Addus Building Up Hospice, Home Health, Co-Locating with Personal Care Business

Addus HomeCare Corporation (NASDAQ: ADUS) plans to continue growing through acquisitions, devoting approximately $100 million to cover deals this year. The company’s current strategy is focused on co-locating its clinical hospice and home health operations in markets in which they already have a foothold with its personal care business.

Addus launched as a personal care company, and those services still represent about 80% of Addus’ business. Shortly after CEO Dirk Allison came on board in 2016, the company began building up its clinical services, including hospice and home health. The national company has locations for all three business lines in the New Mexico and Ohio markets, with plans to grow that number in the coming years.

“You won’t really see us go out and make a big clinical acquisition in a market where we do not have personal care services,” Addus CEO Dirk Allison said at the Jeffries Virtual Healthcare Conference. “Addus is going to be focusing on those 5-to-10 markets where we have a really strong presence in personal care.”


The hospice M&A market has been the hottest in health care during 2020 and 2021, leading the sector in terms of deals and valuations. Multiples in the hospice and home care space reached a record 26x last year, according to a research report by PwC’s Health Research Institute. 

Hospice and home health merger and acquisition activity buoyed the larger health care services sector in 2020, which saw a decline in transactions largely due to the fallout from the COVID-19 pandemic. Overall health care sector multiples hovered near 13.9x, up slightly from 13.8x the prior year, according to PwC.

Partially because of these high valuations, Addus is leaning towards home health in its M&A plans for this year. Strategic buyers are turning their attention back towards home health transactions in 2021 after a lull while they waited for the dust to settle from a new payment system, the Patient Driven Groupings Model (PDGM). The company also wants to help its home health segment catch up with some of its recent hospice expansion as well as keep the momentum going on its core personal care business.


“In our mind, with our most recent acquisitions in hospice, you go back to the [Hospice Partners of America (HPA)] acquisition well over a year ago, and then Queen City, which we closed in December of last year, we have a pretty good presence in hospice across a number of states,” Allison said. “Our focus is really trying to source home health acquisitions in markets where we are strong in personal care. That’s what you’ll see us focus on for probably the next 12-to-24 months.”

Addus is nearly finished with its integration of its Queen City Hospice purchase in Ohio last year. In December 2020, the company bought Queen City and its affiliate Miracle City Hospice from the private equity firm Stonehenge Partners for a cash purchase price of $192.0 million.

The Queen City transaction was one of the larger hospice deals to occur last year. Also in December, Addus acquired personal care provider SunLife HomeCare in Tucson, Ariz., for an undisclosed amount. During 2019 and 2020, acquired companies brought in more than a total $214 million for Addus.

Addus provides hospice, home health, and personal care services to nearly 44,000 patients through 215 locations in 25 states.

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