Grant Avenue Capital Makes First Transaction in Buy-and-Build Home Health Play

Grant Avenue Capital recently acquired Salt Lake City-based Valeo Home Health & Hospice from Eduro Healthcare, an operator of skilled nursing facilities. The financial terms of the deal were not disclosed.

New York-based Grant Avenue Capital is a middle-market private equity firm focused on health care. Founded in 2011, Valeo Home Health & Hospice has served over 6,000 patients in Salt Lake City and other Utah counties.

While this transaction is Grant Avenue Capital’s first foray into the home-based care arena, the company’s leaders have a history in the space.

Advertisement

“I had the great joy of doing a transaction with Encompass Health back in the early 2000s,” Buddy Gumina, founder and managing partner of Grant Avenue Capital, told Home Health Care News. “We also did a buy and build in the hospice space with a company called Voyager Hospice Care. Those were with a previous firm, but I was the lead on those.”

Gumina noted that members of the Grant Avenue team provided the first institutional capital for Encompass Health.

In general, health care is increasingly being delivered in the home. Gumina believes the COVID-19 emergency will only accelerate this trend and that home-based care will help curb health care costs.

Advertisement

“Overall, one of our themes is cost-containment,” he said. “Obviously, home-based care is a great high-quality solution for the right patients. It is less expensive than being in the hospital and other facilities. We see this opportunity as our first step in a buy and build in the home care and hospice space.”

When it comes to Valeo Home Health & Hospice, specifically, Grant Avenue Capital believed the company to be an attractive acquisition target due to its experienced team and its care efforts throughout the public health emergency.

As far as building a strong home-based care acquisition pipeline in the future, Grant Avenue Capital anticipates that the major M&A wave — first predicted when the Patient-Driven Groupings Model (PDGM) was introduced — will eventually come to fruition.

When this occurs, smaller and mid-sized home health companies may be looking to enter deals.

“Similar to the change to PPS almost 20-years ago, we expect that under PDGM there will be a number of companies looking for a partner to … help them identify opportunities and grow their business,” Gumina said. “For some of these smaller players, coming together and getting bigger will be something they’re considering.”

Private equity interest in the home-based business should come as no surprise to those who have been watching closely.

Recently, 39% of surveyed health care CFOs — including home health financial leaders — cited private equity as a source of outside capital for 2021, according to data from BDO.

Looking ahead, along with home health and hospice companies, Grant Avenue Capital is also considering palliative care and private-duty personal care, according to Gumina.

Certain individual shareholders of Eduro will continue to have a minority ownership stake in Valeo, with Grant Avenue holding the majority stake.