Although Covid-19 has brought the U.S. economy to a halt over the past few weeks, there is still some healthcare M&A activity to be found, even in the Home Health & Hospice sector. So far for the first quarter, 16 deals have been made public, compared with 21 for Q1: 2019, according to our Deal Search Online database. It’s a 27% drop, but that’s a difference of five deals in extraordinarily different market conditions. We’ll take what we can get.
Earlier in March, Charter Health Care Group, a portfolio company of Pharos Capital Group, acquired two hospice service providers from VeraCare Hospice, St. Luke’s Home Hospice LLC and Arizona Select Hospice LLC.
St. Luke’s, based in Las Vegas, and Arizona Select, based in Phoenix, provide end-of-life hospice care along with palliative care services for adult patients with life-limiting illnesses. The management teams for St. Luke’s Home Hospice LLC and Arizona Select Hospice LLC will remain with their organizations. This gives Charter Health Care Group a presence outside California in the southwestern United States.
Pharos Capital Group and Charter Health Care Group actually partnered back in 2018 as the basis for Pharos’s post-acute care platform. The platform focuses on building and acquiring high-quality hospice and home health companies that manage healthcare needs across the post-acute care continuum while also working to improve the patient experience and lower the costs of care for those patients. And based on the recent acquisition, it seems like that’s moving along smoothly.
However, not surprisingly, it’s private equity firms that are still driving the activity for the quarter. Fifty percent of all transactions involved a private equity firm or their sponsored company as a buyer. Arosa+LivHOME, a portfolio Bain Capital Double Impact, reported its first deal in January after an incredibly busy 2019, with six deals on the books last year. It bought Lifecare Innovations, a professional care management services provider, offering guidance to families to better manage disability, disease and age-related vulnerabilities.
Cornerstone Healthcare has also been active. The group is the home health and hospice subsidiary of The Pennant Group, Inc. (NASDAQ: PNTG), a holding company for home health and senior living agencies. The Pennant Group was formed in October 2019 when The Ensign Group spun off two of its subsidiaries, Cornerstone Healthcare and Pinnacle Senior Living. Early in January Cornerstone Healthcare acquired Desert View Home Health and earlier this month it bought Hospice of Missoula, which provides hospice services and palliative care in western Montana.