CareRing Health, a US-based provider of home healthcare services, is building throughout the Mid-Atlantic and Midwest regions via acquisitions, said Steve Guenthner, CEO.

The Madison Dearborn Partners-backed company, which generates around USD 200m annual recurring revenue, is actively seeking bolt-on deals to grow its home healthcare footprint, Guenthner said. Initially, the company is looking to expand throughout the Mid-Atlantic and Midwest regions in states such as Pennsylvania, Delaware, Indiana, Maryland, Michigan, Illinois, Virginia and Ohio, he said.

Currently, Louisville, Kentucky-based CareRing operates in six states, he said. It aims to operate in 10 states in five years and double revenue, the CEO said.

Since its formation in 2022 alongside Madison Dearborn, CareRing has closed five acquisitions and anticipates making 10-15 buys each year, Guenthner said. CareRing is Madison Dearborn’s eighth fund and is not constrained by capital, noting that it could deploy USD 100m-USD 200m on acquisitions, he said.

Its sweet spot for buys ranges from USD 1m-USD 5m EBITDA if CareRing already has a presence in a certain market, Guenthner said. However, if CareRing is entering a new state, it prefers to make a larger acquisition of a company with USD 5m-USD 10m EBITDA to be its “cornerstone,” and then acquire bolt-on deals around it, he said.

The company is looking at home healthcare providers offering personal care services to Medicare and Medicaid patient populations; however, it would also look at opportunities that offer home-based primary care and hospice care to the same patient populations, Guenthner said.

CareRing is receptive to approaches from bankers with sell-side opportunities, Guenthner said. CareRing prefers deals on a direct approach, however, it also participates in banker-led processes. Deals in a process are harder to close on because of the larger pool of potential buyers with anywhere from five to 35 potential suitors, he said. The key to closing deals is a continuous flow of deals and opportunities, he added.

Valuations are starting to equalize between buyers and sellers, Guenthner said. Add-on deals are commanding mid- to high-single-digit EBITDA multiples while platform buys garner low-double-digit EBITDA multiples, he said.

Strong EBITDA margins for companies in this market range from 10%-12%, and CareRing expects its margins to continue to fall within this range, Guenthner said. Madison Dearborn is the majority owner of CareRing and Guenthner, who previously served as president of Almost Family, is the largest single investor, he said.

CareRing is not focused on its exit right now, noting its investors are only two years into its 10-year plan, Guenthner said.

CareRing offers home health services including skilled nursing, personal, primary and hospice care to the dually eligible Medicare and Medicaid patient populations who are chronically ill, aged, or disabled, according to the company. These 13 million people, whose average age is 65, make up 33% of federal healthcare spending, according to the company. CareRing aims to reduce inefficient federal and state healthcare spending through coordinated care rings, according to the company.

CareRing provides care for more than 5,500 patients in more than 20 markets throughout Pennsylvania, Delaware, Ohio, Maryland, Washington, DC and Virginia, according to the company. It has more than 5,700 employees.

by Rebecca Wenzel

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