Help at Home — a provider of home- and community-based services (HCBS) — is considering going public. The Chicago-based company has even selected banks to help it prepare for an IPO later this year, Bloomberg News reported.
More providers are considering public exits thanks to an increasing demand for home-based care, promising outlooks for public at-home care companies and advantageous demographics in the U.S.
Atlanta-based Aveanna Healthcare (Nasdaq: AVAH) went public early this year, filing initially for a $100 million public stock offering in April. Home Health Care News reported Monday that other home-based care companies could go public in the near future as well, given the current trends in both home care and home health.
Those companies included Louisville, Kentucky-based BrightSpring, Dallas-based AccentCare and Help at Home.
“I do think there’s truth to the idea that companies are trying to capitalize off trends,” Les Levison, the co-chair of the transactional health care practice at Robinson & Cole LLP, told HHCN. “Most of the publicly traded home care companies, all of their stocks seem to be doing quite well. I think people are looking at home care in a different way post pandemic than they had been in the past.”
Founded in 1975, Help at Home provides HCBS across 13 states, mostly concentrated in the Midwest and Southeast of the U.S. Backed by Centerbridge Partners and the Vistria Group, the company serves about 67,000 clients across its network.
Centerbridge and Vistria acquired Help at Home in November.
There is no exact timeframe set for an IPO yet, according to Bloomberg.
“People are sort of seeing the value proposition that home care has, in terms of being able to take care of patients in a non-congregant setting, which is certainly appealing,” Levinson continued. “That’s the reason why you’re also seeing continued private equity and other investment-type interest in the space. Going public seems like a natural extension of that. I think historically, people have thought that perhaps being public might give you an improved valuation over doing it privately.”
Help at Home had not responded to a request for comment from HHCN by the time this article was published.
Contextually, the shift in strategy could also have something to do with a change in leadership at the organization. Current Help at Home CEO Chris Hocevar was appointed to his position in March, taking over for Paul Mastrapa. Hocevar had been a member on the company’s board before becoming CEO.
it could also be the other way around, with the idea of going public prompting a leadership change.
“That’s not that unusual, particularly if the sponsors were looking at a public offering as a liquidity opportunity,” Levinson said. “You very often see a change in the C-suite or maybe a bulking up of some talent that maybe wasn’t there before. Ahead of a public offering, that is not really that uncommon.”
Another factor pushing Help at Home toward a public exit could have been its current debt burden. The company has about $760 million in debt, according to Bloomberg.
“I think that sort of goes into the whole valuation metrics,” Levinson said. “That’s a lot of debt. So what’s the capitalization of the company going to look like? It may be that there’s a number of potential interested parties in an acquisition that may not have the firepower to refinance that debt or take it on.”
Selling a certain amount of stock and taking the company public may be a way of creating liquidity without having to fully deal with that debt, Levinson said.
Apart from Levinson, other industry insiders have been scratching their heads at why other large home-based care companies haven’t already gone public, with many not even considering the move. Given its momentum, it’s “a no-brainer” for Help at Home to go public, one source told HHCN.
Public momentum
When Aveanna went public — aiming to extend its successful pediatric home health business into senior care — insiders wondered if others could follow. Certainly, there are a handful of companies that could feasibly enter the public markets, even with the amount of interested private equity buyers increasing.
Whether one or two companies going public influences the rest of the bunch, however, is still not so clear.
“I think that, as companies go public, the option does tend to get a little bit higher up on the food chain in terms of alternatives — and maybe people that hadn’t been thinking about it may look and go, ‘Oh, well, these guys did that. Maybe that’s something that we should consider,’” Levinson said.
But despite the advantages, there are still costs to consider when going public.
“I do think, as a general proposition, that you really need to be of a certain size to make it worthwhile,” Levinson said. “If you’re a small company, and you try to go public, there’s a lot of costs involved. There’s enhanced regulatory scrutiny; you’re now in an SEC-reporting company. There’s a question whether you are going to have real support in the aftermarket. There are going to be investment banks and analysts who are following the stock; will they be creating enough of a market so there’s active trading and real liquidity?”
In other words, for companies without a significant network, the move may not be worth it. Or it might be further down the road.
Plus, with all of the M&A activity there promises to be in 2021 and how much money is available through private equity players, there are other promising options.
“Public companies aren’t able to take the kind of risks a private company can,” Mertz Taggart Managing Partner Cory Mertz recently told HHCN. “Everything is out in the open and subject to analyst criticism, which can affect the stock price.”