In an effort to raise money, Cressey & Co. is placing its at home health care company Encompass Home Health Inc. up for sale through an auction style process. This is an increasing trend with regard to home health care companies and agencies this year. In fact, it is the latest offering of home health and hospice companies that are seeking new partners or investors during the past year.
Cressey & Co. is hoping to get about $700 million for Encompass, according to three independent sources that are familiar with the situation. Another company that is seeking to find a qualified buyer or new investors is Jordan Health Services, which is a home health care company currently supported by Palladium Equity Partners. They are hoping to raise between $300 million and $400 million in this potential deal.
According to the Wall Street Journal, “Other such deals struck this year include the sale of Southern Care Inc., a hospice-care provider that was backed by Kohlberg & Co., to GTCR portfolio company Curo Health Services Inc. for about $230 million; and Wellspring Capital Management’s purchase of Great Lakes Caring LLC, a home health and hospice operator formerly owned by Pouschine Cook Capital Management.”
Encompass is ranked as one of the top companies within the home health care industry, accounting for a total market share of 0.73%, as compared to the single largest operator of home health care services across the country, Amedisys Inc., which claims a 4.85% share.
There has been no official word or comment from the company or its representatives regarding this potential sale. April Anthony is the company’s founder and chief executive officer and is also the CEO of Homecare Homebase LLC, of which Hearst Corp., a media company, purchased it in December for what was considered to be a higher than average price multiple.
Encompass was founded in 1998 and has locations in New Mexico, Texas, and Oklahoma. It operates 104 locations throughout these states and employs more than 4,500 people. It also operates 21 hospice facilities and has nine locations that are dedicated to pediatric patients.
There have been numerous acquisitions by major home health care companies across the United States of smaller operations and the industry leader, Amedisys has announced that it plans to close 29 care centers as well as consolidate 25 more. The impact of these potential sales have yet to be seen, but it appears to be growing trend at a time when demand is expected to increase, while Medicaid reimbursement rates are being cut.
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