Home Health Care Dealmaking on the Rise in Early 2020

After somewhat of a down fourth quarter of 2019, home health care dealmaking is back on the upswing.

That’s according to the latest M&A update from advisory firm Mertz Taggart.

Overall, there were at least 13 transactions that included Medicare-certified home health companies in the first quarter of 2020, Mertz Taggart noted in its update. The total is more than double the six home health care transactions that took place in Q4 2019.

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Q1’s 13 transactions included BrightSpring Health Service’s deal for the home health and specialty infusion businesses of Advanced Home Care, in addition to a handful of moves by LHC Group Inc. (Nasdaq: LHCG) related to the company’s joint venture engine. 

While the most recent quarter’s home health deal volume was up, the total is somewhat misleading, according to Mertz Taggart. At least six of the 13 deals involving home health assets also included hospice, which has been a much hotter space as of late.

“The first quarter of 2020 saw more hospice M&A activity than any other quarter we’ve ever tracked,” Cory Mertz, managing partner of Mertz Taggart, said in the M&A update.

Looking at the home care world, there were at least seven transactions that took place in Q1 2020, two fewer than nine deals that took place in Q4 2019. In his firm’s M&A update, Mertz attributed the dip more to a lack of quality assets on the market than lackluster buyer interest. 

Q1 home care deals included Care Advantage’s acquisition of Amaisa Home Care, in addition to Arosa+LivHome’s purchase of Life Care Innovations.

Across home health, hospice and home care, there were at least 27 total transactions, according to Mertz Taggart.

While M&A activity throughout the first few months of 2020 has been steady, there’s no telling what might happen in coming weeks due to challenges and uncertainties tied to the COVID-19 virus.

When it comes to private equity buyers, investing may slow down or pause in the short term, but COVID-19 shouldn’t have a detrimental long-term impact.

In fact, the crisis could ultimately accelerate PE interest in post-acute care.

“You’ve got the ultimate infection control procedures in place if you’re keeping some vulnerable adults at home and segregated from others,” Ari Markenson, co-chair of the health and life sciences industry group at Winston & Strawn, previously told Home Health Care News. “But certainly — and this is a trend even irrespective of the outbreak — we’re going to see more home- and community-based services, period.”

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