TowerBrook, Ascension lock arms with PE-backed Hospice Compassus

TowerBrook Capital Partners and non-profit Catholic health system Ascension have teamed up to buy Hospice Compassus, according to people familiar with the matter.

The agreement values the Bay City, Michigan, hospice-care provider north of $1 billion, the people said, equating to a low-teens multiple of Ebitda. The pending transaction provides an exit for existing investors Formation Capital and Audax Private Equity.

Barclays, Bank of America Merrill Lynch, Capital One, Jefferies and Houlihan Lokey are providing financing on the transaction, one of the people said.

The transaction concludes a Jefferies-run auction process that kicked off earlier this year. Buyouts initially reported on the adviser engagement and anticipated process in January. Sources at the time placed the asset’s Ebitda in the $80 million to $90 million range.

Houlihan Lokey co-advised on the process, one of the people said.

The consortium prevailed over financial sponsors in the competitive process, including one PE-backed strategic, sources said. TowerBrook and Ascension will own approximately equal equity stakes in Hospice Compassus, one of the people said.

TowerBrook, an investment management firm with headquarters in London and New York, and Ascension, a faith-based healthcare organization headquartered in St. Louis, Missouri, have invested alongside one another in the past.

The parties teamed up in April 2016 to invest in and develop Ascension subsidiary TriMedx, which provides healthcare technology management services to healthcare providers, medical equipment and device manufacturers.

TowerBrook also owns U.K. healthcare staffing company Independent Clinical Services and publicly-traded revenue cycle management company R1.

Hospice Compassus was founded in 2006 by CEO Jim Deal in partnership with Chicago PE firm Cressey & Co.

Formation, of Atlanta, and Audax, with offices in Boston, New York and San Francisco, recapitalized Hospice Compassus in December 2014. The transaction was reportedly valued north of $300 million.

Today Hospice Compassus offers community-based hospice, palliative and home health care services across more than 140 locations in over 30 states.

In other notable home care activity this year, Advent International in May agreed to purchase AccentCare from Oak Hill Capital Partners.

Representatives of Audax declined to comment, while those with Formation Capital, TowerBrook, Ascension and Hospice Compassus didn’t return requests for comment on Monday.

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