Post-acute care company AccentCare will merge with Rosemont, Ill.-based Seasons Hospice & Palliative Care. The combined company will provide a full continuum of home-based health care services, including hospice, palliative care, home health care and personal care.
AccentCare is a portfolio company of the private equity firm Advent International, which purchased the provider from Oak Hill Capital Partners in 2019 for an undisclosed sum. AccentCare CEO Steve Rodgers will lead the combined organization post-merger. Seasons CEO Todd Stern will helm the company’s hospice operations and will be named executive vice chair.
The merged organizations will become the fourth-largest hospice provider in the nation, according to Rodgers. Financial terms of the merger are being kept confidential.
“We had on-and-off conversations beginning late last year, and to the early part of this year. Bringing companies together is incredibly difficult,” Rodgers said. “[Seasons CEO Stern] and I got to know each other over the course of the year and developed a mutual respect for each other and our organizations. We started getting excited about what we could do together.”
Discussions between the company began to ramp up during the summer and early autumn, allowing for the merger decision to be made at the end of October.
Current Seasons locations will continue to work under their current brand, as will AccentCare’s home health and personal care operations. The companies’ have no immediate plans to rebrand.
After the merger is completed, the combined company will operate more than 225 locations in 26 states with close to 30,000 employees. It will have more than 60 health systems and physician practice joint ventures and partnerships and will care for in excess of 175,000 patients annually across all of its business lines.
The two organizations’ hospice and home health geographic footprints dovetail well with each other throughout the markets they serve, which include several major cities with high population density, according to Rodgers.
“This is a marriage of opportunity. We see our footprints to be extremely complimentary, our respective skill sets to be extremely complimentary,” Stern said. “I believe that together, we can deliver a superior patient and family experience and ultimately serve our continuum of care partners even better, many of which want multiple service lines and multiple forms of care.”
Also included in the merger is Health Resources Solutions, a home health provider serving 2,500 patients in three states, as well as the personal care business Gareda, with more than 4,500 yearly clients. The merged company will be headquartered at AccentCare’s current home base in Dallas. Seasons’ Illinois headquarters will house the hospice division.
The merger is subject to regulatory approvals, which the companies expect to be completed by the end of the year. The integration process is underway.
AccentCare’s private equity owner Advent International played a key role in moving the merger forward.
“Advent haas been an incredible partner of ours and continues to shore up the base infrastructure in the organization over the course of the last 16 months, as well as preparing us to kind of face into a very significant opportunity like this,” Rodgers said. “They bring a tremendous amount of capabilities and were very involved in this transaction. They helped very much to facilitate us being able to pull this [merger] together.”
Many deals in the overall hospice M&A market were delayed early in the year due to the pandemic. The number of transactions has climbed during the third and fourth quarters, particularly among private equity buyers and sellers. The hospice market is one of the most robust in the health care services sector, despite record high multiples in the space.
Among the largest recent PE-backed acquisitions was the purchase of Queen City Hospice by Addus HomeCare Corporation (NASDAQ: ADUS) for a purchase price of $192.0 million. Queen City is a portfolio company of the private equity firm Stonehenge Partners. In October the PE firm the Vistria Group sold St. Croix Hospice to an affiliate of the investment company H.I.G. Capital for an undisclosed amount. PE-backed Charter Health Group, Traditions Healthcare and Three Oaks Hospice have also completed a series of transactions in recent months.
AccentCare itself entered into a joint venture with Fairview Health Services in September that will provide hospice care throughout Minnesota. AccentCare holds 80% ownership of the JV.
“Private equity groups and other financial firms are becoming more and more at the forefront of hospice acquisitions” said Mike Moran, principal with Team M&A at American Healthcare Capital. “There’s no shortage of acquisition capital out there, and financial firms continue to look for companies that provide great returns. Despite the pandemic, Hospice businesses continue to generate profit margins above other health care segments.”