Home Health M&A Stays Flat In Fourth Quarter

Following some slippage in the third quarter, the final quarter of 2016 remained steady in home health and hospice mergers and acquisitions.

With uncertainty still looming over the future of the Affordable Care Act (ACA) under a new presidential administration, home health and hospice M&A decreased a bit when compared to the fourth quarter of 2015, according to the most recent report from Irving Levin Associates Inc.

Quarter four of 2016 saw a total of 11 publicly announced home health and hospice mergers—the same as quarter three of 2016— which is down from 13 transactions from quarter four of 2015. This quarter is also the lowest level of M&A activity since the second quarter of 2015 when there were six acquisitions, according to the report.

Looking at 2016’s publicly announced transactions as a whole did show a growth of 8% from 51 transactions in 2015 to 55 transactions in 2016.

Arguably one of the most significant deals in 2016 was the $128 million acquisition by Almost Family for an 80% interest in Community Health Systems’ home health division, which was announced in the fourth quarter. Other big players in 2016 included Epic Health Services, that had a number of acquisitions followed by Bain Capital acquiring the company at the end of the year, as well as The Ensign Group.

Though the Medicare Payment Advisory Commission (MedPAC) still recommends cuts in Medicare reimbursements for home health care, there is some pushback from federal and state governments to provide more funding for home health services as the sector continues to grow along with the aging population, the report says.

“With the election behind us, we expect home health and hospice M&A activity will increase, despite the headwinds of repeal and replace the ACA,” Lisa Phillips, editor of the Health Care M&A Report, said in a press release. “The push for care at home is just a train that will not stop.”

Written by Alana Stramowski