Hospice Topping Other Health Care Sectors on M&A

Hospice providers are charging ahead with merger and acquisition transactions this year despite taking a few financial punches from the COVID-19 pandemic. While the larger health care M&A market saw more disruption, hospice activity proceeded apace according to a new report from Provident Healthcare Partners.

Acquisitions in the health care services sector slowed significantly in early 2020 as the pandemic ramped up. In the home health space in particular, investors also have been cautious as they gauge the impact of the patient-driven groupings model (PDGM), a new payment structure that became effective this year.

Among the various segments of the health care industry, hospice continues to be the one to watch, even as valuations soar and multiples continue to hit record highs.


“Hospice is in the upper tier of consolidation activity compared to any health care provider or service organization right now. Hospice valuations remain at peak levels and have really been at those peak levels now for the better part of the last couple of years,” Provident’s Managing Director Kevin Palamara said. “They’re certainly at the higher end of what you would see within the health care provider marketplace — certainly higher than valuations of other groups within the post-acute care space, including home health care and unskilled home care.” 

The hospice market is buoyed by strong tailwinds, including demographic forces driven by aging Baby Boomers, rising hospice utilization and, during the pandemic, a shift towards patients’ being more receptive to receiving care in the home for fear of acquiring the virus in an institutional setting, according to Provident’s Senior Analyst Jake Vesely. 

Providers haven’t seen a notable drop in their patient census, though the rate of referrals slowed somewhat in the first quarter and early in the second quarter. This is largely due to interruption of hospice’s traditional marketing methods, such as in-person sales calls to hospitals and skilled nursing facilities.


“On the hospital side of things, and some of the skilled nursing and long term care facilities, they were trying to move the patients to the home or to receive hospice care outside of the traditional institutionalized settings to help reduce the spread of COVID-19 amongst the elderly population. There has been some positive tailwinds for hospice in that regard,” Vesely told Hospice News. “Overall, we haven’t seen a huge impact on hospice operations [from the pandemic]. Furthermore, some of these health care-focused private equity firms may be looking to turn towards hospice as one of the areas that hasn’t been impacted as significantly as some of the other areas of health care.” 

A number of hospice transactions so far this year have involved private equity firms.

In March, Minnesota-based St. Croix Hospice bought Serenity Care Hospice in Harrison, Mo., for an undisclosed amount. St. Croix is a portfolio company of the Chicago-based private equity firm Vistria Group. More recently, Vistria began shopping St. Croix itself for a potential sale.

Traditions Health, a portfolio company of family-owned investment firm Dorilton Capital Advisors, has also been active in the market. The company completed three acquisitions in the past nine months in Texas, Oklahoma and Georgia.

Also in March, Bristol Hospice, backed by Webster Equity Partners, purchased the Utah and California locations of Sojourn Hospice & Palliative Care from parent company Healthy Living Network. Financial terms were undisclosed.

However, the most prominent deal so far in 2020 did not involve private equity. That was the $235 million purchase of AseraCare by hospice and home health provider Amedisys (NASDAQ: AMED) in June.

The litany of 2020 hospice transactions indicates that activity in that market is unlikely to falter in the near future.

“The AseraCare deal is certainly the most notable transaction of 2020. Hospice activity is going to be going to remain extremely robust. We have so many consolidators out there. I think you’re going to see notable deals every week,” Palamara said. “In terms of larger scale acquisitions, through our proprietary knowledge of the market, we do anticipate that there will be anywhere from two to three very meaningful transactions in the hospice space over the next six months or so. When I say meaningful, I think that you’ll see some of the top 10 to 20 providers in terms of their overall patient census. You will see some bigger names transact as we move into the latter part of 2020 and into early 2021.”

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