Private equity firm Wellspring Capital Management has acquired Caring Brands International, parent company of home health and hospice franchise company Interim Healthcare, for an undisclosed amount. The seller, PE outfit Levine Leichtman Capital Partners, purchased the company in 2015.
Caring Brands is the seventh largest home-based care provider in the United States, in addition to its international holdings in the United Kingdom, Ireland and Australia. The company’s franchise business model is unique in health care. Franchise owners in the network range from large private equity investors to mom-and-pop startups, some of which have been in the owners’ families for two or three generations.
“Over the past year and throughout 2021, delivery and access to high-quality home-based health care services has never been more essential, and it is rewarding to see such a positive market reaction,” said Jennifer Sheets, president and CEO of Caring Brands International and Interim HealthCare Inc. “We at [Caring Brands International] are fully committed to making the home the center of health care and helping more people gain the quality services they need.”
Combined, Caring Brands and its three subsidiaries — Interim Healthcare (U.S.), Bluebird Care (U.K, Ireland), and Just Better Care (Australia) — operate from more than 550 locations globally owned by more than 350 franchisees, generating $1.3 billion in system-wide revenues each year, according to PE Hub. The private equity industry publication indicated that multiples in the deal were in the 11x to 12x range of the company’s $45 million EBITDA.
The company in 2020 ranked No. 1 in the senior care category of Entrepreneur magazine’s annual Franchise 500. In addition to hospice and palliative care, the company’s franchisees provided home health care, home pediatric care, health care staffing and senior care services.
New York-based Wellspring has invested in more than 35 platforms and completed upwards of 60 acquisitions worldwide in a range of industries since 1995, including health care. To date, the firm has raised in excess of $4 billion via six PE funds. Their portfolio also includes Chicago-based home care company Help at Home, which care for 67,000 patients through 169 locations in 13 states.
Private equity interest in the hospice sector has been gaining momentum in recent years, raising the stakes in hospice deals and stepping up competition for acquisition targets. Private equity transactions and an influx of new deals during 2021 could drive up hospice valuations that have already reached record highs, with multiples reaching 26x in 2020.
Private equity hospice transactions rose nearly 25% between 2011 to 2020, according to a recent industry transaction report that M&A advisory firm The Braff Group shared with Hospice News.
The timing of the Caring Brands transaction makes sense for a number of reasons, according to Mark Kulik managing director of The Braff Group. These include lower capital gains tax rates that could rise next year if proposed legislation goes through. In addition, seller Levine Leichtman bought the company in 2015, so the asset is in the range in which PE firms usually sell — about 4 to 7 years.
These factors coupled with favorable demographics and rising demand ripened the opportunity for a sale.
“Wellspring is no stranger to the home health care marketplace. This is part of their comfort zone; it certainly is an adjacent business to Help at Home,” Kulik told Hospice News. “They’re also comfortable with international expansion, which is a whole different set of expertise.”
Companies featured in this article:
Bluebird Care, Caring Brands International, Help at Home, Interim Healthcare, Just Better Care, Levine Leichtman Capital Partners, The Braff Group, Wellspring Capital Management
