Literature Review

VITAS seeking large acquisitions in hospice CON states Hospice News; by Jim Parker; 11/13/24 As it considers potential acquisitions, VITAS Healthcare is focused on large assets in certificate of need (CON) states. VITAS is a subsidiary of Chemed Corp. (NYSE: CHE). The company this year made its return to the M&A market after a hiatus of several years. In April, VITAS acquired Covenant Health and Community Services’ hospice operations as well as one assisted living facility in an $85 million deal. With that transaction under its belt, more are likely on the way, according to Mike Witzeman, vice president and CFO for Chemed. “We are fairly optimistic on a pipeline of potential Covenant-size deals, but there are a few hurdles from an internal perspective that we would certainly want to keep in mind. First is we like CON states or states where there are restrictions on barriers of entry,” Witzeman said during a presentation at the UBS Healthcare Conference. “The second would then be locations that, generally speaking, have some size to them. That’s important, obviously, from a patient flow perspective, but also from a staffing perspective.” The third major consideration is the price tag. The Covenant deal was sealed at a multiple of 6x to 8x EBITDA. ...

DOJ preps lawsuit to block UnitedHealth-Amedisys deal Modern Healthcare; by Josh Sisco, Bloomberg; 11/12/24 The US Justice Department is moving to block UnitedHealth Group Inc.’s $3.3 billion purchase of Amedisys Inc. over concerns the deal would harm competition in the market for home-health services, according to people familiar with the matter.  Justice Department antitrust officials have signed off on a lawsuit to be filed in federal court as soon as this week to stop the deal, according to the people, who asked not to be named discussing a nonpublic matter. The move follows a meeting last week between company executives and the Justice Department in a last-ditch effort to ease the government’s concerns, the people said. 

‘Everything is lining up’: Home-based care M&A expected to soar in near-term future Home Health News; by Audrie Martin; 11/11/24 Home health, home care and hospice M&A was historically high in 2021, with high valuations serving sellers and solid return on investment serving buyers. Transactions plummeted after that, but recent signs suggest M&A is beginning to pick back up across sectors. ... Sellers should expect questions about employee retention, the company’s track record of growth after M&A and whether their leadership has done due diligence before entering the race. ... Experts predict that large, founder-led home health and hospice businesses will be in high demand in the coming year. Larger home care companies, especially those that are Medicaid-funded, will also be in demand. 

New Day Healthcare acquires Intrepid USA’s Missouri, Texas hospice assets Hospice News; by Holly Vossel; 11/11/24 Texas-based New Day Healthcare LLC on Monday announced its acquisition of Intrepid USA’s hospice operations in Missouri and in its home state. The transaction expands the home-based service provider’s existing presence in those markets. The deal includes Intrepid’s hospice assets in Joplin and Springfield, Missouri, as well as its locations in Beaumont, Texas. New Day Healthcare has additional strategic growth plans in store once the acquisition completes, with more deals on the near horizon in coming months according to CEO and Founder G. Scott Herman.

Enhabit to shutter handful of home health locations, ‘close’ to new deal with UnitedHealthcare Home Health Care News; by Andrew Donlan; 11/7/24 Enhabit Inc. (NYSE: EHAB) has a new CFO and a somewhat new strategy. It still faces a lot of the same problems. On Thursday, CEO Barb Jacobsmeyer said the company would be closing or consolidating certain locations that are underperforming, specifically when it comes to traditional Medicare business in home health care. While its payer innovation strategy is still intact, that’s largely a departure from its goal of moving more toward Medicare Advantage (MA) revenue over the last couple of years. Specifically, the company has been trying to diversify its revenue mix to become a better partner to referral sources and adjust to a more MA-dominated future. But now, after a strategic review and a battle with the activist investor AREX Capital, it seems to be re-focusing on fee-for-service revenue from traditional Medicare. ...

The Pennant Group to seek more hospice, home health deals in 2025 Hospice News; by Jim Parker; 11/7/24 The Pennant Group (Nasdaq: PNTG) has a “robust pipeline” of potential acquisitions in the wings for 2025 across its home health and hospice and senior living business segments. For prospective deals, Pennant scouts for agencies that show strong promise for organic growth that have “talented” local leaders or entrepreneurs in place, according to CEO Brent Guerisoli. Pennant then leverages the resources in its platform to foster growth. “Developing local leaders remains at the heart of our operating model,” Guerisoli said in a Q3 earnings call. “As the talent and experience operations and clusters deepens with strong portfolio companies, our efforts throughout our footprint, we are able to more quickly improve new acquisitions and grow seasoned operations, thus the significant investment we have made in our leadership and development programs is the catalyst for enduring momentum.” Pennant is the holding company for a cluster of independent hospice, home health and senior living providers located across 13 states. Year to date, the company has added more than 60 CEOs to its portfolio agencies as well as 40 internal clinical leaders.

