Fortis Health, Grant Avenue Capital ‘Intensely Focused’ on Hospice Expansion

Home-based care veteran Rob Radics took the helm as CEO of Fortis Home Health & Hospice in May, and in the early days of his tenure is laser-focused on hospice growth.

Radics’ 25-year career includes his founding of the hospice and home health company, Five Points Healthcare, which he led for nine years before selling the business. Most recently, he served as the president of the home health and hospice segments at Aveanna Healthcare Holdings (NASDAQ: AVAH).

Fortis offers home health, hospice, palliative and personal care services in Utah and Indiana, with plans to build density in its existing footprint, as well as expand to new markets. The company is backed by the private equity firm Grant Avenue Capital.

Grant Avenue was founded by the firm’s managing partner, Buddy Gumina, in 2019. Gumina has been an investor in the health care space for more than 25 years. The firm is focused on what he calls “thematic investing,” which includes a strong focus on home-based care industries.

Fortis is the parent company of Valeo Home Health and Hospice and Select Home Health, which Grant Avenue acquired in late 2020 and 2021, respectively.

Hospice News spoke with Radics and Gumina to discuss their objectives for the company’s future and how they plan to achieve them.

Rob, now that you’re taking over at Fortis, what are some of your top priorities?

Radics: Our vision is to build an industry-leading home health and hospice platform. Grant Avenue, when they acquired Valeo and Select, was off to a great start trying to integrate the businesses, but there is still some work to be done there to fully complete the foundation.

We’re presently in the middle of our [electronic medical record] conversion, implementing the standardized platforms, vendors and different partners that we’re going to work with going forward.

So, in addition to understanding the teams and the culture as I settle into my role, the initial focus from a pure business perspective is helping to complete our technology investment in the near term.

Certainly, one thing that struck me when I joined was the dedication and commitment from our outstanding clinical and operations staff. They are truly amazing in ensuring the best care is delivered to patients every day. Among everything, that is clearly the most important thing we do.

Could you share some of the benchmarks you plan to reach before you enter into that next phase?

Radics: We’re pretty far along on the integration component and finishing the foundation.

It’s not a defined line of getting to one step and then another. We are to the point where we’re doing both simultaneously.

There are always going to be changes and improvements to our technology platform – unfortunately, that work is never done completely. But we are far enough along that we have already kicked off the M&A process. In fact, we are looking at some opportunities right now.

Buddy, turning back to you, what was it that led Grant Ave. initially to invest in the home health and hospice space?

Gumina: I first invested in home health and hospice prior to my time at Grant Avenue back in the early 2000s. For example, I was the first institutional investor in Encompass Home Health back then, and also started a hospice business called Voyager. Those were both successful investments. 

Home-based care can have such an impact on the quality of life for the patients and the overall health system. Where home-based care fits in the health care system always struck us as a great solution. But the key thing is you have to obviously partner with the right companies that provide the highest quality care for those patients, both on the home care side and the hospice side. So, it was one of the first areas that we focused on when we launched Grant Avenue.

If you step back and just think about these next five to 10 years of the aging demographic, the continued health or activity level of people as they get older, and generally speaking, the desire of people to stay in their home, is something that I think will continue to drive significant demand for great quality providers, like Fortis.

Back in 2020, Grant Ave. started talking about a home-based care buy-and-build initiative, what more can you tell me about that or how that has progressed?

Gumina: We’ve done quite a few buy-and-builds in our past, and to be successful, you have to have a real playbook for that. Overall, Fortis has progressed well in the sense that we found a great initial opportunity, a carve-out in Utah; that’s a very strong foundation.

We did another investment in Utah that fit very well with Valeo, and then we acquired Select in Indiana in late 2021.

One thing we think is quite important is to have real regional density, to have some real presence in a market. And both of those businesses – Valeo and Select – have good regional density, but also very strong reputations in those markets for great quality care.

Though what’s critical in any kind of buy-and-build is that you’ve got to make sure you also stand up the right kind of infrastructure foundation. So, we were working on that, in particular over the course of 2022. Rob, in some respects, is effectively the last piece of the puzzle, bringing in that super-experienced, seasoned CEO to take the business to the next level.

In terms of growth, with Rob on board, we have already been working on M&A opportunities and launched a de novo. So, we have clearly begun to focus on the next chapter of Fortis’s growth.

As you start to kind of move forward into this next phase of growth, how would you define your acquisition strategy? What’s guiding that?

Radics: We have a Midwest platform, and we have a Rocky Mountain platform. We want to continue to build density in those markets. We really like the opportunities to acquire from founders.

From my experiences, I’ve worked for small, medium, and large companies, and there’s great value in each of those settings. But this business is all about the people and the reputations and the goodwill that they’ve earned in the communities from the patient care they deliver. And those founder-led businesses generally seem to have really strong cultures.

Our goal is to identify and partner with founder-led businesses, and maybe there’s an opportunity for the founders to continue to go forward if they choose to do so. At the end of the day, it’s about maintaining those great cultures that are generally built in the smaller founder-led businesses and continuing to build upon the presence that they’ve developed in communities over many, many years.

We’re not exclusively focused on founder-led opportunities, but that’s a big piece of what we’re looking for.

Gumina: A lot of the founders in the lower middle market have built great businesses. And as they look forward to an opportunity to achieve some level of liquidity, they often hope to find a partner that they can work with and where they see an opportunity for a second bite at the apple.

But the key thing here is that they ensure who they’re teaming up with is a good partner and – that they share the same culture and vision and values. That’s obviously quite important.

Also, sometimes founders may want to step back from the day-to-day and play more of a business development role, or maybe they focus on a certain aspect of the business that really resonates with them. That’s also quite appealing when an organization like Fortis can help them do that.

A true win-win can occur where founders can get some liquidity, have a second bite at the apple, play the role that they really enjoy playing, and partner with a firm that shares their values.

Aside from growth and expansion, what’s top of mind for you when it comes to running a hospice business in particular?

Radics: Right now, we are a little heavier weighted towards home health than hospice, and so we want to give hospice an equal seat at the table. We do have an intense focus right now on trying to grow our hospice services.

That’s going to come from the types of acquisitions we would look at, but also from startups where we may have a larger home health business in a given market to add a hospice into those service areas. We are looking to grow hospice into a bigger share of the company than it is today.

At a higher overall level, it’s the quality of care we’re delivering. To deliver hospice services to a patient is a sacred trust that we take incredibly seriously.