TowerBrook Capital Partners and Ascension have joined forces in a hospice deal worth $1 billion, or 11.8x revenue. The joint venture is buying Hospice Compassus, which provides hospice, palliative and home health care and services to patients in more than 25 states, from Formation Capital and Audax Private Equity. Towerbrook and Ascension will own equal stakes in Hospice Compassus after buying the hospice firm an auction that started in early 2019. Formation and Audax backed Hospice Compassus for roughly five years, recapitalizing the company in 2014 for roughly $300 million, according to the same report.
Although it’s no surprise that PE firms are big players in the Home Health and Hospice sector, we’ve seen some attention from health systems such as Ascension as well. Back in April, Encompass Health Corp. (NYSE: EHC) bought Alacare Home Health & Hospice for $217.5 million. The target company provides home health, hospice and palliative care, physical rehabilitation and specialty programs for dementia, cancer, stroke and cardiac patients. Alacare owns and operates 23 co-located home health and hospice agencies across Alabama.
Cornerstone Healthcare Group, a portfolio company of Highland Capital Management Group, bought Southland Home Health in March for an undisclosed price, and Perry Memorial Hospital purchased Illinois-based In-Home Care VNA, rebranding the company Perry Home Care as of this past June.
The Hospice Compassus deal gave a much-needed jolt to the home health and hospice sector for the third quarter. According to our Deal Search Online database, there were only 19 deals in the sector last quarter (more tend to trickle in the following weeks). That’s a 27% drop from the number of deals in the second quarter. Prices haven’t fared well either. Excluding Ascension and Towerbrook’s investment, this quarter only produced $155.8 million in announced prices, a drop from Q2’s dollar volume of $218.4 million.
The second-biggest deal of this quarter, based on announced prices, came from Addus HomeCare Corporation’s (NASDAQ: ADUS) acquisition of Hospice Partners of America, LLC. , a portfolio company of Eastside Partners, for $130 million. This purchase supports Addus’ network in Oregon, Virginia and Idaho while adding a new market in Texas. It adds hospice services in markets where Addus already has a personal care presence.