7 Home Care Companies To Watch In 2023

The home care industry, so far, has had a relatively quiet 2023.

Over the past few years, the home care space has been defined by ample private equity investment, aggressive provider roll-ups, exciting Medicare Advantage (MA) developments and innovative cross-continuum partnerships. There has been much less action this year, despite the continued focus on social determinants of health (SDoH), activities of daily living (ADLs) and non-medical services throughout the senior care world.

A number of providers have had interesting starts to 2023, however, with revitalized M&A strategies, key leadership changes, creative staffing investments and other factors making them home care companies to watch.

Home Health Care News is highlighting seven such organizations in this exclusive, members-only HHCN+ story. For the purposes of this article, “home care” broadly includes private-pay home care, Medicaid personal care services and adjacent non-medical in-home care services.

Addus

Addus HomeCare Corporation (Nasdaq: ADUS) is an in-home care provider that delivers services to more than 47,500 clients across nearly two dozen states. The Frisco, Texas-based company has steadily expanded into home health and hospice services, but the bulk of its business remains in the personal care field, supporting individuals with activities of daily living (ADLs) and their chronic conditions on a longitudinal basis.

On one hand, Addus is a company to watch simply because it has been such a rock-solid operation through turbulent times, positioning itself for future dealmaking and growth in months to come.

“[With] its clean balance sheet, ADUS will likely get more aggressive this year in pursuing acquisitions, including larger transactions, which should drive EBITDA upside/boost growth,” an April analyst note from Jefferies stated.

Prior to the COVID-19 pandemic, Addus was growing upwards of 20% annually, with a good chunk of that through deals. That pace has lessened, but M&A – particularly in home health care – remains a key part of its growth strategy, according to CFO Brian Poff.

“On the home health side, I think, obviously, that’s been a focus for us,” Poff said during a recent investor presentation. “We’ve talked about that over the last year. I really think that’s complementary to the things we’re doing in the value-based arena. We still would like to add clinical assets, specifically in skilled home health, where we have a strong personal care presence.”

Medicaid rate tailwinds in many of its markets will help Addus invest in its recruitment and retention efforts, too, further supporting organic growth. Already, the provider has started to see improvements in its labor force.

On the other hand, though, Addus is a home care company to watch because of a proposed rule from the U.S. Centers for Medicare & Medicaid Services (CMS).

In April, CMS proposed a series of sweeping Medicaid changes pertaining to home- and community-based services (HCBS). Among them: a provision mandating that at least 80% of Medicaid payment go toward worker compensation in personal care, homemaker and home health aide services.

If finalized, the proposed rule would effectively create a margin cap for HCBS providers such as Addus. At the same time, it could put pressure on some operators, leading to more consolidation opportunities for those that can weather the storm.

“If it goes through at 80%, you’re going to see a vast majority of the small mom and pops go out of business,” Addus Chairman and CEO Dirk Allison recently said. “In states like Illinois, they’ll probably do OK, and maybe New York and Washington because you’re already there. In these other states, mainly the Southwestern states where you’re paying $7.25 an hour minimum wage, that’s where you’re going to have difficulty.”

BrightStar Care

BrightStar Care CEO Shelly Sun, like most home care leaders, is worried about rising billing rates in the home care industry.

Her approach to that issue is a little different than others, however.

Traditionally a private-pay home care provider, Sun wants to invest in Medicare Advantage business as MA plans gain a more considerable hold on Medicare beneficiaries. More than half of all Medicare beneficiaries are now under MA plans.

Home care providers are now able to access beneficiaries through MA’s supplemental benefit offerings, which include in-home support services. The goal for BrightStar is to meet these patients where they are now, hoping to convert them to private-pay clients down the line. MA doesn’t pay well for home care, so the company takes a near-term hit to deliver on a long-term goal.

“I think that it’s really important that we have a seat at the table,” Sun told HHCN last year. “We’re seeing that about 5% to 10% of our Medicare Advantage enrollees from two years ago are now coming back and becoming private-pay clients. So those successes are starting to occur.”

Sun said that converting MA beneficiaries to private-pay clients generally takes 18 to 30 months.

The Chicago-based BrightStar is a provider of home care, senior living and supplemental staffing. It has 380 total locations in its network, along with 15,000 caregivers and 5,700 registered nurses.

BrightStar is a franchise, which has made its MA strategy a bit tougher to implement nationwide. Franchisees aren’t always psyched about the idea of taking short-term losses when private-pay home care is as lucrative as it’s ever been.

That’s why BrightStar has significantly increased its company-owned footprint of late, so it can innovate in those locations and eventually prove its strategies to franchisees. As of April, nearly 10% of BrightStar’s network was company-owned.

