Aveanna Doubles Down on Recruitment, Pursues Hospice Growth

Aveanna Healthcare Holdings (NASDAQ: AVAH) has streamlined its hiring and on-boarding process to more quickly replenish its workforce in a tight labor market. The industry-wide staffing shortage may be the company’s most significant headwind as it expands its hospice and home health care footprint. 

The Atlanta-based  hospice, home health, private duty and pediatric services provider is offering virtual on-demand training classes for new hires, removing the necessity of two-day, in-person orientations. The initiative has reduced on-boarding time by 80%, CEO Tony Strange said at the Barclays Global Healthcare Conference in Miami Beach, Fla. 

The company has coupled this acceleration with efforts to create more flexible scheduling for its part-time clinicians, as well as offering same-day pay. This includes the roll out of a caregiver smartphone app designed to give employees more control over their own schedules.

These decisions have contributed to low turnover at Aveanna, according to Strange. 

“You have to understand who the workforce is, in private duty, in our traditional home health and hospice. We have very low turnover,” Strange said at the conference. “We are at or below the industry standard, because those employees look and feel like full-time employees.”

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 2021 launched a $458.8 million initial public offering (IPO).

The redoubling of recruitment and retention comes at a time of not only staffing shortages but a period of anticipated growth for Aveanna, including its hospice and home health business.

The company is actively seeking hospice and home health deals in addition to boosting organic growth, Aveanna Chief Operating Officer Jeff Shaner previously told Hospice News.

“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.”

That would certainly be the case if Aveanna were to purchase the Encompass Health Corporation (NYSE: EHC) home health and hospice spin off.

Reuters reported last week that Aveanna and private equity firm Advent International were among the interested parties in the potential sale of the spin off, branded as Enhabit Home Health & Hospice.

Historically a pediatric home care and private duty company, Aveanna entered the hospice space with the October 2020 purchase of Five Points Healthcare, which operates locations in seven states, for an aggregate cash consideration of $64.4 million.

The company is currently integrating the operations of Comfort Care Home Health, an Alabama-based hospice and home health provider the company acquired for $345 million last December. Comfort Care’s 31 locations earned about $100 million in revenue annually, with hospice representing about 53% of the total.

The $345 million price tag for Comfort Care includes $290 million of value and an estimated $55 million in tax benefits. When financing the deal, Aveanna took on additional debt, leveraging the company at about 6%. This is higher than the 4% to 4.5% Aveanna anticipated at the time of its IPO, according to Strange. 

This likely had some impact on stock prices.

“We decided to take leverage to the [6%] range to close those deals and not take on shareholder dilution, which I think is the right decision,” Strange said. “However, there are some investors that aren’t comfortable with that kind of leverage.”