candidates came in the November, early December timeframe. Then the final buyer was selected, probably in that mid- to late-December timeframe. Then came the final parts of due diligence, and everything else, before we got to yesterday’s closing.”

Ross pointed out that when it comes to acquisitions, the Waud Capital transaction isn’t Senior Helpers first rodeo. Before being purchased by Advocate Aurora, Senior Helpers was owned by the private equity firm Altaris Capital.

“The difference between the prior sales was that Advocate Aurora was the only strategic [buyer] that we’ve ever sold to,” Ross said. “The others, including this recent one to Waud Capital, have all been private equity firms, so the process is very similar.”

Though under a new owner, Senior Helpers will maintain a relationship with Advocate Aurora.

“Their decision to sell Senior Helpers with a decision of partner versus ownership, so we’re going to continue that,” Ross said. “When you’re part of a large health system — and I think Advocate would admit this as well — it’s not as easy as it sounds. There’s a lot of people that you have to educate within the health system, there’s a lot of layers to that. Navigating a large health system, it took more time, more patience. We did make some good inroads in some of the collaborations we did, it just didn’t happen as quickly as some of us hoped. At this point, we have a really good working relationship with Advocate’s care teams in the markets we’re in.”

Additionally, Senior Helpers believes that the company fits into Waud Capital’s overall ecosystem. The PE firm is no stranger to the post-acute care sector.

Waud Capital’s portfolio includes companies like Concierge Home Care, CarePoint Partners and PromptCare.

“[Waud Capital is] very focused on health care,” Ross said. “They’re looking at new avenues and service lines that can really help to expand Senior Helpers even further. They’re also very well-capitalized as a private equity firm. They’re really bringing a lot to bear for their resources and their capital to see what else Senior Helpers can be doing, what other types of business lines we can get into, to really help to grow. We’ve had significant growth over the course of our history, which is why we’ve been acquired four times.”

Though Senior Helpers’ time under Advocate Aurora was shorter than the company anticipated, Ross appreciates their time with the health system, and is excited for its next chapter with Waud Capital.

“I do really appreciate all that Advocate did for Senior Helpers, but we are energized for our next chapter with Waud Capital,” he said. “The team is energized, and our system is energized.”

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Most buyers in home health and personal care are signaling they’ll be more active in the M&A market this year.

That’s according to a new Mertz Taggart report, which included responses from over 50 potential home-based care buyers. Nearly 80% said they planned to be more acquisitive in 2024 compared to 2023.

But some of the biggest deals – or potential deals – are already well underway.

Waud Capital announced Thursday that it had acquired Senior Helpers – one of the largest home care companies in the country – for an undisclosed sum. That deal is intriguing for the rest of the personal care market for a few reasons, which we’ll get to below.

At the same time, the last two pure play home health and hospice providers on the public market are in periods of limbo.

Enhabit Inc. (NYSE: EHAB) is nearing the end of its strategic review process, which will likely end up in a merger or sale.

Meanwhile, UnitedHealth Group’s agreed-upon deal with Amedisys Inc. (Nasdaq: AMED) is under further scrutiny from the Department of Justice.

In this week’s exclusive, members-only HHCN+ Update, I take a closer look at three of the major home-based care deals that have happened, or could happen, this year.

The waiting game

Multiple times over the past few months, I predicted that Enhabit Inc. (Nasdaq: EHAB) would finish its strategic review prior to its March 7 fourth-quarter earnings call, which took place later than it had in the past.

That prediction did not come to fruition.

“The board, with the assistance of our advisors, is being comprehensive in its assessment of strategic alternatives, and discussions with interested parties are ongoing,” Enhabit CEO Barb Jacobsmeyer said on the company’s fourth-quarter earnings call. “We are in the later stages of our strategic review, but don’t intend to disclose developments unless and until we determine further disclosure is appropriate or necessary. We will not be commenting beyond that.”

Instead, Enhabit’s earnings call mirrored past earnings calls: it acknowledged its year-over-year contraction, while also honing in on its new payer contracts and improved hiring numbers.

“We are making significant progress demonstrating our value proposition to payers, as we negotiate new agreements with improved rates and are successfully shifting Medicare Advantage volumes into our payer innovation agreement,” Enhabit CFO Crissy Carlisle said during the call. “The revenue and adjusted EBITDA impact from this volume shift has not been enough to overcome the financial impact from the erosion of Medicare fee-for-service volume.”

