After hunting for an aging-in-place business to take public for a year, DTRT Health Acquisition Corp. (Nasdaq: DTRT) has found its match.
DTRT Health — a special purpose acquisition company (SPAC) — announced Thursday that it will merge with Consumer Direct Holdings (CDH), a self-directed in-home personal care network.
Once the merger is complete, the Missoula, Montana-based Consumer Direct Holdings will become a public company.
Following the merger, CDH is expected to be valued at $681 million. The company will be funded from DTRT cash in trust and up to $150 million in debt financing.
Self-directed care is an emerging option for home-based care consumers, DTRT CEO Mark Heaney told Home Health Care News. The merger allows CDH to expand its services to a larger demographic.
“[CDH] has a tenured, respected and thoughtful care management team that has built the company that it is today, which is a substantial company,” Heaney said. “From this platform as a private company, being public basically supercharges the company.”
Heaney, the former CEO of the Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), is bullish on self-directed care and felt like CDH was an ideal fit – a company in a prime position to go public.
In essence, SPACs are shell companies that raise money to acquire or merge with businesses looking to hit the public market.
“Self-directed care is growing and so there are opportunities coming forward where capital is required,” Heaney said. “This will enhance and strengthen Consumer Direct’s foundation going into those opportunities.”
Traditionally, personal care providers will recruit, hire and place caregivers in an individual’s home for care.
Self-directed care providers like CDH, on the other hand, will allow seniors and people with disabilities to choose their own non-medical caregiver. Oftentimes those caregivers are family members or friends.
CDH acts as a back-end platform that facilitates and manages the compensation for those self-directed caregivers.
Those caregivers are generally paid out by state Medicaid programs.
Over the last 12 months, CDH’s 95,000 caregivers have provided care to over 75,000 clients across 14 states.
The CDH and DTRT merger is another example of self-directed care’s popularity growth over the last year.
In August, Park City, Utah-based DW Healthcare Partners and the Chicago-based Linden Capital Partners reportedly invested heavily in the self-directed, at-home care enabler Public Partnerships (PPL).
The downside of the self-directed care model from the provider perspective is that it sometimes can be prone to fraud.
Still, states see it as a win-win because it lowers the cost of care and gives families their preferred option.
“Do you want to take on some responsibility to oversee care, or do you want to have an agency take that responsibility for you?” Heaney said. “It’s an important option for consumers and for families.”
Regardless of how seniors get in-home care delivered, Heaney said there has never been a better and more opportunistic time for home-based care than right now.
“Here’s what’s exciting: There’s no one size fits all,” Heaney said. “There are more people that need home care right now than when I started this sentence. In some cases, it’s more appropriate for agency-directed care, and in many cases, it’s more appropriate for self-directed care. The whole balloon is growing.”
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