Bristol Hospice, a portfolio company of Webster Equity Partners, has purchased the California operations of Companion Hospice for an undisclosed amount. Companion will retain its Texas and Arizona locations. The acquisition fills a geographic gap in Bristol’s service area, in which Companion Hospice cares for more than 600 patients per day. Financial terms of the transaction were not disclosed.
California is the largest hospice market in the country, according to Kevin Palamara, managing director at Provident Healthcare Partners, the M&A firm that advised Companion on the deal. The acquisition fills a geographic gap its Bristol’s service area, in which Companion Hospice cares for more than 600 patients per day
“California is the largest hospice market in the country. Southern California in particular is probably one of the most heavily inundated hospice markets in the country,” Palamara told Hospice News “Companion really fills in an area of need in terms of geography for Bristol. [Companion] is among the largest non-private equity-backed group in the state of California.”
More than 9 million Californians will be older than 65 by 2030, a rise of 3 million from 2019, according to the Public Policy Institute of California. By then, seniors will comprise more than 20% of the state’s population.
Hospice utilization reached 46.1% in the state during 2018, compared to a national average of slightly more than 50%. Utah leads the nation in utilization at 60.5%.
Bristol Hospice has been active in the hospice M&A space during 2020. In September Bristol expanded into Arizona and Nevada with the purchase of Remita Health. The company in August purchased the hospice components of California-based Visiting Nurse Association of the Inland Counties (VNA). A second company, HealthSure Management Services, acquired VNA’s home health assets. Financial terms were confidential.
Earlier in the year Bristol acquired the Utah and California locations of Sojourn Hospice & Palliative Care, a Healthy Living Network company, for an undisclosed amount.
Hospice valuations have hit record highs during the past two years, with multiples in the space reaching as high as 29x. Nevertheless, the high price tags are unlikely to discourage investors seeking to capitalize on demographic tailwinds and rising demand.
“Hospice still is a very attractive area of investment for private equity investors, and they were certainly at the table for Companion. They continue to be an attractive option for owner/operators in these processes,” Palamara said. “We understand with some recent transactions there may be some sticker shock, but those are typically transactions in which a strategic had a unique angle (such as geography, complimentary service offering) in which they are able to pay above market premiums.”