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H.I.G. Capital strikes $580m deal for Vistria’s St. Croix Hospice

Proving a strong performer through the pandemic, hospice platforms the likes of St. Croix have immense runway for future M&A and growth.

H.I.G. Capital has prevailed in the sale process for Vistria Group’s St. Croix Hospice, an end-of-life care provider serving the Midwest, according to sources familiar with the transaction.

The deal, which has not yet closed, values the Oakdale, Minnesota-based company at $580 million, according to some of the sources.

St. Croix’s projected pro forma adjusted EBITDA for 2020 lies in the $36 million to $39 million range, sources said, implying a mid-teens EBITDA multiple.

Vistria, three years into its investment, will exit its investment in full. The Chicago private equity firm invested in the company out of both Fund I and Fund II, initially buying a majority stake from Clearview Capital in October 2017.

The transaction concludes a sale process that Houlihan Lokey kicked off earlier this year. The runner up in the process was KKR’s BrightSpring Health Services, a national provider of diversified home- and community-based health services to complex patient populations, one of the sources said.

St. Croix provides hospice care to individuals with life-limiting illnesses across Minnesota, Wisconsin, Iowa, Nebraska, Kansas and Missouri. The company provides various end-of-life care services, including physician care and nursing, hospice aid, social services, physical therapy, medications and certain procedures for pain and symptom management, as well as bereavement services.

Contributing to interest in the sector, hospice care has proven a strong and consistent performer through the pandemic. On the reimbursement front there’s no overhang, while hospice care is also considered cost efficient for the health system, offering care outside of the hospital, which is one of healthcare’s most expensive settings of care.

Further, the industry remains largely local and fragmented, so platforms like St. Croix still have immense runway for M&A and growth. The professionalizing of the industry and a value proposition that appeals to both fee-for-service and managed care models of reimbursement is helping drive that consolidation, sources said.

H.I.G. Capital, with global headquarters in Miami, is also an investor in Sage Hospice, a provider of hospice and palliative care services to patients in Arizona. The lower-middle-market PE firm closed Fund VI at $1.3 billion in late September.

Vistria will continue to play in the hospice-services space as owner of Agape Care Carolina in South Carolina and Georgia.

In September, Vistria joined with Centerbridge Partners to acquire a majority stake in Wellspring Capital Management’s Help at Home. The deal valued the provider of nonmedical home care services at approximately $1.4 billion, sources told PE Hub at that time.

Elsewhere in hospice care, Martis Capital is seeking a buyer for Care Hospice. PE Hub reported in July that a limited process was underway via Harris Williams. Based in Charlottesville, Virginia, Care Hospice focuses on underpenetrated, highly populated secondary and tertiary markets.

Other sizable providers of hospice care to keep tabs on include Bristol Hospice, a portfolio company of Webster Equity. Webster in 2017 acquired Bristol at an enterprise value just north of $70 million, sources told PE Hub at the time.

Vistria, Houlihan Lokey and KKR declined to comment. H.I.G. didn’t respond to requests for comment.

Action Item: See H.I.G.’s latest Form ADV filing.