Aveanna Completes $345 Million Comfort Care Acquisition

Aveanna Healthcare (NASDAQ: AVAH) has completed its acquisition of Comfort Care Home Health for $345 million. Comfort Care provides hospice and home health care in Alabama and Tennessee.

Aveanna was born in 2017 through the merger of Epic Health Services and Pediatric Health Services and since then has scaled its business by a factor of nearly five times. The company in April launched a $458.8 million initial public offering (IPO) and currently operates 245 locations nationally.

“Over the course of 21 years [Comfort Care] built a nice business. They’ve been a methodical company built on good core values and great commitment to both clinical outcomes and customer satisfaction,” Aveanna Chief Operating Officer Jeff Shaner told Hospice News. “It’s a really nice story of expansion and growth.”

Comfort Care launched in Birmingham, Ala., and soon began expanding to the north and the south, including markets like Mobile and Huntsville. During the past two years they moved into Tennessee, primarily in the Nashville region according to Shaner.

Comfort Care operates 31 locations and brings in $100 million in revenue annually with hospice representing about 53% of the total.

The $345 million price tag for Comfort Care represents $290 million of value, net of the present value of approximately $55 million in estimated net tax benefits. Aveanna financed the Comfort Care acquisition via portions of a new $415 million term loan, proceeds from a new $150 million securitization facility and cash on hand. The company expects to complete integration of its new asset during the first 180 days of 2022.

The deal builds out Aveanna’s hospice presence. The company entered the space last year with the Oct. 2020 purchase of home health and hospice provider Five Points Healthcare, which operates locations in seven states, for an aggregate cash consideration of $64.4 million.

Geography was a significant draw for Aveanna, both due to history and demographics. Several members of the Aveanna executive team, including Shaner, Executive Chairman Rod Windley and CEO Tony Strange, have worked for more than two decades in home-based care industries, with much of that time concentrated in the Southeast.

“For over 25 years, we’ve been together in the home health and hospice industries, and almost all of that time we have operated in the Southeast, and Alabama has been one of our primary markets,” Shaner said. “It’s a very competitive state, but it’s a state that we’ve known for a long, long time. We felt Comfort Care was probably the last scaled entity in the state of Alabama for both home health and hospice, and that was one of the attractive reasons.”

A 2018 projection by the Alabama Department of Public Health estimated that the state’s senior population would grow by more than 82% between 2010 and 2040. The U.S. Census Bureau estimates that more than 24% of Tennessee’s population will be 60 and older by the year 2030, up 27% from 2012.

Hospice utilization among Medicare decedents in 2018 reached 49.2%, slightly less than that year’s national average of 50.3%, according to the National Hospice & Palliative Care Organization. The 2018 rate for Tennessee was 44.9%.

While Aveanna does not comment on specific forthcoming deals, Shaner told Hospice News that the company plans to expand its hospice business by fostering organic growth as well as additional acquisitions, with a focus on building density in key markets.

This would continue a strong growth trajectory for the company. During the past five years, Aveanna has expanded from a 17-state footprint to and $324.6 million in revenue to 30 states and $1.5 billion in revenue as of the end of 2020, according to documents filed with the Securities and Exchange Commission.

“We continue to have a strong appetite for M&A both on home health and hospice, but also on our private duty space; 2021 was a very active year for us,” Shaner said. “We don’t think that that will slow down in 2022 and 2023.”