Hospice and home health provider Amedisys, Inc. (NASDAQ:AMED) has entered into a definitive agreement to purchase Texas-based AseraCare Hospice for a cash purchase price of $235 million.
Amedisys has had its eye on AseraCare for a number of years.
“In 2016 we actually approached the AseraCare, and at that time they weren’t for sale. We’ve been tracking them and keeping up with their owners and management team for almost four and a half years now. It’s an asset we liked,” Amedisys CEO Paul Kusserow said. “We particularly liked the culture, their ability to hold on to good employees. Their structure also is very similar. They run their business very similarly to the way we do.”
The purchase price includes a $32 million tax asset, Amedysis indicated.
AseraCare endured legal troubles in recent years. Earlier this year, the hospice provider agreed to a $1 million settlement with the U.S. Department of Justice in a longstanding Qui Tam False Claims Act (FCA) case that began in 2008. Though the company was cleared of the allegations, the Department of Justice was given the opportunity to review the evidence and present any new information for further action. Rather than continue to pursue the case in court, Aseracare agreed to the settlement.
“The company really wasn’t for sale prior to the settlement of [the FCA case]. We feel that it’s free and clear, and they’re ready to move ahead,” Kusserow said. “They’ve left that behind, and the [Justice Department] as well as very willing to let this company move forward.”
Amedisys was active in the hospice M&A market during 2019, completing several transactions that included its $340 million purchase of Compassionate Care Hospice in February and its tuck-in of RoseRock Healthcare for an undisclosed amount.
The company kicked off the new year with another acquisition, closing its purchase of Asana Hospice for an undisclosed amount on Jan 1. Asana Hospice, which operates eight locations in Pennsylvania, Ohio, Missouri, Kansas and Texas, had an average daily census of 540.
After the AseraCare transaction closes, Amedisys will operate 190 locations in 35 states, reaching 14,000 patients daily. The deal was in the works prior to the onset of the COVID-19 pandemic.
The deal continues Amedisys’ three-pronged hospice growth strategy that includes large acquisitions, smaller tuck-in transactions and the building of four de novo hospice locations. The company turned its focus on expanding its hospice footprint in part due to anticipated disruption resulting from the new Patient Driven Groupings Model (PDGM) payment structure for home health.
“We didn’t know what PDGM was going to look like, and now that we have PDGM plus coronavirus, we still don’t know what home health looks like for us. We have a much better idea of hospice,” Kusserow said.