For PE-backed pediatric-home-care giant Aveanna, Premier is just the beginning

  • PE backers: Bain, J.H. Whitney
  • Led by former PSA Healthcare and Gentiva execs
  • Aveanna sees M&A opportunities in autism treatment

Aveanna Healthcare, the pediatric-focused home-care giant formed in early 2017, had been intent on buying one particular company if and when it got the chance.

That is: Premier Healthcare Services, the segment’s largest player in California.

“We knew going into the strategic process that it was a deal we wanted to win … and we wanted to leverage our size and scale,” Jeff Shaner, Aveanna’s COO, told Buyouts. “It was the deal we’ve had our eyes on for the last 24 months.”

PE-backed Aveanna — formed through the 2017 merger of Epic Health Services and PSA Healthcare — on May 10 said it would buy Pasadena, California-based Premier.

Terms weren’t disclosed, but a source familiar with the matter pegged the target’s Ebitda around $30 million.

Bain Capital Private Equity and J.H. Whitney Capital Partners jointly own Aveanna. Post-transaction, Atlanta’s Aveanna will encompass about 225 locations across 25 states, with about 40,000 caregivers serving about 45,000 patients.

“We’ve looked at a lot of deals,” Shaner said. “It’s not often you find a pure-play, pediatric-focused home-care provider at this size and scale.”

In addition to its significant market share in California, Premier’s long-term commitment to the Medicaid population in the state, which is fiscally stable on a forward-looking basis, added further comfort, the executive said. Premier also has operations in Colorado and Texas.

And besides the benefit of a well-capitalized platform that brings a strategic angle in a process, Aveanna management for some time has talked on and off with Premier Co-Founders Kelly Johnson and Joe Mallinger, Shaner said.

Shaner, like several company execs including Chairman Rod Windley and CEO Tony Strange, were installed in the C-suite via PSA. PSA exited a pair of locations in California, and through that process got to know the Premier co-founders, Shaner noted.

More dealmaking to follow

Premier will be Aveanna’s largest deal in 2018, but the company expects to complete another one or two acquisitions before year-end, Shaner said.

Aveanna over the next couple of years will remain focused on building out its existing core areas: pediatric home nursing and therapy, autism services (ABA therapy) and enteral nutrition care, he said.

Broadly speaking, most potential targets dedicated to pediatric home care post annual revenue of $30 million to $100 million. Premier is one of the few generating north of that range, the executive said.

And while Aveanna’s autism-treatment unit is small today, the segment presents an obvious growth path and ought to become a meaningful part of the company, Shaner said.

The company has evaluated multiple ABA deals over the past several months and is closely tracking activity in the sector, he said.

At the same time, Shaner said he’s astounded by recent ABA-deal multiples.

Valuations in autism treatment have become increasingly rich over the past six months or so as investors remain eager to score a piece of the market.

For example, Blackstone about a month ago prevailed in the auction for the sector’s largest platform, Center for Autism and Related Disorders, in an about $600 million deal, Buyouts reported.

Based on 2018 projected pro forma adjusted Ebitda, the transaction’s EV-to-Ebitda multiple panned out to north of 18x. The multiple increases to about 26x when applying the provider’s 2017 pro forma adjusted Ebitda.

In the longer term, Aveanna will also consider expanding into the adult-home-care universe, Shaner said.

The company has been invited to participate in various recent auctions in the segment, but hasn’t actively engaged due to its immediate focus on the pediatric end of the market, he said.

In recent activity, Blue Wolf Capital Partners and Kelso & Co in April teamed up to buy Palladium Equity PartnersJordan Health Services in a deal valued around $700 million, Buyouts previously reported.

Oak Hill Partners’ Accentcare and founder-owned Premier Home Health were also recently on the market, Buyouts reported.

If and when Aveanna chooses to diversify into adult home care, the company’s management team certainly knows that end of the market well.

Shaner, as did Windley, Strange and other senior leaders, previously held executive positions at home-health and hospice company Gentiva Health Services.

Under their leadership, the company more doubled in size and was ultimately acquired for $1.8 billion by Kindred Healthcare in 2015.

Bain in January 2017 agreed to buy PSA, uniting it with the even larger Epic Health. It just weeks earlier had agreed to buy Epic from Webster Capital in a deal sources valued at $950 million.

Lincoln International advised Premier on the deal, while Edge Healthcare Partners offered banking advice to Aveanna.

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