Denver-based private equity firm Revelstoke Capital Partners has made a significant investment in Michigan-based hospice company The Care Team, a large provider in the Great Lakes region. The two companies would not divulge the investment dollar amount, but the move contributes to a growing trend of private equity interest in the hospice space.
Revelstoke indicated that the firm intended for the investment to support The Care Team’s growth objectives. The Care Team did not respond to Hospice News’ requests for more details on those objectives, but indicated in a statement that the company intends to expand to new markets.
In addition to hospice care, The Care Team providers in-home nursing services, physical therapy, home health care and speech and occupational therapies. The company also employs medical social workers.
“This investment is the result of a multi-year outbound search in the home health and hospice industry for providers that can offer excellent outcomes for patients in the lowest cost-of-care setting,” said Russell Cassella, managing partner at Revelstoke. “Our partnership with [The Care Team], a leading home health and hospice agency that is well-positioned for growth and consolidation, achieves this objective. [The Care Team’s] management team has developed the infrastructure and capabilities needed to provide patients and families with exceptional and cost-efficient care. With consolidation in the industry expected to accelerate, we are seeking other leading agencies to partner with so we can further expand the [Revelstoke’s] reach and capabilities.”
Private equity interest in the hospice market has been driven by multiple factors, including the fragmented nature of the industry, increased acceptance of hospice and palliative care services, demographic tailwinds, the changing regulatory landscape, and the gradual transition towards a value-based care model, such as the Medicare Advantage hospice carve-in slated for 2021.
A number of high-profile hospice transactions involving private equity firms have occurred thus far during 2019.
Private equity firm Towerbrook Capital Partners and health system Ascension Health have agreed to purchase the Nashville-based hospice provider Compassus at a valuation of $1 billion, with multiples of EBITDA in the low teens, PEHub.com reported earlier this month. The two companies will split ownership of Compassus down the middle, each holding an equal stake.
Also this month, Missouri Home Hospice, LLC, a firm with portfolio companies throughout the post-acute care space, and MHS Equities, LLC acquired Missouri-based Transitions Hospice, marking the third 2019 acquisition for Missouri Home Hospice.
Texas-based Three Oaks Hospice in September acquired three hospice agencies in Dallas, Fort Worth and San Antonio — Total Hospice & Palliative Care, ABS Palliative and Hospice Care and Fellowship Hospice — after receiving more than $21 million in private equity funds from Granite Growth Health Partners, Health Velocity Capital and Petra Capital Partners.
Earlier this year, a Salt Lake City-based private equity firm has purchased Comfort Hospice & Palliative Care in Portland, Ore., for $20 million. The purchasing company — a large regional operator with 30 additional hospice locations primarily in the Western United States — has not been identified publicly. Comfort Hospice & Palliative Care earns nearly $8.3 million in annual revenues and cares for an average of 143 patients per day in four Oregon counties.
The Revelstoke deal with The Care Team keeps the hospice provider’s founder and CEO Jason Laing in place, according to Revelstoke.
“Over the last four years, The Care Team has grown into a leading regional provider of home health and hospice care, serving patients across Michigan,” Laing said. “Partnering with Revelstoke will provide us with the expertise, capital and guidance needed to expand our presence in Michigan and enable our entry in new markets.”