The home health care industry continued its streak of mergers and acquisition activity in the second quarter of the year, as the number of deals doubled during the quarter compared to the same time period in 2015, according to a recent report.
During the second quarter, there were 12 home health and hospice care deals in the sector, compared to just 6 in the same three months in 2015, according to Irving Levin Associates as reported by HealthCareMandA.com.
Health care merger and acquisition activity across all health care sectors picked up during the quarter compared to the first three months of the year, the report found. Deal volume rose 11% in the second quarter from the first, to 396 transactions. On a year-over-year basis, deal volume was up 15% for combined health care sectors.
Not only has deal volume increased within home health, but public home health care company stock prices have soared throughout the year. The most recent Home Health Index by Stoneridge Partners revealed that the market value of the most prominent publicly-traded home health companies—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHCGroup(Nasdaq: LHCG)—hit a record high for the second consecutive month in May 2016, outpacing the S&P 500 for the month.
However, while the year-over-year deal volume doubled for home health, the number of deals in the second quarter dropped by 33% from the first three months of 2016. During the first quarter, there were 18 deals, according to Irving Levin Associates.
Overall, home health and hospice care M&A is doing far better than 2015, when transactions tanked 33% from 2014 totals. Deal volume is resurrecting despite acquisition price spikes at the start of the year.
New regulations being implemented this year from the federal payor level may have influenced the M&A activity during the second quarter, according to Irving Levin Associates.
“It’s very clear that those who practice value-based care will get the carrots, while providers who stick with fee-for-service will get the sticks,” Lisa E. Phillips, editor of HealthCareM&A.com, said in a statement.
Written by Amy Baxter