The health care investment firm Grant Avenue Capital has purchased Salt Lake City-based Valeo Home Health & Hospice for an undisclosed amount. The transaction marks the private equity company’s first deal in the home-based care space and signals the start of a larger effort to acquire hospice and home health holdings.
Grant Avenue Capital purchased Valeo from the skilled nursing facility operator Eduro Healthcare. Certain individual shareholders of Eduro will continue to have a minority ownership stake in Valeo, with Grant Avenue holding the majority stake.
“Valeo’s dedicated leadership, operations and clinical teams provide outstanding care to patients and their families, as exemplified by its expansion of services during 2020 to serve those particularly hard-hit by COVID,” said Buddy Gumina, founder and managing partner of Grant Avenue Capital. “Going forward, we plan to accelerate the expansion of both Valeo and our overall home-based care platform through continued investment in strategic acquisitions, partnerships and de novo launches,”
Valeo since its founding in 2011 has served more than 6,000 patients in Salt Lake City and Utah Counties in its home state. Utah led the nation in hospice utilization among Medicare beneficiaries during 2018, with 60.4% of decedents electing hospice. The national average that year was slightly more than 50%.
This transaction is Grant Avenue Capital’s fourth corporate carve-out since the firm opened its doors in 2019. Following the Valeo transaction, the firm plans a broader buy-and-build initiative to complete acquisitions and strategic partnerships in the home-based care sector. While the space is new to Grant Avenue, several of the firm’s members have experience with home health and hospice investment.
Private equity activity in the hospice space has spiked in recent years, with buyers largely driven by demographic tailwinds, rising utilization and the need to build scale for participation in value-based payment models such as Medicare Advantage or the Center for Medicare & Medicaid Innovation’s direct contracting programs. On the seller side, record high multiples for hospice companies have made investor-owners’ mouths water. Multiples reached as high as 26x in 2020.
“Home health and hospice are areas that are very fragmented with a number of ways to expand, both through M&A and organically,” Gumina told Hospice News. “The key is starting with a strong, highly compliant foundation, which we are. Members of the Grant Avenue team have also completed and exited a number of successful deals in the space historically, so we know the space quite well.”