Mega-Deals Drive Home Health M&A Spending Past $4 Billion Mark

Two blockbuster transactions in late 2017 contributed to a record quarter for home health M&A spending, according to the latest data from business intelligence firm Irving Levin Associates.

In November, two major home health providers—LHC Group (Nasdaq: LHCG) and Almost Family (Nasdaq: AFAM)—announced their intention to merge in an all-stock deal with a total implied value of $2.4 billion. The next month, insurance giant Humana (NYSE: HUM) announced that it is teaming with two private equity firms to acquire Kindred Healthcare (NYSE: KND), the largest home health provider in the nation. That $4.1 billion all-cash deal involved Humana buying a 40% stake in Kindred’s home health and hospice business. The home health part of the deal totaled $3.1 billion.

With more than $4 billion invested in total, M&A spending on home health and hospice reached record levels, Lisa Phillips, editor of Irving Levin’s M&A reports, told Home Health Care News.

However, on an annual basis, a record $5.9 billion was spent on home health and hospice deals in 2012. That record will stand, given that combined spending on home health and hospice for 2017 will be about $5.1 billion, Phillips said. The Irving Levin data goes back to 1997.

Despite the massive dollars invested, total transaction volume was down on a year-over-year basis in Q4. There were 16 publicly announced home health and hospice transactions in the fourth quarter of 2016, compared to 13 in Q4 2017.

In addition to the Kindred and LHC Group mega-deals, private equity firms also continued to invest in home care during the last three months of 2017. Deals included Silver Oak Services Partners’ acquisition of Caring People, a New York City-based private duty company.

Webster Capital was another PE firm making a move in the fourth quarter, acquiring a hospice based in Salt Lake City. Looking ahead to 2018, it appears that hospice is heating up.

Major providers such as Amedisys (Nasdaq: AMED) have announced their interest in expanding their hospice services as they build out a full continuum of care. However, PE firms are increasingly eyeing hospice opportunities as well, Jim Moskal, partner and global health care practice leader at Chicago-based M&A firm Livingstone Partners, told HHCN last month.

Written by Tim Mullaney

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Tim Mullaney on Email
Tim Mullaney
If he’s not in the newsroom, Tim likes to be on the tennis court or traveling to a new destination. Recent highlights include Sri Lanka and Iceland.

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