VitalCaring Primed for Hospice Expansion in 2024

The Texas-based home health and hospice company VitalCaring Group was built largely through acquisitions. It expects to step up that strategy in 2024, with an emphasis on hospice.

VitalCaring was formed in July 2021, when the private equity firms The Vistria Group and Nautic Partners began acquiring home health and hospice agencies throughout the South and Southeast. More transactions followed, with an initial emphasis on home health care. In August 2022, April Anthony, former CEO of Encompass Health’s (NYSE: EHC) home health and hospice business, joined VitalCaring as its CEO and a third principal owner.

As an engine for growth, acquisitions will continue to give VitalCaring a lot of its horsepower. The company, which also offers pediatric and companion care, has also opened a few de novos and has more planned for this year.


Hospice News spoke with VitalCaring President Luke James at the Home Care 100 Conference in Scottsdale, Arizona, about the company’s anticipated trajectory.

VitalCaring VitalCaring
VitalCaring President Luke James

We spoke early last year about VitalCaring’s launch. How have things been progressing since then?

We’re very well-poised going into 2024 to start executing on our growth strategy. We did a couple of acquisitions last year. We are looking to increase the pace and the size of acquisitions that we’re closing as we go into 2024 and beyond.


There was a lot of foundation laying that we did in the first couple of years, multiple platforms and multiple systems. So we’ve been trying to synthesize all of those and get a singular system for each investment in each portion of the business or each department that we need.

That takes a while to do, but we didn’t really want to start adding on big deals on top of the chassis we were building until we felt good about having a strong enough foundation.

M&A has been critical to your strategy. Has anything changed with the rising cost of capital and the changing economic climate?

Not a lot right now. The big question mark right now is what home health and hospice multiples are going to look like. I think we’re going to see a couple of deals that kind of reset what the market is, especially for sizable transactions.

We have a lot of committed equity that our private equity sponsors and [Anthony] are looking to deploy. We’re less reliant on debt markets, so the rising interest rates really haven’t impacted us as much in terms of the capital we’re going to deploy.

Hopefully, it impacts us positively, because compared to many other competitors, they are going to be more subject to the rising cost of debt service and those kinds of things. So hopefully, that just causes a reduction in multiples for the businesses.

Do you think there’s going to be more reasonable expectations for multiples in 2024?

I think you’ll see home health continue to slide. I think you’ll see hospice kind of maintain a little bit of a range for the foreseeable future that’s significantly below where it was in 2020 and 2021, even going into early 2022.

One of the interesting dynamics is that there’s going to be a lot of money that flows into some of these hospice platforms in 2019 and 2021. When they start to exit, the basis that those private equity sponsors have those businesses is at 16x to 18x. So now, even if those businesses have doubled in size, but they’re only able to sell for 11x or 12x. You’ve got to make up a lot of ground versus where they enter those businesses.

What are some of your priorities for your hospice business in particular when it comes to growth during 2024?

We had a great year of growth last year. Hospice was definitely the star of our service lines in terms of meeting its growth targets in 2023.

On the hospice side, we invested heavily in our sales team. We added sales team members that were going into new referral sources and new markets for us.

We also expanded our Medalogix relationship. So, where we have overlap between the home health and hospice service lines, Medalogix has products that look at our home health census and help us understand which of those patients that are on service may be more appropriate for hospice, so we can initiate the conversations with their physician and with the family and patient.

If we can shift them over to the more appropriate service line sooner, that’s going to help growth. Now, it takes away from home health centers, so it’s a little bit of a balancing act. But if it’s what’s most clinically appropriate for the patients, that’s was the driver.

What’s your current scale for the hospice segment?

Currently, today, it’s about 15% of our revenue. We would like to get that higher. We’d like to see closer to the 50/50 mix between home health and hospice, so a lot of the acquisitions we’re focused on right now are more hospice-oriented.

Texas would be a good example. We’re a large player in Texas, with a lot of geographic coverage. We have one hospice location. So Texas is a market we’re looking to either do de novo startups or acquire larger hospice operations.

Where do you see the biggest barriers and headwinds right now? What keeps you up at night?

I think that’s going to be more around the [regulatory] changes and what we’re looking at the Special Focus Program (SFP) for hospices, and how the [U.S. Centers for Medicare & Medicaid Services (CMS)] implements that. 

That keeps me up at night, because I don’t have full confidence that it is going to be implemented in a way that providers are going to feel like that’s fair. We are all-in on rooting out fraud and corruption, but CMS data that would suggest it’s isolated and focused. But we’ll see how that gets implemented.

With the SFP program, the provisional period of enhanced oversight that CMS put into place last summer, we are going to be subject to greater scrutiny in some states when we’re going through an acquisition. That makes diligence efforts even more important to make sure we know fully what we’re buying. And we’ve got to be able to show CMS day one after we buy a business that we have our arms around compliance and clinical documentation.

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