Private Equity Bullish on Hospice in 2021

The hospice and home health sectors saw strong consolidation activity at the end of 2020, according to a fourth quarter report from Provident Healthcare Partners. The report indicated that increased private equity transactions and an influx of new deals during 2021 will be attracting interest and driving heightened valuations in a growing hospice market.

Private equity firm interest in the hospice sector rose during the 2020’s fourth quarter, according to the capital market company’s report. Provident pointed to several transactions in both markets as evidence that new consolidators will raise the stakes in hospice deals and step up competition.

“The hospice market continues to remain extremely active,” said Provident’s Managing Director, Kevin Palamara, and Senior Analyst, Jake Vesely, in an email to Hospice News. “The combination of several private equity-backed platforms reaching inflection points within their investment cycles and the continued strong performance of the publicly traded groups have led to increased competition and frothy valuations. Private equity’s bullish sentiment on the hospice sector is evident in the valuations we are witnessing on some of the deals such as Care Hospice and St. Croix Hospice.”


The Chicago-based private equity firm the Vistria Group agreed to sell St. Croix Hospice to an affiliate of the investment company H.I.G. Capital for an undisclosed amount in October. The Minnesota-headquartered hospice has been on a strong growth trajectory in recent years, completing a number of acquisitions and adding several de novo locations in 2019 and 2020.

Rumors have also circulated that private equity firm Webster Equity Partners will sell Bristol Hospice, representing another large sale in the hospice space with an EBITDA in excess of $70 million, according to PE Hub. Private-equity backed Queen City Hospice, LLC, and its affiliate Miracle City Hospice were acquired by Addus HomeCare for a total cash consideration of $192.0 million in November.

Not many large-scale hospices remain on the market to drive further private equity interest, having an impact on the future of consolidations and crowding an already competitive marketplace. Despite possible slowed interest relating to evolving Medicare Advantage plans and delayed available equity due to COVID-19 headwinds, several more iterations of private equity investments are expected in the hospice space, according to Palamara and Vesely.


“As the amount of large scale, independently-owned hospices continues to decrease, private equity firms in the lower middle-market may have to go a bit downstream for new platforms,” said Palamara and Vesely. “That being said, the hospice market is still extremely fragmented with plenty of opportunity for new private equity firms to enter the space. We may see the combination of several smaller providers as a starting point for new platforms as well.”

Nontraditional buyers have increasingly stepped into the hospice space, with Provident reporting a much more diverse investor base, including search funds and family offices. Interest from various types of strategic buyers is also growing.

Strategic buyers attempting to capture the entire continuum of care by expanding into hospice is a trend anticipated to continue, according to Palamara and Vesely, who indicated that the hospice space will largely remain a seller’s market for the near term in 2021.

“Provident expects sustained heightened levels of M&A activity in the hospice space to continue throughout 2021,” Palamara and Vesely told Hospice News. “What we’ll continue to see, which is evident by these transactions, is that strategic consolidators will continue to leverage add-on M&A activity and put forth aggressive valuations as it tends to be one of the most accretive and quick ways to expand market share within their existing geographies. Additionally, private equity firms will continue to invest capital in this sector through new platforms and add-on M&A activity for existing platforms.”

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