Home Health Transactions Tank in 2015

Despite record-breaking totals across health care sectors for merger and acquisition activity in 2015, the home health and hospice sector bucked the industry trend, falling 33% versus 2014 totals.

Across several sectors within the health care industry tracked by research and publishing firm Irving Levin Associates, the industry saw record-breaking totals both in terms of deal volume, and dollar volume.

Behavioral health, hospitals, laboratories, MRI and dialysis, managed care, physician groups, and rehab and other services, all saw gains in 2015 versus their 2014 deal volume totals. Yet the home health and hospice sector was the only subset to post a loss, despite seeing several strong points during the year after a sluggish start.

“The Affordable Care Act generally benefited health care services M&A activity in 2015,” said Lisa Phillips, editor of the 2016 Health Care Services Acquisition Report, published by Irving Levin Associates. “The shift to value-based outcomes and reimbursement made the post-acute sectors especially appealing for investors.”

Struggling companies also served as an acquisition target during 2015, Phillips noted.

“We’re seeing more sales resulting from bankruptcies, especially in states that have not expanded Medicaid coverage,” she said.

In total, across health care sectors, deal volume rose 22%, to 936 transactions versus 765 in 2014, according to the data compiled by Irving Levin Associates. In terms of dollar value, the volume was up 183% to $175 billion in 2015, compared with $62 billion in 2014.

Written by Elizabeth Ecker