VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), has completed its $85 million acquisition of Covenant Health and Community Services’ hospice operations and one assisted living facility location.
The deal is structured as an asset purchase, which allows the buyer to assume liability for assets included in the transaction. It also brings VITAS into the Alabama market and expands its geographic footprint in Florida. The transaction also marks VITAS’ entry into the assisted living space.
“Being a long-standing, mission-focused provider, we have always been exploring opportunities to partner with similar organizations that have a shared culture, mission and passion for impacting their communities,” VITAS CEO Nick Westfall told Hospice News in an email when the transaction was announced. “This opportunity is reflective of that alignment, and we are looking forward to welcoming those members of the Covenant Care team into our organization over the coming weeks to continue our commitment of providing high-quality, compassionate care to patients and families across the Florida panhandle and Alabama.”
Covenant Health and Community Services Inc., d/b/a/ Covenant Care, provides hospice across six cities in the panhandle and northwest region of Florida and in three markets across southeast Alabama. The company has provided hospice, palliative care, home health and personal care for more than 36 years. The nonprofit provider operates a 32-bed assisted living facility in Pensacola, Florida.
This is VITAS’ first deal in several years, largely due to record-high valuations in the space, Westfall told Hospice News in 2020.
The company’s net revenue reached $350 million in the fourth quarter of 2023, a 13.6% increase from the prior-year’s period. VITAS’ revenue growth was in part fueled by increased staffing volumes and clinical capacity, with the company seeing an 11% increase in days-of-care in Q4 last year.
While the company does not comment on its specific acquisition plans or its pipeline, VITAS may be more active in the M&A space in the coming year, Westfall indicated at the Oppenheimer 34th Annual Healthcare MedTech & Services Conference.
“It’s the best environment that I’ve seen in that entire window, where you now have opportunities in markets that maybe we had always desired to be in for a variety of different reasons for strategic purposes, where we may have real opportunities to engage and evaluate acquisitions in those markets, and at pricing that makes a lot of sense,” Westfall said at the conference.
Companies featured in this article:
Chemed Corp., Covenant Health and Community Services, VITAS Healthcare
