Home Health M&A Trends: Deal Volume Rose, Dollar Value Fell
For years, there existed an inverse relationship between the number of home health and hospice transactions and their total dollar value.
In general, as the number of home health and hospice transactions climbed between 2012 and 2014, the total transaction dollar value declined, according to the second edition of the “Health Care Mergers & Acquisitions in the 21st Century” report from Irving Levin Associates, Inc.
The number of home health care and hospice acquisitions increased by almost 80% between 2011 and 2014, before the transaction volume declined by 33% in 2015, the report notes.
The total transaction dollar amount fell in 2015, as well; the total value of the U.S.-based home health and hospice agencies sold with disclosed prices that year was $438.05 million, an 88% drop in value from 2014.
The value of the highest priced transactions fell in 2015, too. Three of the home health and hospice transactions completed in 2014 were valued at more than $400 million, including the massive $1.8 billion Kindred Healthcare (NYSE: KND) acquisition of Gentiva. In 2015, on the other hand, the highest priced transaction with a disclosed price was only $170 million, the report says.
About 87% of the organizations that purchased home health and hospice agencies were for-profit in 2015, signaling the expansion of the for-profit sector, the report says.
At the same time, just 8.5% of the sellers of home health care and hospice agencies in 2015 were not-for-profits. This indicates that the not-for-profits are neither growing in number, nor are they selling in big numbers, the report says.
A variety of factors may have contributed to the trend of slowing transaction volume and falling prices coinciding in 2015. Because several large acquisition targets are now off the market, for instance, the deals may have moved further downstream, and buyers may be rethinking their strategies.
Written by Mary Kate Nelson