Addus Building Up Hospice, Home Health, Co-Locating with Personal Care Business

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Addus HomeCare Company (NASDAQ: ADUS) plans to proceed rising by means of acquisitions, devoting roughly $100 million to cowl offers this 12 months. The corporate’s present technique is concentrated on co-locating its medical hospice and residential well being operations in markets by which they have already got a foothold with its private care enterprise.

Addus launched as a private care firm, and people providers nonetheless symbolize about 80% of Addus’ enterprise. Shortly after CEO Dirk Allison got here on board in 2016, the corporate started build up its medical providers, together with hospice and residential well being. The nationwide firm has places for all three enterprise traces within the New Mexico and Ohio markets, with plans to develop that quantity within the coming years.

“You gained’t actually see us exit and make a giant medical acquisition in a market the place we shouldn’t have private care providers,” Addus CEO Dirk Allison mentioned on the Jeffries Digital Healthcare Convention. “Addus goes to be specializing in these 5-to-10 markets the place we have now a extremely sturdy presence in private care.”

The hospice M&A market has been the most popular in well being care throughout 2020 and 2021, main the sector by way of offers and valuations. Multiples within the hospice and residential care area reached a file 26x final 12 months, in line with a analysis report by PwC’s Well being Analysis Institute. 

Hospice and residential well being merger and acquisition exercise buoyed the bigger well being care providers sector in 2020, which noticed a decline in transactions largely as a result of fallout from the COVID-19 pandemic. General well being care sector multiples hovered close to 13.9x, up barely from 13.8x the prior 12 months, in line with PwC.

Partially due to these excessive valuations, Addus is leaning in direction of residence well being in its M&A plans for this 12 months. Strategic patrons are turning their consideration again in direction of residence well being transactions in 2021 after a lull whereas they waited for the mud to settle from a brand new cost system, the Affected person Pushed Groupings Mannequin (PDGM). The corporate additionally desires to assist its residence well being section meet up with a few of its current hospice enlargement in addition to maintain the momentum happening its core private care enterprise.

“In our thoughts, with our most up-to-date acquisitions in hospice, you return to the [Hospice Partners of America (HPA)] acquisition effectively over a 12 months in the past, after which Queen Metropolis, which we closed in December of final 12 months, we have now a reasonably good presence in hospice throughout numerous states,” Allison mentioned. “Our focus is de facto attempting to supply residence well being acquisitions in markets the place we’re sturdy in private care. That’s what you’ll see us concentrate on for most likely the following 12-to-24 months.”

Addus is sort of completed with its integration of its Queen Metropolis Hospice buy in Ohio final 12 months. In December 2020, the corporate purchased Queen Metropolis and its affiliate Miracle Metropolis Hospice from the non-public fairness agency Stonehenge Companions for a money buy value of $192.0 million.

The Queen Metropolis transaction was one of many bigger hospice offers to happen final 12 months. Additionally in December, Addus acquired private care supplier SunLife HomeCare in Tucson, Ariz., for an undisclosed quantity. Throughout 2019 and 2020, acquired corporations introduced in additional than a complete $214 million for Addus.

Addus gives hospice, residence well being, and private care providers to almost 44,000 sufferers by means of 215 places in 25 states.

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