The hospice mergers & acquisitions market continues to be robust. Fourteen hospice transactions took place during the second quarter of 2019, up from eight hospice-related acquisitions during the first quarter, according to a report from M&A advisory firm Mertz-Taggart.
The hospice merger and acquisitions market has been thriving in recent years, with several top providers such as Amedisys, LHC Group, and others prioritizing expansion of their hospice footprint through acquisitions.
The number of Q2 transactions outstrips the previous year’s activity; seven transactions occurring in the first quarter of 2018, followed by eight in the second quarter.
“Hospice made a big jump in the second quarter, which isn’t shocking at all, given the growing demand among home health agencies and some of the newer hospice private-equity backed portfolio companies in the marketplace,” said Cory Mertz, managing partner at Mertz Taggart.
Among the most significant transactions in the second quarter occurred in May with the purchase of Texas-based Resolutions Hospice by Cornerstone Healthcare Inc., a subsidiary of The Ensign Group (NASDAQ: ENSG), for an undisclosed amount. With the Resolutions deal, Cornerstone subsidiaries operate 26 hospice operations, 25 home health operations, and nine other home care operations across 12 states.
Earlier this year, Cornerstone acquired Boerne, Tex.-based All County Home Care and Hospice for an undisclosed sum, but the company is not alone in pursuing opportunities in Texas.
Along with Cornerstone, a number of hospice providers are zeroing in on the Texas market for growth during 2019.
VITAS Healthcare’s Inpatient Hospice Unit in late February began accepting patients in a new dedicated wing of Methodist Dallas Medical Center. The $2.8 million, 13,000-square-foot facility is expected to care for 800 hospice patients annually.
The nonprofit Hospice of Wichita Falls in February expanded its operations into northern Texas, financed through $12 million in donations. Also in February Traditions Healthcare Holding Company, LLC, a portfolio company of Dorilton Capital Advisors LLC, purchased Tyler, Tex.-based Hospice Connection.
The U.S. Centers for Medicare & Medicaid Services’ recent rebasing of hospice payments in the 2020 final rule is unlikely to derail M&A activity in the hospice space. The rule implemented a 2.7% in per diem amounts for the routine home care level of care as well as a 2.7% increase for the general inpatient care, continuous home care and inpatient respite care levels.
“Hospice will remain a hot space for the foreseeable future, though CMS did rebase payment rates for the four levels of hospice care in its Fiscal Year 2020 final rule,” the Mertz Taggart report indicated.