That Enhabit problem, which forced a strategic review, is a problem most home health providers are facing.

But the company is making legitimate strides, and will be better off for the difficult transition it’s making now. The duties of its payer innovation team will eventually be the duties of one or more people at every home health agency.

Earlier reporting indicated that Enhabit would have a harder time finding a seller, and that it may end up with a private equity firm.

I do not think that is the case anymore, however, and believe there’s a larger chance now it’ll land in the hands of a strategic, which would be very significant. Enhabit, merged with one of the other top home health providers in the country, would create a home health powerhouse similar to the likes of Optum (if the Amedisys deal is completed).

Speaking of, Optum and its parent company – UnitedHealth Group (NYSE: UNH) – are still waiting on the Amedisys acquisition to go through.

As I wrote last month, that could take even longer than UnitedHealth Group’s acquisition of LHC Group, which took about 11 months. The 11-month mark for the Amedisys deal is upcoming in May.

So, for right now, Amedisys is not behind schedule comparatively. But, in addition to a general DOJ antitrust investigation into UnitedHealth Group, the DOJ is now reportedly considering a lawsuit to block the Optum-Amedisys deal.

It’s unclear how likely the DOJ nixing the Optum-Amedisys deal is at this point.

If it were to be blocked by the DOJ, however, legal processes would draw the timeline of the deal out significantly.

And, if the deal were actually blocked, it would be a massive deal for the home health industry. While Optum would still have LHC Group under its belt, it would end the company’s more massive home health land grab.

It would stop one of the most significant consolidations of home health assets we’ve seen in modern history. It could also change how payers and retailers, in general, view home health assets as M&A targets in the future.

For now, the states of Enhabit and Amedisys put the home health industry in a strange position. The two largest, public-facing assets representing the industry have relatively unclear futures.

Both are here, in the first place, largely due to Medicare Advantage (MA) penetration.

Part of the reason Amedisys opened its ears to acquisition opportunities in the first place was the shifting landscape of home health payment.

While smaller companies can sometimes be more nimble than the larger ones, Amedisys and Enhabit leaders’ recognition of that existential crisis – and difficulties dealing with it – is a troublesome foreshadowing for the thousands of other home health agencies.

Home care activity

An M&A expert recently told me to expect more personal home care dealmaking soon, as did Best of Care CEO Kevin Smith.

We have our first major deal of the year in the space now, with Waud Capital acquiring Senior Helpers. Sneakily, there has been a lot of turnover among the largest home care franchises over the last few years.

Honor acquired Home Instead in 2021. In the same year, Advocate Aurora Enterprises acquired Senior Helpers and Wellspring Capital Management acquired Interim HealthCare’s parent company Caring Brands International. Last September, The Halifax Group acquired Comfort Keepers from Sodexo.

BrightStar Care Executive Chairwoman and Founder Shelly Sun told me her company could be on the move in the next three to five years. And now, Senior Helpers is on the move again. 

I’m a tad surprised that Waud Capital went after a home care franchise to kickstart its home care platform, but for Senior Helpers, the deal makes a whole lot of sense.

Without the financials at hand, a private equity firm with significant home care interest is a far better place for a home care franchise than a health system undergoing a significant integration process. Advocate Aurora merged with Atrium Health in December of 2022.

Waud Capital put $100 million behind Steve Jakubcanin – a Cornerstone Health Group, AccentCare and Kindred veteran – earlier this year. Jakubcanin will serve as the executive chairman of Senior Helpers post-acquisition.

Increased home care interest in private equity may be taking hold due to reimbursement struggles in home health care. Investors interested in home-based care models may prefer – for the time being – providers more insulated from rate risks.

“I think we’re already seeing a little bit of that,” Rebecca Springer, lead health care analyst at PitchBook, told HHCN recently regarding that trend. “It’s not a full pivot, but we’ve definitely seen private-duty deals come through. Home- and community-based services deals have had a slow uptick in interest for a little while now. I think that’s because it’s an alternative to home health and hospice, but also because there’s a lot of green space there.”

Similarly, Havencrest Capital Management also recently started its own home care platform, Avid Health at Home. The firm began with an acquisition of For Papa’s Sake Home Care, and has since been very acquisitive across the country.

I expect Senior Helpers to similarly add on – whether in service lines or through home care acquisition – in the near-term future.

