StrangeTony,
Financial rapscallion Kinderhook Industries LLC is buying Enhabit, a home health and hospice provider in a $1.1 billion deal. Hospice News reported:
At about $13.80 per share, the all-cash transaction represents about 24.4% of Enhabit’s closing stock price. The valuation implies that Enhabit has a roughly 10.3x EBITDA multiple for the Fiscal Year 2025, according to a report from Jefferies LLC.
That's far cheaper than hospice multiples in 2019-2020.
Multiples in the hospice and home care space reached a record 26x during 2020, according to a research report by PwC’s Health Research Institute.Enhabit was spun off from Encompass in early 2022. Encompass has financial rapscallion roots as it was once owned by Cressey & Company.
Flashback to 2017 when our hospice was part of Kindred Healthcare:
Financial sharks circle Kindred Healthcare and some are inside the company. Take former CEO Paul Diaz, who received a $6 million cash bonus in May 2015 for closing the deal on Gentiva. Diaz went on to become an operating partner with Cressey and Company. Oddly, his bio on Cressey's website makes no mention of his current Kindred board service. Diaz is Vice Chairman of Kindred's Board of Directors.
We were sold down the river in summer 2018 to TPG Capital, Welsh, Carson, Anderson & Stowe (combined 60% owners) and Humana (40%). Our new owners cut everything, including quality of care.
Humana kept the home health division but flipped Gentiva's hospice and personal care divisions to another rapscallion, Clayton, Dubilier & Rice
CDR just put affiliate Multicolor into bankruptcy and somehow will retain majority ownership. That only happens if the rapscallion is on both sides of the deal, equity and debt.
Arm's length agreements and ethics are so yesterday. I imagine Enhabit's hospices will funnel huge sums to Kinderhook, its executives and limited partners. That is the way of the world today.
Hospice deals with the eternal but must endure the greedy on our earthly plane. I lived it and it was brutal. Never again, Lord willing.
An attorney wrote a law review article titled "The Dark Side of Private Equity." The anonymous author:
"argues that the core tools of PE value creation—high leverage, cash extraction, and short-term exit incentives—externalize predictable risks to third parties including workers, healthcare patients, consumers, unsecured creditors, communities and the environment."
Sounds about right.
Anonymous (yes, there are a lot of us)