Addus leaders dive further into Gentiva deal, ‘historically low’ turnover rates Home Health Care News; by Joyce Famakinwa; 11/5/24 Completing the acquisition of Gentiva’s personal care operations is still top of mind at Addus HomeCare Corp. (Nasdaq: ADUS). The $350 million transaction was first announced in June. Addus Chairman and CEO Dirk Allison explained how he believes the deal will better position the company for the impacts of the “Ensuring Access to Medicaid Services” rule. “We believe our personal care segment benefits from both scale and broad geographic coverage in the states where we operate,” Allison said Tuesday during the company’s third-quarter earnings call. ..."

Chicago Pacific Founders sells 20 communities valued at $725 million to Ventas McKnights Senior Living; by Kathleen Steele Gaivin; 11/1/24 Chicago Pacific Founders sold 20 senior living communities to real estate investment trust Ventas this week, the healthcare investment firm announced Thursday [10/31]. The properties are valued at $725 million, “representing one of the most significant senior housing portfolio sales in the United States for 2024,” according to CPF. “Senior living is a core investment strategy and one we continue to grow by purchasing and establishing new institutional-quality communities, and this sale demonstrates the strength and attractiveness of this asset class,” CPF founder and Managing Partner Mary Tolan said. The 20-property portfolio includes independent living, assisted living and memory care communities located in what CPF called “strategic markets known for strong and growing demand for senior living.”

Pennant acquires senior living communities in Wisconsin Global Newswire; by Pennant Group; 11/1/24 The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the Pennant group of affiliated home health, hospice, home care and senior living companies, today announced that it has acquired the operations of the following premier senior living facilities in Green Bay and Appleton, Wisconsin. The acquisition is effective today, November 1, 2024, and will be subject to a long-term, triple net lease:

Mission Health Services acquires Angel’s Crossing Home Hospice Hospice News; by Jim Parker; 11/4/24 The long term care company Mission Health Services has acquired Utah-based Angel’s Crossing Home Hospice. Mission is a nonprofit provider of nursing home, assisted living, short term care, memory care and therapy services. The M&A advisory firm Agenda Health facilitated the transaction. Financial terms were undisclosed. The deal marks Mission’s first foray into the hospice space. “The sellers made the strategic decision to divest their business to pursue a new venture. Their goal was to reallocate their time, energy and resources towards founding a hospice in a different region of the country,” Stephen Walters, senior director for Agenda Health, told Hospice News in an email. 

CareTrust, JV partner to acquire 31 skilled nursing facilities in $500 million deal Skilled Nursing News; by Tim Mullaney; 10/29/24 CareTrust REIT (NYSE: CTRE) and a joint venture partner have reached an agreement to acquire a portfolio of 31 skilled nursing facilities for approximately $500 million, the company’s largest acquisition to date. San Clemente, California-based CareTrust anticipates that most of the facilities will be operated by existing partners of the REIT, including The Ensign Group (Nasdaq: ENSG), PACS Group (NYSE: PACS) and Links Healthcare Group, the company announced Tuesday. The portfolio being acquired totals 3,290 licensed beds, with 30 of the locations in Tennessee and one in Alabama. CareTrust anticipates that the deal will close in the fourth quarter of 2024. ... PACS will be adding 12 of the 31 properties to its ranks, all 12 are in Tennessee; PACS currently operates 276 post-acute care and senior living facilities across 15 states. This is a new state for the Utah-based operator. PACS may purchase the real estate on six of the facilities between years four and seven of the lease with CareTrust, PACS said in a statement.

Covenant Care deal a growth engine for Vitas Hospice News; by Jim Parker; 10/30/24 VITAS Healthcare’s acquisition of Covenant Health and Community Services hospice business has emerged as a growth engine for the company. In April, VITAS acquired Covenant’s hospice operations as well as one assisted living facility in an $85 million deal. The transaction brought VITAS into the Alabama market and expanded its geographic footprint in Florida and marked the company’s entry into the assisted living space. Covenant Health contributed close to $11 million to VITAS’ $391.4 million third quarter revenue, which is up 17.3% year over year. In addition to the acquisition, the company in Q3 saw an 15.5% increase in average daily census (ADC) reaching 21,785. Admissions also rose 6.3% to 16,775.

Cigna considers Humana acquisition – What it means for the stocks MarketBeat; by Jea Yu; 10/29/24 There has been speculation of a massive merger in the medical sector between two massive health insurers. Specifically, the rumor is The Cigna Group NYSE: CI is interested in acquiring Humana Inc. NYSE: HUM. The conjecture caused both stocks to react, as Cigna stock fell 10% as the rumored surfaced on Oct. 18, 2024, and Humana stock remained relatively flat. Based on the reactions, the market doesn't see this as a favorable merger, and for good reason. While there are many potential synergies in a merger, assuming it passes the regulatory antitrust sniff test (which is a big "if"), there is also a major sticking point that sinks any possibility of it coming to fruition called Medicare Advantage (MA).