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Advocate Aurora Health acquired Senior Helpers in 2021, with the idea that the health system would “own the full continuum.” A year and a half later, however, Advocate Aurora merged with Atrium Health, forming one of the largest health systems in the country.

The health system is now offloading its primary home care asset to a private equity company that has become very active in home-based care of late.

“We are very excited for our franchisee partners, teammates, caregivers and clients,” Peter Ross, CEO and co-founder of Senior Helpers, said in a statement. “The need for high-quality, in-home senior care has never been greater. We see opportunities to enhance our suite of senior services as part of the next phase of the company’s growth. Waud Capital brings deep expertise in supporting and successfully growing healthcare companies, a set of similar core values, and a shared vision for the future.”

The Maryland-based Senior Helpers operates more than 380 franchise locations in the U.S., Canada and Australia. It is one of the largest home care companies in the country.

Prior to Advocate Aurora acquiring it, Senior Helpers was owned by the private equity firm Altaris Capital.

Terms of the most recent transaction were not disclosed.

On Waud Capital’s end, it is a Chicago-based middle-market private equity firm. Its focus is on the health care services and software and technology sectors. Its total capital commitments surpass $4 billion.

In February 2023, it put $100 million behind former Cornerstone Healthcare Group CEO Steve Jakubcanin, making him the architect of a new home-based care enterprise. 

Now, Jakubcanin and Waud Capital have made a major, foundational move.

“Senior Helpers is one of the most respected and reputable brands in the home care industry, and I share the company’s commitment to providing high-quality, compassionate care,” Jakubcanin said. “It is a privilege to work with Peter and the Senior Helpers management team. We plan to continue building on the company’s success and further enhance the services offered to our franchisee partners and client families.”

Jakubcanin will serve as executive chairman of the board of directors at Senior Helpers. Prior to Cornerstone, he also spent time at AccentCare and Kindred Healthcare.

Waud Capital also recently backed two Signify Health veterans on a staffing services venture that includes home health care as a focus area.

Additionally, it has invested in the home health provider Concierge Home Care; the home infusion companies PromptCare and CarePoint Partners; the physical therapy platform Ivy Rehab; Regency Hospital Company; and DS Medical, a home medical supplies company.

“Our partnership with Senior Helpers is another key example of the Waud Capital strategy of matching experienced executive talent with industry-leading companies in sectors where we have deep conviction,” Chris Graber, a partner at Waud Capital, said in a statement. “We look forward to supporting the company in its next phase of growth.”

As for Advocate Health, the company says it remains committed to providing its patients with home-based care options in the future.

“Advocate Health remains committed to collaborating with innovative companies like Senior Helpers to advance health care transformation and enhance outcomes among our patients aging in place,” Rasu Shrestha, Advocate Health’s chief innovation and commercialization officer, added.

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Private equity investment remains down in health care services. But the firms active in home-based care will likely have a major impact on the industry in the near future.

The decisions those firms make – while entering or exiting – will have a lasting impact.

In the second quarter, there were 164 PE deals across health care services in the U.S., which is the lowest mark since the second quarter of 2020, according to PitchBook’s health care services report, released this week.

“It was a bigger drop than expected in terms of deal activity,” Rebecca Springer, lead health care analyst at PitchBook, told me. “I thought that we had probably hit close to the bottom in Q1, but then we dropped over 20%.”

Private equity dealmaking has been affected by higher inflation and the subsequent higher interest rates. While inflation is easing, interest rates have not yet followed.

Because of that, the home care, home health and hospice M&A environment has been affected in multiple ways. Some of the dominoes have already fallen, while others could fall any time now.

Firstly, different types of transactions are getting done. Private equity firms are opting to go ahead with “platform deals” to get into home-based care.

At the same time, there are multiple, massive PE investments that have nearly run their course. When they officially do – and PE firms exit their current positions – the home health market could look a lot different.

In this week’s members-only, exclusive HHCN+ Update, I break down the macro PE trends – and explain how they could shake up the broader home-based care market for years to come.

PE dominoes waiting to fall

There are multiple large PE investments that have nearly run their course.

– Elara Caring is backed by Blue Wolf Capital Partners and Kelso & Company, the latter of which joined in 2018.

– Advent International acquired AccentCare in May of 2019.

– Looking further down the road, The Vistria Group and Centerbridge Partners backed the large home- and community-based services provider Help at Home in October of 2020.

