Premier Home Health enlists JPMorgan for sale

Premier Home Health Care Services Inc, the New York-concentrated provider of primarily non-medical senior-home-care services, is exploring a sale, according to four sources familiar with the matter.

JP Morgan Securities is financial adviser to the White Plains, New York, home-care company, the sources said. Premier is being marketed to sponsors and strategics, two of the sources said. One of the two said meetings with strategics were held last week.

CEO and Co-Founder Arthur Schwabe does not wish to stay with the company, two of the sources said. A sale to a corporate buyer or PE-backed strategic platform is likely the preferred scenario, as it would present an easier way for the exec to depart and enable a successor, one of these people speculated.

The company is estimating 2017 adjusted EBITDA of $55 million on revenue of $430 million, two of the sources said. Premier is likely to command an enterprise value that pans out to an EBITDA multiple of about 7x to 8x, one of these people and a third source said.

The most recent comparable transaction in both size and scope is Nautic Partners’ February 2016 sale of All Metro Health Care to One Equity Partners, one source noted. Terms weren’t disclosed, but the asset traded for about 7x its roughly $45 million in EBITDA, equating to a valuation of around $315 million, this person said.

Premier, founded in 1992, offers geriatric-care management services, non-medical home health aid, live-in and overnight care-giving services, companion services, at-home skilled nursing, hospice care, in-home respite care and in-home rehabilitation services.

All Metro, like Premier, offers primarily non-medical home-care services. Both providers have a heavy concentration in New York, one of the most expensive health-insurance markets in the country.

Premier, for its part, has 17 offices in New York, with additional locations and services offered in Massachusetts, Florida, Illinois, North Carolina, Connecticut and New Jersey.

Another comparable but smaller deal was Blue Wolf Capital Partners’ purchase of National Home Health Care from Angelo, Gordon & Co. and Eureka Capital Partners.  Terms of the May 2016 transaction weren’t disclosed, but the Northeast-focused provider of home health and personal care also traded for an about 7x multiple of EBITDA, or an EV of about $120 million, one source said at the time.

Blue Wolf, which specializes in turning around challenged assets, also came close to acquiring Jordan Health Services from Palladium Equity Partners last year, but valuation issues ultimately prevented the deal from going through.

One differentiating element at Premier is its managed-care business. The unit provides population health management services such as utilization review, care management and risk assessment services to help manage costs for for dual-eligible and Medicaid health plan members. The business is understood to be a relatively small piece of the overall company.

A potential challenge in the process could be Premier’s significant reliance on Medicaid reimbursement, two of the people noted. The company does not disclose what portion of its business is Medicaid-driven, but two sources said it accounts for a majority of its reimbursement.

Medicaid-dependent sectors are viewed as the most vulnerable to any potential changes to Obamacare, or the Affordable Care Act. The GOP’s proposed legislation, the American Health Care Act, would, if passed, end funding for Medicaid expansion while also disrupting the program’s structure.

Premier on its website states that it also accepts private-pay, long-term-care insurance, Medicare in New York, VA benefits and association grants.

A Premier representative declined to comment, while Schwabe couldn’t be reached. JP Morgan representatives didn’t immediately return a request for comment.

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