Amedisys, Inc. (NASDAQ: AMED) announced Thursday that it has signed a definitive agreement to purchase Associated Home Care, a private-duty agency based in North Andover, Massachusetts, for $28 million.
The transaction is scheduled to close on March 1.
Per the terms of the agreement, Amedisys will acquire 100% of the ownership interests in Associated Home Care, a major private-duty agency in Greater Boston, one of Amedisys’ key markets. The agency, which largely serves a Medicaid population, has 1,500 employees who deliver care to about 5,000 seniors per day.
Associated Home Care CEO Michael Trigilio will continue to lead the company, along with his management team. Trigilio will also oversee Amedisys’ new Personal Care Division to expand the company’s private-duty capabilities across the United States.
Based on the strong performance of AHC and its growth both organically and through acquisitions, Amedisys has confidence that Trigilio can lead the company into waters that are unfamiliar, Amedisys President and CEO Paul Kusserow told Home Health Care News.
“We don’t really know this business very well, so Michael and his team are going to be tasked with running the business and growing the business,” Kusserow said.
The idea is to continue to grow in Massachusetts, a state where Amedisys already has a strong presence, he said. But the demand certainly is not limited to the Bay State or New England.
Amedisys has received a plenty of interest from other parts of the country to offer private duty elsewhere, like New Jersey, Pennsylvania and Tennessee.
“There have been lots of requests for us to come down and see what we can do in the space,” Kusserow said.
In addition to providing a growth platform, the AHC acquisition will dovetail with Amedisys overall strategy to provide more comprehensive services, as the evolving health care ecosystem demands. Some of Associated Home Care’s major referral sources are very interested in working with a company that can deliver all three types of care: home health, hospice and private duty, according to Kusserow.
“This is our first acquisition of a private-duty company and an important step in realizing our long-term strategy,” Kusserow explained in a prepared statement. “Entering this complementary business line will also enhance our home health and hospice businesses in Massachusetts. This will improve the continuity of care our patients receive as their clinical needs change between skilled nursing and private-duty care over time – bringing even more value to our patients, referral sources and payers.”
In his past role with major health insurer Humana, Kusserow saw how private duty home care can reduce hospital admissions and help otherwise keep health costs in check while improving outcomes–an experience that has informed his pursuit of a private duty acquisition since taking the helm of Amedisys about 14 months ago.
The benefits flow the other way, as well, Trigilio emphasized in a prepared statement.
“For years we have been trying to identify the best way to add home health and hospice to our client service delivery,” Trigilio said. “Amedisys will offer us the depth of support and range of resources available from one of the nation’s largest home healthcare and hospice providers. This gives us the clinical expertise, corporate infrastructure and stability to expand the range of services we provide in the communities we serve and beyond.”
When it comes to growth, private duty is far from the only target for Amedisys under Kusserow’s leadership.
The company currently boasts a large pipeline of acquisition targets. Back in November 2015, the company had more than 300 deals in its pipeline, Kusserow revealed. About two months later, at the J.P. Morgan Healthcare Conference in San Francisco, he said Amedisys has more than 400 deals in its “really strong” pipeline.
Amedisys is highly disciplined when it comes to actually identifying smart opportunities, Kusserow emphasizes, highlighting the fact that he was a “deal guy” at Humana, as were several other members of his current leadership team.
“We’re using our sourcing skills and experience to find deals that are not venture-backed deals, so that they have [high] expectations, or brokered deals where we have many [bidders] involved and egregious prices,” he said. “The ultimate price we expect on AHC is 5x. That’s a good deal. We’re not paying the crazy prices that a lot of our competitors and brethren are paying.”
The Associated Home Care acquisition may give some other clues as to what Amedisys is focused on in making these deals.
“We believe this is a nice sized acquisition, with a very good team and a very strong foothold in a very important market for us,” Kusserow said. “Our main goal is to make sure we win very strongly in Massachusetts.”
Written by Mary Kate Nelson