The market for home health care and hospice providers is heating up from a mergers and acquisitions standpoint, counting “unusually large” deals among the most recent transactions in the space.
Mergers and acquisitions topped $1.4 billion total in 2010, marking it a record year due in large part to two milestone transactions, says a report released Wednesday by Irving Levin Associates, which tracks merger and acquisition activity among providers of senior care.
Gentiva’s acquisition of Odyssey HealthCare for $984 million and Highland Capital’s acquisition of American HomePatient for $235.2 million were the deals considered unusually large by Levin and Associates, contributing to $1.43 billion in transactions during the year.
“While the five Home Health Care & Hospice sector deals announced in the second quarter of 2012 amounted to less than half the number (11) announced in the previous quarter, the overall level of activity is on track to beat or at least match the number of transactions announced throughout 2011 (29),” wrote the Irving Levin Associates report. “Last year the deals were fairly evenly split in terms of timing, with 13 transactions announced in the first half of the year and 16 in the second half.”
The drivers of activity in the sector are expected to continue, the report said.
“With the continuing effort to reduce hospital inpatient services in order to cut health-care costs—plus the burgeoning number of senior citizens that we can expect over the next several decades and their desire to remain in their own homes as long or as much as possible—the need for home health care and hospice services has never been greater.”
Written by Elizabeth Ecker