Capital One Issues $600 Million in Revolving Credit to Addus to Fuel Acquisitions

Addus HomeCare (NASDAQ: ADUS) has secured a $600 million revolving line of credit, with Capital One Financial Corp. (NYSE: COF) as the lead arranger and administrative agent. The company intends to apply the credit to pursue further acquisitions.

Addus is on the hunt for acquisitions. While its 2021 acquisition strategy is heavily weighted toward home health and personal care, the company still has its eyes out for hospice assets, CEO Dirk Allison indicated in a second quarter earnings call.

“It has been very important for us to have a sophisticated financial partner with the industry knowledge to appreciate our business model as we implement our strategy,” said Allison. “Capital One’s ability to provide exceptional turnaround and flexibility is yet another reason why we continue to rely on them for our financing.”

Addus has sought financing from Capital One several times since 2017. Capital One Financial Corporation is a Fortune 500 financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $306.3 billion in deposits and $423.4 billion in total assets as of June.

Addus has been active in the M&A market. Since 2019, the company has purchased seven personal care companies and four home health and hospice companies.

Most recently, Addus acquired Armada Hospice of New Mexico and Armada Hospice of Santa Fe for $29 million. The transaction also included the affiliated Armada Skilled Home Health of New Mexico. The Albuquerque-based Armada cares for nearly 1,100 home health patients daily, as well as about 100 hospice patients, bringing in annualized revenues of $23 million.

Addus is also nearly finished with 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 million.

Addus provides hospice, home health and personal care services to nearly 44,000 patients through 215 locations in 25 states. Addus’ hospice segment brought in nearly $37 million during the second quarter of 2021, up from $25.5 million during the prior year’s quarter.

The company earned $217.9 million for the second quarter of 2021, up 18.1% from $184.6 million for the second quarter of 2020.

“The strong capital markets response reflects the growing momentum that Addus has achieved in the past few years,” said Jeffrey Hoffman, managing director, Capital One Healthcare Finance. “The strong top-line growth it reported in 2020, despite disruption from COVID-19, underscores the resilience of its business.”