– Wellspring Capital Management acquired Interim HealthCare’s parent company – Caring Brands International – in October of 2021.

All of these companies are top home-based care providers in the country.

It’s likely Blue Wolf Capital Partners and Kelso & Company are looking to exit their investment in Elara Caring sooner rather than later.

“The bank loan market is slowly improving, but it’s still a shadow of what it previously was,” Springer said. “There needs to be better access to finance some of those bigger deals. Also, the health of those older platforms is going to be pretty varied. Some are in a good position to exit; some are really not, given the current interest rate environment.”

While they have to eventually exit their investments, those PE firms also have to do so at an advantageous time, Springer said.

“I would expect that those that are not in such a good position are going to be holding on for longer,” she said. “Then, once platforms start trading, sponsors are going to be looking at what else is in the market and trying to time exits. They’re already working with multiples that are a couple turns lower than what they would have gotten in previous years.”

If they hold on too long, though, they run the risk of hurting both their internal rate of return and their fundraising on future deals.

An extension is usually available at the end of an investment, but lenders generally don’t like to see that extension realized.

“In the past couple of years, continuation funds have primarily been used for really good assets, strong assets that they want to hold onto and continue growing,” Springer said. “But in times past, … they were used to hold onto assets that have really underperformed. Generally, lenders don’t like that, and aren’t going to be supportive. But technically, it’s something you can do.”

In the end, this puts PE firms in a precarious position. AccentCare and Elara Caring are two large, solid home-based care companies.

The largest independent home health companies have been dropping like flies over the last couple of years. Humana Inc. (NYSE: HUM) acquired Kindred at Home. UnitedHealth Group’s (NYSE: UNH) Optum acquired LHC Group and is now in the process of acquiring Amedisys Inc. (Nasdaq: AMED).

Enhabit Inc. (NYSE: EHAB) announced last week that it was exploring the launch of a strategic alternatives process, which could ultimately end up in a sale.

If Enhabit is on the market, there could be one fewer buyer around to bid on the likes of Elara Caring or AccentCare. If it’s not another private equity group coming into the mix to buy those assets, it could be a managed care company.

Managed care companies – like Humana and UnitedHealth Group – have become a new group of buyers for home health assets in the last half decade.

“I think, for most private equity firms, they’re an exit opportunity,” Springer said. “Vertical payer-provider integration is not just Optum, it’s everyone. It’s just the direction that the industry is going. So, private equity has to focus on building assets that are attractive to those buyers.”

More managed care involvement in home health care specifically could cause trouble. If payers have significant in-house capabilities, they may be less likely to bend the knee and increase rates for small- to mid-sized providers.

At the same time, some home health insiders have suggested that managed care companies becoming aligned with industry advocacy efforts could be of benefit in the future.

Smaller ‘platform deals’

Despite a dip in activity, PE firms are continuing to invest in home-based care, albeit in a slightly different way.

A couple have already launched their own “platform companies,” which tend to be cheaper and less risky investments.

Havencrest Capital Management officially launched Avid Health at Home last week, and Waud Capital recently put $100 million behind the post-acute veteran Steve Jakubcanin to do the same.

“For as long as platform trades are quiet, this is one of the primary ways that firms are going to be deploying capital in this market,” Springer said.

PE firms continuing to take advantage of this opportunity would prove that it’s the macro headwinds – and not necessarily the micro ones within home health or home care – that are affecting deal flow.

The first and second quarters have also been relatively quiet in the home care, home health and hospice markets from an M&A perspective.

“There are advantages of small platform creation,” Springer said. “It can be a proprietary deal sourcing process, so you can get a better entry multiple. The group is not already leveraged, so you’re not dealing with that issue in the high rate environment. You can start out with low leverage and position it to be able to grow pretty significantly. And, it’s just less capital to deploy in a slightly riskier environment.”

As for Avid Health at Home, it’s starting local in Chicago. It launched in tandem with Havencrest’s acquisition of For Papa’s Sake Home Care, but plans to scale quickly – in the Midwest, in the Mid-Atlantic and in the Mountain West geographies.

Avid Health at Home CEO Jen Lentz told me that Havencrest did look at more “sizable” deals at first, but ultimately felt like going that route would be more complicated.