The company is innovating in other areas, too. For instance, it does have its senior living footprint, which it created due to the overwhelming amount of home care clients asking for senior living recommendations.

It also has a partnership with Chamberlain University aimed at increasing the pool of young home care workers in the U.S.

Care Advantage

Care Advantage is a home care provider to watch because of the success it has had establishing pay-for-performance and value-based care arrangements with payer partners – something difficult to do in long-term care.

Its relationship with the Virginia Anthem HealthKeepers plan is the perfect example of that success.

“Value-based payments, risk sharing, alternative payment models, whatever verbiage you use, it’s really difficult to do in the LTSS world,” Jamie Swann, director of LTSS services for the Virginia Anthem HealthKeepers, previously told HHCN. “Because especially around personal care, what are you looking at? What do you measure that is fair to the provider?”

In 2021, Care Advantage CEO Tim Hanold explained to HHCN how that arrangement incorporated multiple performance measures, such as in-patient utilization and ER usage, along with caregiver training and consistency. In a lot of ways, it offers a roadmap for other providers attempting to move into value-based care.

Care Advantage is also exploring creative ways to retain its caregivers. Those ways include a form of “gamification,” or rewarding employees for when they hit key metrics or milestones.

“We wanted to cut through the clutter and be more attractive to the caregiving talent pool,” Hanold previously told HHCN. “We also wanted to create more stickiness with our caregivers, that retention piece.”

Finally, Care Advantage is worth following because it, too, could ramp up M&A in 2023. The provider, backed by PE firm Searchlight Capital Partners, has completed at least 19 acquisitions since 2018.

Overall, Richmond, Virginia-based Care Advantage has more than three dozen locations throughout the Mid-Atlantic region.

Gentiva

“Gentiva Health Services” was the name of the home-based care company acquired by Kindred Healthcare in 2015 for $1.8 billion. That “Gentiva” name was nearly forgotten, but now it’s coming back.

Humana Inc. (NYSE: HUM) completed its divestiture of Kindred at Home’s hospice and personal care divisions in August 2022, selling a majority stake to Clayton, Dubilier & Rice (CD&R), which restructured the assets into a standalone company. The new company’s name: Gentiva.

“Our dedicated hospice and personal care company is focused on improving access, equity and quality of care for patients while remaining an employer of choice for health care professionals,” Gentiva CEO David Causby, who previously helped lead Humana’s internal home health business, said at the time.

Gentiva’s backstory alone – and official coming out party toward the end of last year – make it a home care company to watch in 2023. Its standing is bolstered by some splashy moves of its own.

In February, Gentiva announced an agreement to buy ProMedica’s Heartland home health and hospice assets for $710 million. That deal gives Gentiva care capabilities across the acuity spectrum, adding 15 Medicare-certified home health agencies to its mix to pair with lower-acuity personal care and end-of-life care.

“Gentiva will gain the additional scale needed to expand into new markets, bolster our palliative capabilities, accelerate innovation, and continue adding to our clinical care team, all of which will help provide even more patients with our high-quality care,” a Gentiva spokesperson told HHCN shortly after the deal was announced.

As a result of the deal, Gentiva’s footprint went from 380 locations to 500, and its patient census jumped from about 25,000 to 34,000.

With Causby at the helm armed with capital support from CD&R and Humana, which retains a 40% stake in Gentiva, the company is poised to make additional moves in 2023.

HouseWorks

Boston-based HouseWorks is one of the larger independent home care providers in what remains a highly fragmented market. Andrea Cohen founded the business over two decades ago, differentiating HouseWorks from its peers through a mix of traditional home care support and home-modification services (it no longer provides the latter).

“I would say we’re known as innovators,” Cohen said at HHCN’s 2021 Home Care Conference. “We thought a lot about technology before it was what you’re supposed to think about. We’ve thought a lot about how to support the caregiver, how to empower the caregiver and how to listen to the customer.”

In January, InTandem Capital Partners completed a majority investment in HouseWorks. At that time, the provider’s CEO, Mike Trigilio, told HHCN that new capital would partly go toward expansion.

“There are tremendous opportunities to expand HouseWorks across the Northeast, both through de novo locations and our proprietary M&A pipeline,” Trigilio said.

HouseWorks began realizing those ambitions roughly a month later, announcing an agreement to acquire the personal care business of Amedisys Inc. (Nasdaq: AMED). The transaction, which had a reported price tag of $50 million, included 13 Amedisys care centers in three states.

There are tremendous opportunities to expand HouseWorks … .

– HouseWorks CEO Mike Trigilio

But Trigilio and his team weren’t done.

