New Day Healthcare may not be a household name in the at-home care space just yet. But that’s likely to soon change, as the multi-state provider looks to become a major player in an M&A market that’s normalizing back to pre-pandemic pricing.
And even if those who follow the home health, home care and hospice industries aren’t already familiar with New Day Healthcare as a company, they’re probably familiar with its top executive. New Day’s founder and CEO is G. Scott Herman, the initial CEO of Elara Caring when it was formed following a three-way mega-merger in 2018.
“New Day has been growing rapidly,” Herman said in a statement shared with Home Health Care News.
That rapid growth was on display Wednesday, with New Day completing its acquisition of AdvantageCare Home Health, an East Texas home health and personal care provider, for an undisclosed sum.
“This acquisition will strategically advance our Texas expansion, where we already have a significant footprint,” Herman said.
Herman and a group of home health, home care and hospice leaders founded New Day Healthcare in 2020. In 2021, the company had secured $55.5 million in financing to pursue opportunities to scale its footprint.
AdvantageCare Home Health marks New Day’s seventh completed transaction since its inception. Its six others include the purchases of AssistCare, Home Care Partners of Texas, New Age Hospice, Envision Health Partners, Pride PHC Services, and Phoenix Home Care and Hospice.
With the closing of AdvantageCare Home Health, New Day now has 21 locations across Texas, Missouri, Kansas and Illinois. It serves nearly 82,000 patients annually and employs about 6,200 employees, according to the company.
In addition to home health, hospice and home care services for seniors, New Day also offers pediatric care and clinical decision support as part of its business mix.
The road ahead
If all goes according to plan, the road ahead for New Day should include more deals like the one for AdvantageCare Home Health, according to the company.
In 2021 and 2022, New Day was interested in M&A opportunities, but opted to mostly stay on the sidelines, partly due to the sky-high valuations on quality home health, home care and hospice assets.
For all health care transactions executed during the 12 months leading up to May 15, 2021, the mean enterprise value to EBITDA multiple was 16.1 times, according to a mid-year dealmaking report from PricewaterhouseCoopers. For home health and hospice specifically, that figure was 26.2 times – the highest in the health care sector “by far,” the report pointed out.
“Now, as the market is seeing deal activity slow to pre-pandemic levels, acquisitions have slowed and pricing has softened,” noted the statement shared with HHCN. “New Day is strategically positioned for rapid acquisition growth.”
Data from M&A advisory firms confirm that transaction activity has lessened.
In the first quarter of 2023, Mertz Taggart reported 17 home health, home care and hospice transactions taking place – the smallest number of deals for any quarter since at least mid-year 2019. The second quarter saw 29 transactions – a rebound, but still down compared to most of 2020, 2021 and early 2022.
“This volume is in line with pre-pandemic norms,” Mertz Taggart Managing Partner Cory Mertz said in a report. “I’m going to be curious to see what next quarter brings, but we are not ready to suggest it will be this strong.”
Beyond M&A, New Day plans to make a name for itself through its technology, including a “continuum-based data system” it developed, dubbed “Carelytics.” The data system, according to the company, helps New Day engage in value-based programs and maintain longitudinal patient views across its service lines.
“The success of our Carelytics program, along with our diversification along multiple services lines, has positioned New Day to thrive in the current challenging home health environment,” New Day Healthcare Chief Development Officer Matthew Griffith said in the statement.
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