A private equity firm has moved to purchase a home health agency in New York for about $103 million*, in what would be one of the highest-value transactions in recent quarters.
New York-based private equity firm Blue Wolf Capital has moved to purchase the National Home Health Care Corporation (NHHC), according to Capital One (NYSE: COF), which acted as administrative agent and lead bookrunner for a $65 million senior secured credit facility to support the acquisition.
By way of comparison, the largest transaction in the fourth quarter of 2015, was Amedisys Inc.’s (Nasdaq: AMED) $63 million acquisition of Infinity HomeCare in November.
Scarsdale, New York-based NHHC, through its subsidiaries, provides personal care and home health care services in the New York metropolitan area, Connecticut, and northern New Jersey. The company also provides medical, behavioral health and pediatric skilled nursing, social work, rehabilitative therapy, paraprofessional and staffing services across Massachusetts and Connecticut.
A range of factors are currently driving M&A dealmaking in the home health space, Jim Moskal, who heads Global Healthcare Practice at international mid-market M&A and debt advisory firm Livingstone, recently told Home Health Care News.
These factors include heightened costs and regulations, which are resulting in smaller and mid-sized agencies pursuing sales. A volatile rate environment incentivizes consolidation as well, as larger organizations can leverage their scale and efficiencies in response to lower Medicaid or Medicare reimbursements.
Additionally, the shift in the U.S. health care system is making high-quality, low-cost post-acute care more important to hospital systems, large payors and integrated provider networks such as Accountable Care Organizations (ACOs). Given these dynamics, Moskal expects 2016 to be an active year.
“I think valuations are going to remain high, volume is going to remain high for 2016,” Moskal said.
Though private equity deal volume has been relatively even since 2010 as a percentage of total deal flow, private equity-sponsored activity is increasing, Mark Kulik, managing director of The Braff Group, said during a Home Health Care News webinar in March on the industry finance outlook for 2016.
*Editor’s note: This article has been updated to reflect the correct acquisition price of about $103 million. Home Health Care News previously reported that the acquisition price was $65 million; in reality, that was the amount of the senior secured credit facility Capital One closed to support the acquisition.
Written by Mary Kate Nelson