[Updated] Health Care-Focused PE Firm RiverGlade Capital Acquires Home Helpers

Home care M&A experts knew that the dealmaking dominoes would start to tumble in 2021, pushed over by the recent agreement between Senior Helper and Advocate Aurora Enterprises. They didn’t know how fast that chain reaction would be, however.

On Thursday, H.H. Franchising Systems Inc. — the Cincinnati-based company that operates Home Helpers Home Care — announced it had been acquired by Chicago-based private equity firm RiverGlade Capital. Financial terms of the transaction were not disclosed.

Founded in 1997, Home Helpers operates throughout more than 1,000 communities across the U.S. The home care franchiser, led by President and CEO Emma Dickison, has more than 320 franchise territories operating in 41 states.

“With its strong performance in the home care market and talented leadership team and staff, we saw an opportunity in Home Helpers Home Care in which our investment could continue to fuel growth,” Danny Rosenberg, managing partner at RiverGlade, said in a statement. “We recognize the great company that has been built at Home Helpers Home Care and look forward to working with Emma and team.”

Home Helpers was previously owned by Cleveland-based PE firm Linsalata Capital Partners, which acquired the home care business in 2016. Over that time, Home Helpers has grown by about 15% on a year-over-year basis, propelled by investments in technology, recruitment and more.

Linsalata has been a “really great” PE partner that jump-started Home Helpers’ growth, Dickison told Home Health Care News.

“The last five years, the company grew in leaps and bounds, not just in financial performance, but in some of the softer, values-type aspects that an organization needs to prioritize,” Dickison said. “Culture, teamwork, making a lot of investments to help us be more efficient and effective. We’ve implemented state-of-the-art technology.”

Following the RiverGlade Capital acquisition, H.H. Franchising will maintain its current leadership team, national support staff and franchise system. The company will likewise keep its Cincinnati headquarters.

On its end, RiverGlade is a health care services-focused private equity firm with a diversified investment thesis. Home Helpers will be the firm’s only active home care investment, with other current portfolio companies including care management solutions business Longhorn Health Solutions. Past investments include behavioral health provider Foundations Recovery Network and emergency room network Adeptus Health.

That health care expertise was one of the main reasons Home Helpers went with RiverGlade over another potential buyer, added Dickison, who also serves as president of the Home Care Association of America (HCAOA) board of directors.

“[RiverGlade’s two founders], their entire career has been in health care,” she said. “I think they bring that expertise to the table, plus some of the relationships they’ve already established. Their background and investment will help as we continue to accelerate our growth. And they were in alignment with our overall vision and long-term plan.”

‘We had a lot of interest’

Dickison declined to comment on the specific figures of the transaction, but last week’s Senior Helpers deal may serve as an unscientific M&A barometer.

Home Helpers has 322 individual franchise units across North America, with no corporate-owned locations. In comparison, the Maryland-based Senior Helpers says it has more than 320 franchised and corporate-owned locations in 44 states, in addition to Canada and Australia.

Advocate Aurora Enterprises reportedly bought Senior Helpers in a deal that valued the franchiser at about $180 million, or roughly 14 times its 2020 EBITDA.

“What I can say is that, as it was five years ago, the home care space and the health care space is still very active,” Dickison said. “And for those companies out there that are strong players, there’s good, strong value there.”

Internally, Home Helpers and Linsalata — reaching the end of its normal investment window — had started talking about a possible sale even before the COVID-19 pandemic began. Those discussions began heating up in earnest in the fall, with Home Helpers officially launching a sales process around December.

Early on, that sales process included both strategic buyers and PE investors, Dickison. As Home Helpers began to narrow the field down, only private equity was left in the final running.

“We had a lot of interest,” Dickison said. “I won’t say I was surprised that there was a lot of interest. I was rather surprised at the sheer total amount of interest. It was a very, very competitive process.”

A positive influence

There’s been plenty of scrutiny placed on private equity in health care in 2021.

In fact, members of the U.S. House of Representatives actually slammed PE’s “troubling” expansion into health care during a special hearing on March 25.

“It’s past time for a bright light to be shined on how private equity ownership in our health care system affects patient safety, costs and jobs,” Rep. Bill Pascrell (D-N.J.), chairman of the House Ways and Means Subcommittee on Oversight, said during the hearing. “Private equity’s influence stretches like an octopus.”

As with any for-profit entity, not all private equity firms are created equal, Dickison explained.

But for Home Helpers, PE has been an overwhelmingly positive influence.

“The partners that I have worked with, Linsalata and now RiverGlade, they recognize that our mission matters,” she said. “They’ve been able to provide investments for us that have been able to help us better take care of clients through technology. They’re made sure that we can advocate for appropriate regulatory measures at the state and federal levels to ensure clients are properly cared for and safe.”

Since 2015, there have been at least nine acquisitions of large, multi-state home care franchise companies, with the buyer typically being private equity. Since most firms operate with a three- or five-year investment window, that likely means more home care deals are on the horizon.

Dickison hasn’t directly heard about any other pending sales from her fellow CEOs, but the interest is definitely out there, she emphasized. 

“I think you very well could [see more deals],” she said. “I think there’s a large interest in not just home care as a space, but the entire home health continuum. There are investors out there who want to invest in good, strong companies, especially if they have the ability to have a positive impact on communities.”