Addus Acquires JourneyCare in $85 Million Deal

Addus HomeCare (NASDAQ: ADUS) has purchased JourneyCare Inc., for an anticipated sale price of $85 million. JourneyCare, a nonprofit, is one of the largest hospice providers in Illinois, serving 750 patients daily in 13 counties.

Addus had indicated in 2021 earnings calls that the company would lean its M&A activity towards personal care and home health during 2022, but would continue to consider hospice transactions as they work to build density in markets where they have a home health or personal care presence. Among these markets is the Chicago metropolitan area, where JourneyCare is headquartered. In October, Addus completed its acquisition of Summit Home Health, also near Chicago.

“Acquisitions are an important part of our growth strategy, and we are pleased to start 2022 on a strong note,” Addus CEO Dirk Allison said. “Our development team continues to do an outstanding job of identifying strategic acquisitions and our strong capital structure supports our ability to continue this successful track record. We look forward to the growth opportunities ahead for Addus in 2022.”

Addus provides hospice, home health and personal care services to nearly 44,000 patients through 215 locations in 25 states. The company’s net service revenues rose 11.7% to $216.7 million in the third quarter of 2021, up from $194.0 million for the prior year’s period.

Addus will finance the deal, expected to close on Feb. 1, through a mix of cash on hand and the company’s revolving credit facility. Addus last summer secured a $600 million revolving line of credit with Capital One Financial Corp. (NYSE: COF) as the lead arranger and administrative agent. The company indicated that it intends to apply the credit to pursue further acquisitions.

The company has been active in the M&A market in recent years, completing seven personal care acquisitions and four home health and hospice since 2019. 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.

Hospice utilization in JourneyCare’s home state of Illinois market reached 50.3% among Medicare decedents during 2018, which is in line with the national average, according to the National Hospice & Palliative Care Organization. Utah led the nation with 60.5%.

“We very carefully selected Addus to carry forward the JourneyCare clinical operations, and we believe this combination will benefit our employees, patients and everyone associated with JourneyCare,” Kimberly Hobson, president and CEO of JourneyCare, said. “We share the same commitment to providing quality, end of life care, and we look forward to working together to close this important transaction.”