PACE operators may become the next target of interest for healthcare private equity investors following a first-of-its-kind acquisition of a PACE operator by private equity sponsor Welsh Carson Anderson & Stowe (WCAS), which plans to acquire Denver-based InnovAge for $206m.

InnovAge is a non-profit provider of in-home senior care, healthcare programs, memory loss programs and adult day services, and operates as a non-profit under the PACE program, a unique capitated managed care benefit for the frail elderly funded by the CMS. PACE operators have historically been required to maintain non-profit status, and most beneficiaries are dually eligible for Medicare and Medicaid.

In an interview with Mergermarket published May 3, WCAS Partner and former CMS Administrator Tom Scully shared the firm’s plans for the series of acquisitions, which WCAS expects to pursue in earnest following this transaction.

WCAS had submitted its acquisition bid in 2015, drawing scrutiny from public health and legal advocates. If the transaction is successful, WCAS will be the first private equity firm to have cleared significant regulatory hurdles to acquire this type of business. Scully indicated it will follow the model WCAS uses in the InnovAge acquisition to acquire other PACE businesses.

The transaction is expected to close later this month.