Complete Oklahoma to Expand in Texas with License Deal

Hospice provider Complete Oklahoma has acquired a license from Houston-based Avenir Hospice Care, establishing the company’s first foothold in Texas. Financial terms were undisclosed.

The Complete Oklahoma deal clears the way for the company to launch a de novo in the burgeoning Texas market, according to Alex Veach, director of operations for the M&A advisory firm Agenda Health.

Agenda represented Avenir in the transaction.

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“Texas is rampant with home health and hospice opportunities. We see high levels of interest from all of our buyers in those spaces,” Veach told Hospice News. “From a saturation standpoint, it’s second to California in terms of the number of home health and hospice agencies that exist.”

Demographics are driving demand for hospice in Texas. Projections from the U.S. Census Bureau indicate that seniors will comprise more than 20% of the state’s population by 2030, up from 12.9% currently.

Hospice utilization among Medicare decedents in Texas runs high, reaching 52.1% in 2018, tipping above the national average of 50.3% that year, according to the National Hospice and Palliative Care Organization.

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Purchasing a license from another provider is generally less expensive than acquiring a full-fledged agency. These transactions allow a hospice to expand to new markets while deploying a smaller amount of capital.

These types of transactions may be ideal for smaller organizations that are poised for growth, but unlikely to outbid a large company or private equity-backed provider.

Price tags for hospice assets have been breaking records during the past three years. Hospice multiples reached a record-high of 26x in 2020, reported PwC’s Health Research Institute.

Valuations for licenses, however, have remained stable during at least the past five years, according to Veach. The most significant considerations are location, the size of the geographic area the license covers and how easily the buyer would be able to launch a startup in that market.

“The biggest factor there is is where the license is and where it covers and how much of a plug and play opportunity it is,” Veach told Hospice News. “By this I mean, are the buyers going to have the opportunities to buy that, plug it into their system and their sources for referrals, and see that location grow up.”

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