Weeks before Encompass Health is expected to spin off Enhabit, its home health and hospice unit, Aveanna Healthcare, a big name in the home health and hospice industry, could be on the hunt to buy it.
According to Reuters, Aveanna and some private equity groups, including Advent International, have expressed interest in acquiring Enhabit. Sources told the news service that Encompass’s home health and hospice unit could be worth up to $3 billion.
McKnight’s Home Care Daily Pulse reached out to both Encompass and Aveanna for comment, but neither company responded to requests.
Andre Ulloa, partner with M&A Healthcare Advisors, told McKnight’s Home Care Daily Pulse in an email that Enhabit could be an attractive acquisition target for Aveanna. He said the home health and hospice company has been growing organically and has made no secret that it wants to accelerate growth through acquisitions.
“Financial sponsors, such as Bain Capital appear to be the private equity firm backing Aveanna and are deploying capital into home health and hospice at record breaking levels,” Ulloa explained. “We see this across the market spectrum, from large cap down to the lower middle market.”
Enhabit spin-off expected before second half
In late January, Encompass announced plans to spin off its home health and hospice business as a separate publicly-held company called Enhabit before the second half of this year. The decision came after a year-long review of the business. In announcing the spin-off, the company said the move would provide significant benefits to both businesses and shareholders and improve the operational flexibility of each business.
But early last week, Encompass said it was contemplating a possible sale or merger of Enhabit. In a press release, Encompass executives said they “will assess any value-creating strategic opportunities and remain open to value-maximizing alternatives, including a sale or merger of Enhabit.”
Encompass is one of the nation’s largest integrated healthcare services companies, offering both facility-based rehabilitation services, as well as home health and hospice services. The Birmingham, AL-based company operates in 42 states with approximately 43,000 employees.
Aveanna Healthcare provides services in 30 states.
