After a long hiatus from dealmaking, home health giant Amedisys is pursuing acquisitions again to expand geographically and add personal-care services to its traditional skilled-nursing offerings.
But a different priority at Amedisys, headquartered in Baton Rouge, La., also has appeared in the immediate term, as the company helps its employees recover from the flood waters that inundated Louisiana last month. Bill Borne, founder of Amedisys, was one of the several people who died in the flooding.
Earlier this year, Amedisys bought a large home health company in Sarasota, Fla., Infinity HomeCare. The $63 million purchase gave Amedisys 30 locations across Florida, versus 13 prior to the acquisition, and boosted its Florida home health revenue to about $70 million from $25 million before the purchase, CEO Paul Kusserow said.
Also this year, Amedisys purchased two personal-care companies in New England to provide clients with lower-cost bathing, cooking and cleaning services in addition to skilled nursing, Kusserow said. The companies are Associated Home Care and Professional Profiles.
This diversification is critical, Kusserow said, because payers are moving to bundled payments in the home-care setting, putting providers at risk for keeping costs under control and quality consistent.
Amedisys wants home-care nurses attending predominantly to clinical needs and personal-care providers doing important but unskilled tasks. Nurses cost about $160 an hour in the home while personal-care caregivers cost on average $22 an hour, he said.
The first personal-care acquisition was Associated Home Care in North Andover, Mass. Amedisys paid $28 million for the company's $40 million in annual revenue. Amedisys just completed its acquisition of the smaller Professional Profiles in Danvers, Mass. Amedisys paid $4.4 million for Professional Profiles, which has annual revenue of about $9.7 million.
Kusserow said the acquisitions will add to profits this year. In the six months ended June 30, publicly traded Amedisys posted net income of $17 million, or 51 cents per share, compared with a net loss of $24 million, or 74 cents per share.
Amedisys, one of the nation's largest home health and hospice providers, posted revenue in its fiscal first half of $709.6 million compared with $615.7 million in the year-ago period. Kusserow said Amedisys is looking at a pipeline of other possible acquisitions, some of which could happen this year.
Kusserow, 54, a former Humana executive, took on a turnaround challenge when he was appointed Amedisys CEO in December 2014.
The company's stock was trading in the low teens in early 2014, and an effort to build a commercial software product internally to run operations was draining resources, he said. The low stock price had attracted activist investors, including KKR & Co., which had demanded and received a board seat. Kusserow said KKR is still providing welcome advice. Amedisys' stock price closed Thursday at $48.10.
Kusserow said one of his first acts was to shut down the software business in April 2015, saving the company about $50 million but costing the jobs of 240 code writers and other professionals.
Operations and profits have consistently improved over time. And the company has used cash to pay off debt, including $150 million that had to be borrowed in 2014 to settle a Medicare fraud case involving allegations of improper billing for unnecessary therapy procedures and improper relationships with referring physicians.
Today, Amedisys' debt is less than one times annual earnings before interest, taxes, depreciation and amortization, meaning the company has the borrowing capacity to comfortably make $300 million more in acquisitions if the right deals come along, Kusserow said.
“We're a very different-looking company,” he said.
More immediately, Amedisys has been assisting its 400 employees in Baton Rouge who have been impacted by the floods that ravaged Louisiana and caused $22 billion in damage. Some of the 112 employees whose homes or cars were completed swamped are still not back to work more than three weeks after the storms, Kusserow said.
Employees are helping their colleagues tear out drywall and return to their homes and have gathered donations. Amedisys is contributing money and supplies as well. "We saw people with everything they owned sitting outside their homes," Kusserow said.