The Public Hospice Companies Most Likely to Acquire in 2024

After a rocky year for M&A, two of the publicly traded hospice providers are poised to pursue more deals in 2024.

Based on 2023 earnings trends, The Pennant Group (NASDAQ: PNTG) and Addus HomeCare Cop. (NASDAQ: ADUS) are well-positioned to buy, according to an analysis by the M&A advisory firm Mertz Taggart.

While the majority of the hospice industry is not publicly traded, the actions of those large companies can have an impact on smaller organizations that are on the hunt for deals.


“As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively,” Mertz Taggart indicated in a report. “Historically seen as the ‘ultimate consolidators,’ the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A.”

Pennant on the hunt

For Pennant, 2024 will likely see a continuation of recent activity. The company was among the most prolific hospice buyers last year and has established growth through acquisitions as a key strategy.

The Pennant Group acquired five Medicare hospice provider numbers during the past six months, which accelerated growth for its home-based care segment.


These deals expanded the company’s presence in California, Arizona, Oklahoma and Texas and included a mix of operating providers and license purchases.

“We continue to methodically and effectively execute on our acquisition strategy, as we acquired five hospice provider numbers in new markets close to our existing operations since our last earnings call … ” Pennant President and COO John Gochnour said in a Q3 earnings report. “These acquisitions expand our footprint in states where we’ve had significant success, particularly in more rural geographies. We are excited to serve these new communities and become the provider of choice.”

These transactions contributed to a 24.3% increase in hospice revenue during Q3, which reached $50.4 million. A nearly 18% rise in average daily census, for a total of 2,698, was another significant factor.

The company’s home health and hospice segment brought in $101.5 million in Q3, up 18.3% year-over-year. Pennant attributed these gains largely to the growth in its hospice business, according to CEO Brent Guerisoli.

“With momentum in our results and a 1.3x net debt to adjusted EBITDA leverage ratio, we are poised to pursue our disciplined acquisition strategy,” Gueriusoli said. “Today, we are seeing more potential acquisitions that are consistent with our valuation expectations.”

Addus returns to the fray

Addus also has been among the few publicly traded companies that have remained active acquirers, and more deals are likely on the way in 2024. Though the company pulled back in late 2023 due to uncertainty around home health reimbursement, it will likely resume seeking deals in 2024.

Fueling the company’s acquisition engine are increases in net service revenue that continued into Q3, including its hospice segment.

Addus’ overall net service revenue reached $270.07 million, up 12.6% year-over-year. Its hospice segment earned $53.1 million, up more than 3% from nearly $51.4 million in Q2 of last year.

Acquisitions have contributed to the company’s revenue growth, including its summer purchase of Tennessee Quality Care, a home health, hospice and private-duty company for $106 million. The deal made Tennessee the third state in which Addus offers all three of its core services, along with New Mexico and Illinois.

“We continue to see strong cash flow from operations as our states and other payers have continued to pay in a timely manner. This strong cash flow along with continued management of our balance sheet has allowed us to reduce our debt while maintaining a cash balance of approximately $80 million at the end of the quarter,” Addus CEO Dirk Allison said in a Q3 earnings call. “Our loan leverage gives us the financial flexibility to be opportunistic, as we anticipate seeing additional acquisition opportunities coming to market over the next several quarters.”

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