BrightSpring Health Services has purchased Abode Healthcare from Summit Partners with a reported valuation of $775 million, PE Hub reported. The transaction is projected to bring the combined company roughly $6 billion in annual revenue.
Louisville, -based BrightSpring’s total value currently rests at approximately $10 billion. Brightspring is a portfolio company of the global investment and private equity firm KKR & Co., which purchased the company in 2018 for approximately $1.32 billion.
Beginning as ResCare in 1974, the hospice, palliative, behavioral and home health care provider focuses on serving patient populations with complex and specialized care needs across the continuum of care and also offers pharmaceutical and diagnostic services through subsidiaries such as Adoration Health LLC, Pharmacy Alternatives LLC and more.
Currently awaiting regulatory approval, the acquisition of Durango, Colo.-based Abode Healthcare will “significantly deepen” BrightSpring’s hospice, palliative and clinical home health care segments, according to PE Hub sources. Acquiring Abode is as part of the company’s overall strategy to build out complimentary services and expand integrated care for complex and in-person patient populations with chronic comorbidities.
Financial service provider Guggenheim Partners advised BrightSpring, while investment banking company Houlihan Lokey advised Abode Healthcare in the deal.
Abode Healthcare’s previous owner, Summit Partners, purchased the organization from Tailwind Capital Partners in August 2019. KKR will be the third private equity firm to hold interest in the Adobe within the past three years, , according to PE Hub.
While the COVID-19 pandemic delayed progression on many transactions in the hospice space last year, M&A activity began to tick back upwards late in 2020, according to a fourth quarter report from Provident Healthcare Partners. According to the report, both the hospice and home health sectors saw strong consolidation activity at the end of 2020, indicating that private equity firms will remain bullish on hospice in 2021 with an influx of new deals continuing to drive up heightened valuations in the market.
Private equity investment in hospice shows no sign of slowing.
Private equity firm Webster Equity Partners officially is moving forward on the sale of Bristol Hospice, based in Salt Lake City. The hospice provider operates across 10 states with 35 locations with EBITDA in excess of $70 million. Another multimillion dollar deal came in November 2020 when Addus HomeCare Corporation (NASDAQ: ADUS) purchased private equity-backed Queen City Hospice for $192 million. This followed the sale of St. Croix Hospice by the Vistria Group to H.I.G. Capital for an undisclosed amount.
Strategic buyers attempting to capture the entire continuum of care by expanding into hospice is a trend anticipated to continue.
Named a 2020 Changemaker by Hospice News’ sister publication, Home Health Care News, BrightSpring CEO Jon Rouseeau has focused on growing the company’s pharmaceutical non-medical, personal and assisted living care service base during his leadership since 2016.
Approximately 80% of BrightSpring’s services are provided in the home, primarily serving senior patients and those with behavioral health care needs. The company has been expanding into various specialized health care markets, purchasing Advanced Home Care’s home health and specialty infusion businesses in March 2020 for an undisclosed amount and growing its presence in states such as Georgia and North Carolina, among others.
Adobe Healthcare offers these services in about 10 states including Alabama, Arizona, Colorado, Iowa, Indiana, Minnesota, Nevada, Ohio, Pennsylvania and Texas.
Utah ranks highest nationwide at 60.5% hospice utilization among Medicare decedents, more than 10% above the national average in 2018, according to the National Hospice & Palliative Care Organization. Arizona ranked third at 58.8%, while Ohio and Iowa were at hospice utilization rates of 56.7% and 56.2%, respectively.
Serving more than 350,000 patients daily nationwide, BrightSpring has been on a 20-year growth streak, expanding in all 50 states through its eleven service lines across the continuum of care. The company projects growth in emerging business areas due to swelling of patient populations by 2 to 6% annually.
Both BrightSpring and Abode Healthcare declined to comment on the transaction, which has not been formally announced.
Companies featured in this article:
Abode Healthcare, Addus HomeCare Corporation, Adoration Health, BrightSpring Health Services, Bristol Hospice, Guggenheim Partners, H.I.G. Capital, Home Health Care News, Houlihan Lokey, KKR & Co., National Hospice and Palliative Care Organization, PE Hub, Pharmacy Alternatives, Provident Healthcare Partners, Queen City Hospice, ResCare, St. Croix Hospice, Summit Partners, Tailwind Capital Partners, Vistria Group, Webster Equity Partners