Gentiva buys ProMedica home care and hospice biz

Gentiva, a hospice operator backed by Clayton Dubilier & Rice, plans to acquire hospice and home care assets from ProMedica for $710 million, as reported by Bloomberg and confirmed by Axios.

Why it matters: Corporate carveouts are likely to be central to health care dealmaking this year.

Details: The $710 million valuation includes debt, per Bloomberg.

• Not-for-profit health system ProMedica worked with Houlihan Lokey.
• A cadre of banks — Deutsche Bank, UBS, BNP Paribas, Citizens Financial Group, Truist Financial and Wells Fargo — advised CD&R and Humana-backed Gentiva.
• Gentiva also received committed debt financing from Goldman Sachs Group.

By the numbers: Gentiva CEO David Causby told Bloomberg the deal expands Atlanta-based Gentiva's reach to more than 500 locations, up from 380.

• Following deal close, Gentiva will serve about 34,000 patients (up from about 25,000), while its employee count is expected to jump by about 4,000 from more than 30,000 currently.

Between the lines: Home health and hospice is not an easy industry to navigate amid margin pressures, Medicare rate cuts and staffing shortages.

• Gentiva's a better-positioned buyer than most, with plenty of synergies that make the deal worthwhile, one banker says.

The intrigue: Sources tell Axios the ProMedica business was marketed on EBITDA of $80 million to $100 million, which would imply a single-digit sale multiple if ProMedica traded off that figure.

• It would be a logical multiple, considering the apparent synergies and the headwinds surrounding home health.

CD&R and ProMedica declined to comment.

Editor's note: This story's headline has been corrected to reflect Gentiva is acquiring ProMedica's home care and hospice assets, not the entire company of ProMedica.