Addus Closes on Hospice Partners of America; Ensign Group Completes Pennant Spinoff

Addus completes Hospice Partners of America deal

Addus HomeCare Corporation (Nasdaq: ADUS) has completed its purchase of Hospice Partners of America.

The Frisco, Texas-based at-home care company bought the multi-state hospice provider for $130 million cash — $118.4 million of which was in value and $11.6 million was in estimated tax benefits, according to a press release announcing the news.

Historically, Addus has invested largely in home care, with a focus on Medicaid-reimbursed services specifically. Personal care accounts for more than 90% of the company’s net service revenue, according to public financial documents.

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While personal care remains the company’s primary focus, in recent years leadership has also expressed interest in expanding Addus’s presence in other service areas. The purchase of Hospice Partners of America follows through on those goals.

Hospice Partners of America serves about 1,000 patients per day across 21 locations in six states: Idaho, Kansas, Missouri, Oregon, Texas and Virginia. The Birmingham, Alabama-based company has an annualized revenue of about $55 million, according to Addus.

“This acquisition represents a significant step in our strategy to add hospice services in markets where we already have a personal care presence and also provides a key strategic entry into the Texas market,” Addus President and CEO Dirk Allison said in the press release.

The acquisition, which is the company’s fourth this year, is expected to be “immediately accretive” to Addus’s 2019 financial results. It brings the company’s acquired annualized revenues to approximately $130 million to date, according to the company.

“We are excited about the additional opportunities within our acquisition pipeline,” Allison said. “We remain focused on expanding our market presence and enhancing our home care services offering.”

Ensign Group completes Pennant Group spinoff

The Ensign Group Inc. (Nasdaq: ENSG) has completed its spinoff of The Pennant Group (Nasdaq: PNTG).

The new separate company will focus on Ensign’s former home health, hospice and senior living businesses. It joins the ranks of relatively few publicly traded home-based care companies on the market. Others include Amedisys Inc. (Nasdaq: AMED), LHC Group Inc. (Nasdaq: LHCG) Encompass Health Corporation (NYSE: EHC), Addus and Brookdale Senior Living (NYSE: BKD).

Before the spinoff, The Ensign Group was the parent company of 258 health care facilities, 28 hospice agencies, 26 home health agencies and nine home care businesses nationwide. Its home health and hospice assets lived within its Cornerstone Healthcare Inc. subsidiary.

Now, 212 health care facilities remain under Ensign, with services ranging from skilled nursing and assisted living to various forms of therapy and rehab. Pennant gained dozens of former assets.

The Ensign Group first announced its intent to spin off Pennant in its Q1 2019 earnings call, with the goal being to give investors more industry-specific options by splitting the publicly traded company in two.

Ensign stockholders received one share of Pennant common stock for every two shares of Ensign common stock held at the close of business on Sept. 20, according to a press release announcing the news.

“Our guiding principle in this transaction has always been to make sure both Ensign and Pennant would not only be very healthy in terms of their balance sheets, but that both would be poised to drive the enormous organic growth potential within all our respective operations while having enough dry powder to continue acquiring and transforming underperforming healthcare operations,” Ensign’s Executive Chairman Christopher Christensen said in the press release.

While Ensign and Pennant became separate companies as of Oct. 1, the duo will continue to work together through a preferred provider network called the Ensign Pennant Care Continuum (EPCC).

“The EPCC memorializes the relationship Ensign and Pennant independent operating subsidiaries have historically had by providing those that opt in a framework to share data and create care pathways that will help us achieve the highest possible outcomes in transitions between care settings,” Former Cornerstone President Daniel Walker, who is now the chairman, CEO and president of Pennant, said in the press release.

The Pennant spinoff is Ensign’s second in five years. In 2014, it spun its real estate assets into CareTrust REIT (Nasdaq: CTRE).

VNA of Ohio announces planned acquisition of Ideal Home Health Care

The Visiting Nurse Association (VNA) of Ohio has announced plans to acquire Westlake, Ohio-based Ideal Home Health Care.

The Brooklyn Heights, Ohio-based nonprofit is a member of Holmdel, New Jersey-based VNA Health Group. It’s also one of the state’s biggest providers of home health, hospice and mental health care, with services offered in 17 counties.

The acquisition will strengthen VNA of Ohio’s footprint. The deal is expected to be completed in late summer 2020.

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