Addus HomeCare’s $162M stock sale to help fund Gentiva deal

Addus HomeCare announced a $162 million stock offering Thursday that will help fund its planned purchase of Gentiva’s home care business.

The Frisco, Texas-based company is offering 1.5 million shares of common stock priced at $108 per share, according to a news release. Addus said it intends to use roughly half of the money raised to repay outstanding debt from its credit facility and the rest to fund the proposed $305 million Gentiva deal and any other future acquisitions. Addus offers home care, home health and hospice services in more than 200 locations across 23 states.

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Bank of America Securities and Jefferies are the main underwriters of the stock offering. Oppenheimer and Company, Raymond James, RBC Capital Markets and Stephens are co-underwriters. The company said it expects the offering to close Friday, subject to customary closing conditions.

Addus has been repositioning itself in the past year as new state and federal regulations could make it harder for some home health and home care companies to operate.

Addus Chair and CEO Dirk Allison said during an earnings call last month the Centers for Medicare and Medicaid Services’ Ensuring Access to Medicaid Services rule requiring home care companies to spend 80% of Medicaid reimbursements on worker wages could create a buying opportunity for larger home care companies. He said smaller companies might sell their business to avoid the rule that goes into effect in six years. Allison added the company is also looking to buy home health businesses in markets where it offers home care. 

Last month, the company announced the sale of its home care operations in New York to HCS-Girling for $23 million due to uncertainty over Medicaid regulations in that state. In mid-June, Addus announced plans to buy Atlanta-based Gentiva’s home care business in a move to help better scale its operations and expand its home care business to Texas, Missouri and North Carolina.