“What we found was that it would be harder to go in and really change [things], when it comes to being tech-enabled, when it comes to best practices and policies,” she said. “We weren’t really too excited about some of the things we had looked at. So we opted to pivot and go for the platform, looking for smaller, quality agencies – that really have a unique perspective on the communities that they serve – to bring them up into the larger entity.”

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On Thursday, the Chicago-based middle-market private equity firm announced it is launching Fusion Health, a new platform that will provide clinical staffing services to health care facilities, health plans and providers, including of the home health care variety.

The new venture will be led by Bales Nelson as CEO, and Allen Dye as president.

“Bales and Allen have an impressive track record of innovation and value creation in health care staffing,” Waud Capital’s Chris Graber said in a statement. “We believe this partnership brings together the expertise and resources required to build the next differentiated health care services platform.”

Nelson is the former co-founder of CenseoHealth, which eventually became Signify Health (NYSE: SGFY). CVS Health (NYSE: CVS) agreed to acquire Signify – an at-home care enabler – for $8 billion in September of 2022. Dye is also a Signify veteran, having most recently served as the chief growth officer and COO of the company.

Waud Capital will own a majority stake in Fusion Healthcare Staffing, which is considered the first subsidiary of Fusion Health.

In February, Waud Capital followed a similar model to launch a post-acute care venture.

It partnered with former Cornerstone Healthcare Group CEO Steve Jakubcanin, and provided $100 million to grow the business up front.

In 2019, Waud Capital also invested in Concierge Home Care, a provider of home health services that offers primary care services, skilled nursing and therapy.

While the home-based care space deals with a valuation gap between buyers and sellers, investment experts believe these kinds of launches will become more common.

“Models like that, which are going to allow firms to take advantage of a little bit better pricing on smaller agencies, while still putting capital to work without having to do big platform deals – we’re going to see a lot of that,” Rebecca Springer, senior health care analyst at Pitchbook, recently told Home Health Care News.

Fusion Health plans to grow both organically and inorganically in the near-term future.

Its goal is to provide tech-enabled staffing solutions to groups of customers – like home-based care providers – that face major pain points in that area.

“Allen and I are excited to be taking the next step in our partnership with Waud Capital,” Nelson said in a statement. “We share a vision of the compelling market opportunity that exists for Fusion Health. Together, we believe that we will create a leading platform delivering innovative service offerings to address complex clinical staffing needs for customers across the health care continuum.”

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Waud Capital plans to inject more than $100 million of equity capital to support the venture.

“Waud Capital’s executive partnership approach, dedicated ecosystem resources and deep investing experience across relevant areas, make the firm an attractive partner,” Jakubcanin said in a press release statement. “I believe this combination will enable us to capitalize on transformative growth opportunities.”

Waud Capital is a Chicago-based middle-market private equity firm. As an organization, it partners with management teams and leaders to build companies. Waud Capital is focused on the health care services and software and technology sectors, and has total capital commitments of $4 billion.

This partnership reflects the company’s strategy of working with industry leaders and positioning itself within the home-based care sector.

In the past, Waud Capital has invested in Concierge Home Care, a provider of home health services that offers skilled nursing, therapy and primary care services.

“The partnership with Steve is another example of Waud Capital’s commitment to support experienced executive talent with a deep ecosystem of resources to execute transformative growth strategies in large, growing markets,” Chris Graber, a partner at Waud Capital, said in the statement. “We see significant opportunity in the broader home care services market and look forward to working closely with Steve to support the growth and transformation of another differentiated company.”

For Waud Capital, it was Jakubcanin’s proven track record as a health care executive, with a background that includes working in a variety of different sectors, that placed him on their partnership radar.

As the CEO of Cornerstone, Jakubcanin played a pivotal role in shepherding the company’s recent sale to health system ScionHealth, which closed last month. Cornerstone is an operator of home-based care, long-term acute care, senior living and behavioral health care.

Before joining Cornerstone, Jakubcanin was the chief operating officer at AccentCare. Prior to that, he was the senior vice president at Kindred Healthcare.

“[Steve] has created value throughout his career and brings deep experience operating and scaling organizations across a variety of post-acute care settings and service offerings,” Kyle Lattner, principal of Waud Capital, said in a statement. “Both the volume and scope of health care services being provided in a patient’s place of residence are growing rapidly. In partnership with Steve, we believe there is an opportunity to build a market leading organization focused on delivering high quality care, in the most convenient setting for patients, while also lowering the total cost of care for payers.”

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