Home Health M&A Picks Up, Other Sectors Lose Steam

Bucking an overall slowdown in health care mergers and acquisitions, the number of home health and hospice transactions increased in the first quarter of 2016.

There were 12 transactions in the home health and hospice sector in the last quarter of 2015, and that increased by 50% to 18 deals in the first quarter of this year, according to the latest figures from Irving Levin Associates Inc.’s Health Care M&A News.

The number of deals related to rehabilitation providers also increased in the first quarter of 2016, but all other sectors of the health care services market experienced a deal slowdown in that period. Deal volume dropped 23% for long-term care, 33% for managed care and 50% for laboratories, MRI and dialysis.

Source: Health Care M&A News, April 2016

Source: Health Care M&A News, April 2016

“The slowdown in deal volume in the first quarter of 2016 might simply be fatigue setting in after a record-setting year in 2015,” stated Lisa E. Phillips, editor of Health Care M&A News, in a prepared statement. “Also, some buyers are still figuring out where the best opportunities are, as the shift to value-based reimbursements gains momentum.”

High prices might also be discouraging certain buyers, Phillips noted. Despite the decrease in volume, combined spending on transactions increased 87% on a quarterly basis, reaching $79.5 billion in the first quarter of this year, the data show.

The first-quarter results largely are in line with what experts predicted during a recent Home Health Care News webinar. Despite pricing at peak levels, large strategic buyers and, to a lesser extent, private equity are expected to drive dealmaking activity this year, the webinar panel agreed.

Written by Tim Mullaney