Addus HomeCare Corp. (Nasdaq: ADUS) is set to acquire Gentiva’s personal care assets for about $350 million.
Those assets amount to over 16,000 home care patients per day, in Arizona, Arkansas, California, Missouri, North Carolina, Tennessee and Texas. Addus – which just left the state of New York – will fund the acquisition through its existing revolving credit facility.
“We believe this acquisition is a great strategic fit for Addus, and we are excited about the opportunity to expand our personal care market coverage in seven states, including Texas and Missouri, which are new markets for Addus,” Addus CEO Dirk Allison said. “Notably, Gentiva is the largest provider of personal care services in the state of Texas, where we currently have no personal care operations. This acquisition fits squarely into our growth strategy to leverage our strong personal care experience to build scale in existing markets as well as enter select new markets where we can immediately establish a significant presence.”
Addus currently provides home care, home health care and hospice services to over 49,000 consumers through 214 locations spanning 22 states.
On its end, the Atlanta-based Gentiva is a provider of home care, hospice and palliative care services. It has more than 590 locations across 38 states. The company was born out of Humana’s (NYSE: HUM) divestment of Kindred at Home’s home care and hospice assets to Clayton, Dubilier & Rice (CD&R). Once Humana fully acquired Kindred at Home – turning it into CenterWell Home Health – it only kept the Medicare-certified home health care.
Since, Gentiva – led by CEO David Causby, the former CEO of Kindred at Home – has mostly focused on hospice and palliative care. The company acquired ProMedica’s home health, palliative care and hospice assets for $710 million last year.
Causby told Home Health Care News last year that he believed the company was going to turn a historical loss leader in palliative care into a “game changer.”
“One of the things that we’re really trying to build out is an advanced palliative care model,” Causby said. “Palliative care is very difficult today. It’s built on the physician Part B schedule. It’s a loss leader. There’s just not very good reimbursement. But we personally feel that’s one of the greatest needs. One of the biggest spends in the health care system today are those patients that sit in that middle bucket that don’t qualify for home health and don’t qualify for hospice. That’s really where palliative should sit.”
Now, the company will be able to focus solely on palliative and hospice care.
“A recognized leader in personal care services, Addus is the right home for our personal care division and our teammates who provide care to these important clients,” Causby said in a statement. “This will ensure continued growth for that segment under proven leadership and will allow us to sharpen our focus on our industry-leading core hospice and palliative businesses, where we have the greatest opportunity to deliver the compassionate care that defines who we are, to those who need us the most.”
Addus, on the other hand, has repeatedly said it wants to continue to acquire personal care assets across the country, and then ideally layer home health services on top of that to boost value-based care capabilities.
Gentiva’s seven-state footprint was a perfect opportunity to do the former.
“Acquisitions remain an important part of our growth strategy, and we will continue to pursue strategic acquisitions that meet our criteria and are accretive to our operations,” Allison continued. “Fortunately, our strong capital structure supports our strategy, and we look forward to additional opportunities ahead for Addus.”
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