Value of Home Health Transactions Plummet in Q2 2017

While the overall U.S. health services industry experienced significant growth in mergers and acquisitions in the second quarter of 2017, the value of home health care deals took a dive, according to data published by Pricewaterhouse Coopers (PwC).

While the home health sub-sector saw a total of nine announced deals in the second quarter, both home health care and managed care sub-sectors saw the largest decreases in terms of deal value, both plummeting by 100%.

Noted, however, is the fact that the sub-sectors did not have any transactions with disclosed deal values in the second quarter of 2017, according to PwC.

While the home health sub-sector faced this setback in the second quarter, it did post the highest mean enterprise value/earnings before interest, taxes, depreciation and amortization (EV/EBITDA) multiple in the LTM 2017 period (19.2x), and the largest increase in multiple value versus the LTM 2016 period (3.9x).

Overall, 219 deals occurred throughout the health services industry, totaling $49.6 billion and signifying an increase of over 201% in a year-over-year (YoY) analysis, and a 514% increase over the first quarter of 2017. The performance is also the strongest the health services industry has seen since Q3 2015, according to PwC.

Driving this significant growth is the number of “megadeals” — transactions exceeding $1 billion — in the second quarter. Since 2015, the average number of megadeals remained at about four per quarter; performance in Q2 2017, however, eclipsed this average with a total of 10, making up more than $43 billion in deal value, or 87% of the quarter’s total.

Longterm care deals accounted for 75 of the 219 deals, experiencing 299% YoY growth.

Written by Carlo Calma