Civitas Solutions Inc (CIVI.N), a U.S. provider of home and community health services to people with disabilities, is exploring strategic alternatives, including a potential sale, people familiar with the matter said on Friday.
The move is aimed at capitalizing on strong buyout interest from private equity firms in the sector, the sources said. BrightSpring Health Services, another home care services provider owned by private equity firm Onex Corp (ONEX.TO), received preliminary offers this week from several buyout firms in its own sale process, according to the sources.
Civitas is working with an investment bank to explore a sale, the sources said, cautioning that the deliberations are at an early stage and that no deal is certain. Private equity firm Vestar Capital Partners owns just over half of Civitas and would seek to cash out on its stake, the sources added.
The sources asked not to be identified because the matter is confidential. Civitas and Vestar declined to comment, while Onex and BrightSpring did not immediately respond to requests for comment.
Civitas shares were up 13 percent at $16.58 on the news in late afternoon trading on Friday, giving the company a market capitalization of about $600 million.
Boston-based Civitas offers its home care and community health services under the brand name The MENTOR Network. It employs about 23,000 people across 36 U.S. states.
Vestar acquired Civitas in 2006 from another private equity firm, Madison Dearborn Partners LLC, and took it public in 2014.
Companies and buyout firms have been snapping up healthcare providers as insurers transition to a “value-based” reimbursement system.
Late last year, health insurer Humana Inc (HUM.N), in partnership with two private equity firms, acquired home care provider Kindred Healthcare Inc for around $810 million. United Health Group Inc (UNH.N) purchased managed care provider DaVita Medical Group for $4.9 billion.
In June, private equity firm KKR & Co Inc (KKR.N) agreed to acquire Envision Healthcare Corp (EVHC.N), one of biggest U.S. providers of physicians to hospitals, in a deal valued at $5.6 billion.
Source: Reuters.com