At the start of May, HouseWorks announced the purchase of personal care business Care and Help Home Care, expanding its footprint in Pennsylvania. Terms of that transaction were not disclosed.

“HouseWorks has the potential to partner with great home care agencies across the region and deliver on a better way of doing business and better way of caring for patients,” Brad Coppens, senior managing director with InTandem, told HHCN. “Our capital is backing Mike’s plan, but also providing him capital to expand in ways that might be difficult on a stand-alone basis for him and his team.”

HouseWorks’ M&A progress in 2023 bucks industry trends.

The fourth quarter of 2022 and this year’s first quarter each tallied nine home care-related transactions, according to data from M&A advisory firm Mertz Taggart. Prior to that, no quarter had single-digit home care transaction volume since the third quarter of 2020.

HHCN will be watching HouseWorks to see what other moves it has up its sleeve in 2023.

Papa

Papa is an in-home care company that delivers companionship services to older adults and their families. Its companions, or “Papa Pals,” help Papa clients by taking them to appointments or the grocery store, or by simply starting a meaningful conversation to alleviate feelings of loneliness.

Backed by prominent investors such as Tiger Global Management, SoftBank and Reddit co-founder Alexis Ohanian, Papa has raised more than $240 million since its 2017 launch – making it one of the most successful in-home care startups to date. The Miami-based company makes its money by partnering with a growing number of health plans, with Medicare Advantage payers more frequently including companionship services in their supplemental-benefits packages.

“We work with over 100 managed care organizations across the United States,” Papa CEO Andrew Parker told HHCN in August 2022.

In the past, Papa would have been a home care company to watch because of its unique business model, fundraising prowess and overall growth. It’s worth watching this year for very different reasons.

Last July, HHCN reported that Papa laid off 15% of its workforce, with Parker citing the macro-economic environment and the company’s long-term goals as the reasons why. Many venture capital-backed companies have found themselves in a similar position, with VC firms placing fewer and small bets.

“Our business continues to be very strong,” Parker told HHCN. “Our health plans continue to really be excited about it. Pals continue to be excited about it. And, of course, our members are as well, but, sadly, we had to make a reduction.”

This May, Papa again made headlines, with Bloomberg Businessweek publishing a report documenting abuse claims from both Papa clients and companions. The report was based on 1,200 confidential complaint reports logged by Papa over the past four years.

“The logs show what can happen to both Papa’s elderly clients and its contractors when the company offers little training or oversight,” Businessweek wrote.

It will be worth following Papa to see how it rebounds from the layoffs and negative press. The company has contributed to the progress home care groups have made working with MA plans, so any setback for Papa in those relationships could be a setback for home-focused supplemental benefits more broadly.

Contextually, Papa says it has facilitated about 1.5 million visits between members and its Papa Pals. The 1,200 complaint reports reviewed by Businessweek included 638 individual complaints, according to the publication.

Right at Home

Since the start of 2022, home care franchise company Right at Home has brought in a new CEO, chief growth officer and, most recently, COO. The evolving leadership team makes Right at Home a home care player to keep an eye on in 2023.

Omaha, Nebraska-based Right at Home has over 600 franchise locations in the U.S. and seven other countries.

Margaret Haynes, previously Right at Home’s COO, took over as top executive in April of last year. Among her immediate goals have been better understanding changing consumer preferences and finding creative ways to mitigate the industry’s caregiver shortage.

“I’ve challenged the team, our franchise owners and our network, broadly, to view this caregiver shortage not as a barrier, or an obstacle, but actually as an opportunity,” Haynes told HHCN a month after transitioning into the CEO role.

Helping Right at Home’s owners navigate rising costs in home care, along with changing billing dynamics, has also been a focus.

Meanwhile, Right at Home’s new chief growth officer, Brady Schwab, is doubling down on the franchise company’s corporate-owned footprint expansion. Adding more company-owned locations is important, Schwab previously explained to HHCN, because it accelerates Right at Home’s ability to enter into new markets and offers a “testing bed for innovation.”

“We strive to bring innovation into the system and that requires a level of risk-taking and putting our money where our mouth is that we don’t want to assign or ascribe to the system, especially early on in an innovation process,” he said.

Right at Home’s new COO is Rod Roberts, who has over 37 years of experience in the franchising world – both on the corporate and franchisee level. Roberts’ previous home care experience includes several years in the Home Instead Senior Care franchise system, leaving that organization as vice president of franchise operations.

Moving forward, it will be worth watching Right at Home to see how these leaders make their mark on one of the industry’s largest franchise systems.

Additional contributions to this story by Andrew Donlan.