Amedisys, Inc. (NASDAQ: AMED) has entered into a definitive agreement to purchase Asana Hospice for an undisclosed amount. The transaction is expected to close Jan. 1, 2020.
Amedisys has been doubling down on hospice acquisitions this year, building up its hospice footprint as the company braces for disruption to its home health care business stemming from the forthcoming transition to the patient driven groupings model (PDGM).
“We are continuing to build and buy in hospice. We continue to work a full hospice tuck-in pipeline while streamlining our internal acquisition integration and absorption process as we wait for industry disruption in home health early next year,” Amedisys CEO Paul Kusserow said in an October earnings conference call. “We will buy opportunistically in home health once we see what PDGM looks like and build networks to expand our personal care coverage.”
Asana Hospice, which operates eight locations in Pennsylvania, Ohio, Missouri, Kansas and Texas, has an average daily census of 540. Following closure of this transaction, Amedisys hospice portfolio will rise to 146 locations in 33 states.
“Since our founding, Asana Hospice has focused on family and patient-centered care and empowering each and every team member to take part in fulfilling this mission,” David Glick, president and CEO of Asana Hospice, said. “In Amedisys, we find true alignment to our shared mission of providing the highest quality of care to the communities we serve.”
In the third quarter of 2019 Amedisys hospice segment revenue rose to $162 million, a 57% increase over Q3 2018. The segment’s EBITDA rose 47%. Major contributors to these results were the acquisitions of Compassionate Care Hospice (CCH) and Tulsa, Okla.-based RoseRock Healthcare earlier this year.
The company purchased CCH for $340 million, providing a substantial boost to the company’s hospice segment. Following the CCH transaction, the company’s nationwide annual patient census rose to 11,000 patients in 33 states, up from 7,200 patients in 22 states, making Amedisys the nation’s third-largest hospice provider. With the Asana purchase, their census will rise to nearly 12,000.
Financial terms for the RoseRock transaction were not disclosed. RoseRock served an average daily census of 220 patients in northeastern Oklahoma.
In addition to acquisitions Amedisys is growing its hospice footprint through de novo activity, with as many as five new locations opening this year, compared to three new home health locations.
“We had one [de novo] last year to test it out, and it went well. So we are back in the business of building, mostly hospices but also some home health. The cost for that is quite low,” said Kusserow, speaking at the William Blair 2019 Growth Stock Conference in Chicago. “It takes us about 10 months and half a million dollars to build a hospice, but we believe that is something we should be continually focused on.”