Addus HomeCare Corporation (NASDAQ: ADUS) has acquired Chicago-based Apple Home Healthcare, Ltd., for an undisclosed sum.
Texas-based Addus has more than 200 locations across 22 states, including Illinois. The state is one of three in which Addus offers its trifecta of business lines — personal care, home health and hospice. The company’s growth sights have been set on further expansion in these areas as a core to its acquisition pipeline.
Apple offers home health, skilled nursing and rehabilitative therapy services to 450 patients daily across 11 counties in and around the Chicago area.
Acquiring Apple adds bandwidth to Addus’ reach in that market and builds on its long-term growth plans, according to the company’s CEO and Chairman Dirk Allison.
“We are pleased to announce the addition of Apple to our expanding operations in the greater Chicago area, one of our largest markets,” said Allison in a recent announcement. “Apple shares our mission with a long history of providing high-quality care by promoting the safe and cost-effective administration of home health care services. This acquisition is commensurate with our growth strategy to leverage our strong personal care presence and add clinical services.”
The company’s acquisition focus for this year and into 2023 rests on targets primarily in the personal care and home health space, Allison indicated in a Q2 earnings call. Since 2019, Addus has purchased seven personal care companies and four home health and hospice agencies.
Addus’ 33,000 employees provide personal care to more than 45,000 patients and serve upwards of 3,600 home health and hospice patients.
Apple began providing services in Illinois in 1993, and currently has an annual revenue around $10 million. In addition to home health care, the company offers heart failure and diabetes management, psychiatric home health, social services, telemonitoring and fall prevention, among other specialty care programs.
Hospice utilization in the Illinois market reached 50.3% among Medicare descendants during 2018, which is in line with the national average, the National Hospice and Palliative Care Organization reported. At 60.5%, Utah held the highest rate that year.
Along with national trends, demographics are driving demand for end-of-life and serious illness care in the Prairie State. Seniors are projected to make up nearly a quarter (22.3%) of the state’s overall population by 2030, a rise from 16.6% currently, according to the U.S. Census Bureau.
The Apple acquisition builds steam for Addus’ growing presence in the Illinois market.
The company significantly grew its foothold in the state through its purchase of JourneyCare Inc. for $85 million earlier this year. Based in Glenview, Illinois, the former nonprofit was one of the largest hospice and palliative care providers statewide, serving 750 patients daily in 13 counties.
The previous year Addus bought Chicago-based Summit Home Health for an undisclosed amount. The acquired company provides skilled home health services to 240 patients daily across 14 counties.
The Summit deal sparked the company’s initial interest in home health care in Illinois, which is now one of its largest personal care markets, Addus CFO and Executive Vice President Brian Poff said at the Oppenheimer 32nd Annual Healthcare Conference.
“Together with our recent acquisitions of the operations of Summit Home Health and JourneyCare hospice services in the greater Chicago area, we have expanded our market coverage in both segments of clinical care,” Allison said in the announcement. “We are excited to leverage the strength of our combined operations and support more patients and families in this market.”
The Apple deal was financed through a combination of cash on hand and Addus’ revolving credit facility, and the company expects the transaction to be “immediately accretive to financial results.” Addus in 2021 opened a $600 million revolving line of credit with Capital One Financial Corp. (NYSE: COF) as the lead arranger and administrative agent.
Addus expects to see more large transactions later this year and early 2023, Allison stated in a Q2 earnings call. Company-wide revenues reached $236.9 million during the second quarter. The hospice segment accounted for 20% of that total, bringing in $52.074 million in Q2.
The company anticipates deploying about $100 million annually towards acquisitions.
“We are continuing to identify similar strategic acquisitions that fit our mission and strategy,” Allison said in the announcement. “We have a proven record of creating value from our acquired operations and extending our market reach in key markets. We have a capital structure that supports our ability to extend this record of growth, and we look forward to the additional opportunities ahead for Addus.”