When Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) became a public company earlier this year, it expressed the desire to expand its reach past pediatric home health to seniors.
While there were some skeptics within the industry on how feasible that would be, the Atlanta-based company has done an impressive job executing on that strategy thus far.
On Wednesday, it announced that it had closed on Southern California-based Accredited Home Care for a purchase price of $180 million. An additional $45 million could also be included in the deal based on 2021 volume targets.
Aveanna hopes to integrate the company within the first few months of the new year.
“California is one of our premier markets — and one of our core markets in the country,” Aveanna COO Jeff Shaner told Home Health Care News. “Adding to our current California business just made a ton of sense. One of our core strategies is to create density in the markets that we serve. And this was a great opportunity for us to further the density in Southern and Central California.”
Aveanna provides a range of home health, hospice and home care services to pediatric and senior patients across 30 states in the U.S. In addition, the company also runs a case management business and offers respite services.
On its end, Accredited provides nursing home health services to more than 9,000 patients annually. It has over 6,000 health care workers as part of its network, serving the Los Angeles, Orange County and San Diego areas.
Accredited had approximately $114 million in revenue from August 2020 to August 2021, according to the press release announcing the deal. About 86% of the company’s revenue is through Medicaid or other state-funded programs, which makes sense for Aveanna, a company that works often with Medicaid.
“Accredited is primarily Medicaid, both unskilled and skilled services. And we really like that business,” Shaner said. “I think as we continue to move forward, we like both Medicare and Medicaid, though. We think the Medicaid side business provides a really good diversification strategy from a payer standpoint, and further insulates us from potential rate movements, both up and or down on the Medicare side.”
On Oct. 1, Aveanna announced that it had agreed to acquire Comfort Care Home Health, which has 11 locations in Alabama, for a purchase price of $345 million. That deal proved that while Aveanna is strategically building out certain markets, it’s also looking to bolster less-covered areas as well. Prior to Comfort Care, Aveanna had just two locations in Alabama.
The Comfort Care and Accredited deals – both significant in their own right – allow Aveanna to end 2021 with a boom. Next year, in 2022, more of the same should be expected, Shaner said.
“We’re excited to close out the year with two material transactions kind of back to back, but our 2022 pipeline is robust,” he said. “And I think you’ll see us continue to acquire both on the home health and hospice side, but also opportunistically in private-duty services, both skilled and unskilled.”
Moving into 2022
Aveanna’s business has changed just as it wanted it to when it went public.
“We have clearly materially changed our footprint on the geriatric side, and I think you’ll continue to see us do that,” Shaner said.
Recruiting and retention will be potential issues as the company aims to grow moving forward, as they will be for a lot of home-based care businesses.
But Aveanna is confident that with the right amount of focus and innovation, it can overcome those challenges. A couple of ways the company is looking to address staffing woes is through virtual onboardings and daily pay offerings.
“We remain very excited about the growth of the company, and we recognize the turbulent times that we’re operating in right now,” Shaner said. “But with that said, we still think home care – both in geriatric and the pediatric side of the business – is still a great market to be in and a great industry to be in. I think it’s the right solution for these families, payers and referral sources. And so we remain very optimistic about the future of Aveanna.”