The Chicago-based private equity firm The Vistria Group is seeking a buyer for its portfolio company St. Croix Hospice, headquartered in Minnesota, according to a report from the Wall Street Journal.
A spokesperson representing Vistria Group made no comment to Hospice News about its plans for St. Croix.
St. Croix operates locations throughout Kansas, Minnesota, Missouri, Nebraska, Iowa and Wisconsin, and will likely draw the eyes of prospective buyers in the currently robust hospice mergers and acquisitions market.
“St. Croix was already an attractive platform when Vistria acquired it in 2017. At that time, they were serving 1,100 patients across five states, so it was a sizable multi-state company with a strong executive team,” Cory Mertz, managing partner with the M&A advisory firm Mertz Taggart, told Hospice News. “They’ve done a lot to grow it since, growing organically, opening several de novos in the Midwest, and then acquiring Hometown and Serenity Care in 2019 and 2020, respectively, allowing them to expand into Missouri.”
The hospice has been on a steady growth trajectory in recent years, having completed several acquisitions and opening a number of de novos during 2019 and 2020. The company opened two new locations in Iowa a month apart in May and June, as well as five others within the past year in Wisconsin, Nebraska and its home state of Minnesota.
In March, the company entered the Missouri market through the acquisition of Serenity Care Hospice in Harrison, Mo., for an undisclosed amount. Last August, St. Croix also purchased Brookfield, Wis.-based Hometown Hospice & Homecare, which consists of three hospice and home health operations in eastern Wisconsin. The company has plans for future expansion with a focus on Midwestern markets.
A number of factors have whetted the appetites of private equity firms for hospice in recent years, including the fragmented nature of the industry, increased acceptance of palliative care services, demographic tailwinds, the changing regulatory landscape, and movement towards value-based payment models.
While the COVID-19 pandemic has weakened M&A activity in some industries, that is not the case for hospice.
“Hospice remains hot and, unlike many health care industries or other industries in general, it is structurally sound and, relatively speaking, thriving during COVID times,” Mertz said. “So you have the traditional strategics all interested in adding hospice services, and you have private equity groups with aggressive growth-by-acquisition mandate. But those private equity groups aren’t able to invest in most other industries right now because the banks aren’t lending into them. Hospice doesn’t have that issue, so the demand for hospice among PE groups is even stronger.”