Home health merger and acquisition activity continued at a healthy clip in the second quarter of 2018, with 21 publicly announced deals.
That’s up from 12 acquisitions in Q2 2017, according to newly released data from market intelligence firm Irving Levin & Associates.
On a quarterly basis, deal volume dipped slightly; there were 23 publicly announced transactions in the first quarter of the year.
Pricing was disclosed for only three of the Q2 2018 deals. The total for those three deals was $1.42 billion, with the bulk of that figure coming from the $1.4 billion acquisition of hospice provider Curo Health Services. Previously owned by private equity (PE) firm Thomas H. Lee Partners, Curo was acquired by insurance giant Humana (NYSE: HUM) and two PE companies, TPG Capital and Welsh, Carson, Anderson & Stowe.
That same consortium also has acquired Kindred at Home, the nation’s largest home health provider. Humana intends to eventually buy out its PE partners and own the combined Kindred-Curo entity, leveraging it to better manage its large population of Medicare Advantage beneficiaries.
“Despite reimbursement and regulatory headwinds, investor interest in the home health and hospice sector has heated up,” Lisa Phillips, editor of The HealthCare M&A Report, which publishes the data, stated in a press release issued Tuesday. “Many believe that hospitals and payers will be driving patients to receive care at home as opposed to post-acute facilities as a way to save on costs. Obviously, Humana thinks so.”
Those reimbursement and regulatory headwinds include the potential re-emergence of pre-claim review, as well as the coming Medicare payment revamp known as the Patient-Driven Groupings Model (PDGM).
These changes might be attracting private equity to the sector. PE firms like market disruptions, which can create opportunities for them to bring capital to bear and add value to companies, Mark Kulik, managing partner at M&A advisory firm The Braff Group, told HHCN in June.
Of the 21 deals in Q2 2018, private equity was the buyer in 10 transactions, including the major three-way merger of Jordan Health Services, Great Lakes Caring and National Home Health Care. Just four buyers were public companies, according to the Irving Levin data.
Written by Tim Mullaney
Companies featured in this article:
Curo, Great Lakes Caring, Humana, Irving Levin, Jordan Health Services, Kindred at Home, National Home Health Care, The Braff Group, Thomas H. Lee Partners, TPG Capital, Welsh Carson Anderson & Stowe
