Guide to Selling a Hospice & Geriatric Practice in Texas

The Texas market for Hospice & Geriatric practices is experiencing vibrant M&A activity, presenting a significant opportunity for owners. However, a successful sale now requires navigating new regulatory hurdles and a highly competitive landscape. This guide provides a clear overview of the current environment, from the critical CMS 36-month rule to key valuation drivers, helping you prepare for a strategic and profitable exit. Understanding your practice’s position is the first step.

Market Overview

Texas is a focal point for hospice care in the United States. With over 1,124 organizations, it has the second-highest number of hospices in the country. This creates a deeply competitive environment. Nationally, the market is valued at nearly $30 billion and is projected to grow steadily, fueled by an aging population and increasing acceptance of end-of-life care. This growth has attracted significant investment, with for-profit providers now making up over 70% of the market. For owners in Texas, this means you are operating in a large, mature, and financially active sector, but one where standing out is crucial for attracting the right buyer.

Key Considerations for Sellers

Before you even think about valuation, buyers will scrutinize your practice’s operational and regulatory health. In Texas, a few key areas stand out.

The New 36-Month Rule

As of January 2024, CMS prohibits a new owner from taking over your Medicare provider agreement and billing privileges if your practice has been enrolled or had a majority ownership change within the last 36 months. A misstep here can invalidate the entire transaction. The timeline of your original Medicare enrollment and any past ownership changes is now one of the most important facts about your business.

Staffing and Compliance

Buyers are wary of operational risks. In a state facing staffing shortages, a practice with a stable, well-trained team and low turnover is highly attractive. Likewise, flawless HIPAA compliance and a clean survey history are not just best practices. They are critical assets that demonstrate a low-risk, high-quality operation to prospective partners.

Texas Market Activity

Despite the regulatory pressures, the market for hospice and home health practices in Texas remains strong. Recent activity shows that well-run practices are in high demand. We have seen a series of significant transactions, from New Day Healthcare’s acquisition of Good Samaritan Societys hospice operations to Uplift Hospice expanding its census through the purchase of Star of Texas Hospice. Perhaps most notably, the Dallas market saw two major deals with Silverstone Hospice acquiring Comfort Care and private equity firm Martis Capital acquiring Three Oaks Hospice for a reported $150 million. The key takeaway is that private equity is the primary driver, accounting for the vast majority of recent deals. These sophisticated buyers are actively looking for quality Texas assets.

The Sale Process at a Glance

Selling your practice is a structured process that moves through several distinct phases. Preparing properly for each one is the key to preventing delays and protecting your value. A typical journey looks like this:

1. Preparation and Valuation. We work with you to gather financial and operational data, analyze your practice’s strengths and weaknesses, and determine its market value based on real-world data, not just formulas.
2. Strategic Marketing. We create a confidential marketing package and approach a curated list of potential buyers who are a good fit for your practice, goals, and legacy.
3. Negotiation. We manage initial offers and negotiate the letter of intent (LOI), which outlines the price, structure, and key terms of the deal.
4. Due Diligence. This is the most intensive phase. The buyer conducts a deep dive into your financials, compliance, and operations. This is where many deals encounter unexpected problems if not prepared for.
5. Closing. Final legal agreements are drafted and signed, and the transaction is completed.

Understanding Your Practice’s Value

Your practice’s value is more than a multiple of your revenue. Sophisticated buyers look at “Adjusted EBITDA” (Earnings Before Interest, Taxes, Depreciation, and Amortization), which reflects the true cash flow of the business after normalizing for owner-specific expenses. This Adjusted EBITDA is then multiplied by a number that reflects your practice’s quality and risk. Factors that move this multiple up or down include:

A practice with a $1M+ Adjusted EBITDA, a strong management team, and a clean compliance record will command a much higher multiple than a smaller, owner-reliant practice. A comprehensive valuation is the foundation of a successful strategy.

Post-Sale Considerations

The day the deal closes is not the end of the story. How your sale is structured will define your financial outcome and legacy for years to come. It is important to plan for this from the very beginning.

Your Financial Future

Many deals today are not 100% cash at close. You may be offered an “earnout,” where a portion of the payment depends on the practice hitting future performance targets. You might also have the opportunity for an “equity rollover,” where you retain a stake in the new, larger company. This provides a potential “second bite of the apple” when the new entity is sold again. Structuring these components correctly has major implications for your final proceeds.

Your Legacy and Team

For many owners, protecting their team and the culture they built is just as important as the sale price. The right partner will value your staff and see them as a key asset. We specialize in finding buyers whose goals align with yours, ensuring a smooth transition that respects the legacy you have worked so hard to create.