Addus to Buy New Mexico Home Health Provider for $40M
Addus HomeCare (Nasdaq: ADUS) has signed a definitive agreement to purchase Ambercare Corporation, which provides personal care, hospice and home health services, for the purchase price of $40 million. Ambercare, based in Albuquerque, New Mexico, generated revenue of approximately $57 million in 2017.
Ambercare serves roughly 2,600 consumers through 15 locations located across New Mexico.
The transaction follows another purchase by Addus in the state—In 2017, it bought personal care services provider Options Home Care, a wholly-owned subsidiary of HB Management Group. The financial terms of that deal were not disclosed, but Options had annual revenues over $20 million, Addus said at the time of the transaction.
The deal is subject to usual closing conditions, with funding through the delayed draw term loan portion of Addus’ credit facility. Addus, based in Frisco, Texas, provides personal care services and has 114 locations in 24 states. The company expects to complete the transaction in the second quarter of 2018, according to a press release.
“With a trailing EBITDA purchase multiple between 7.0x and 8.0x, we expect this transaction to be accretive to our 2018 financial results, as well as significantly expand the scope of services we provide in New Mexico,” Dirk Allison, president and CEO of Addus, said in a release announcing the acquisition. “The completion of this acquisition, along with our August 2017 purchase of Options Home Care, will make Addus New Mexico’s leading provider of both personal care and hospice.”
Addus has been particularly interested in expanding its hospice service line; during the RBC Capital Markets 2018 Healthcare Conference in New York City, Addus CFO Brian Poff listed it as an opportunity the company was considering in the changing business landscape. The company stated that up to 40% of its revenue could comes from the sector down the road.
“We are particularly excited to supplement our service offering with hospice services through this acquisition, consistent with our strategy of providing an expanded range of home-based healthcare services,” Allison said in the release. “Our management team has deep experience in the hospice industry, and we look forward to welcoming the employees of Ambercare to the Addus family and adding their expertise to our own, as we intend to continue to grow this segment of the business in the future.”
Sell-side advisory services during the acquisition were provided to Ambercare by Stoneridge Partners.
Written by Maggie Flynn