Interest in Standalone Home Health Agencies Appears to Be Waning

Increasingly, home health providers have worked to expand their service offerings to care for patients on a more longitudinal basis. Mergers-and-acquisitions activity in the second quarter of 2020 reflected that trend.

Specifically, Q2 saw a number of deals that consisted of home health care and hospice pairings, according to the latest monthly M&A report from advisory firm Mertz Taggart.

Overall, Q2 2020 saw a drop in M&A activity, as prospective home health buyers had to navigate both the impacts of the COVID-19 emergency and the Patient-Driven Groupings Model (PDGM). There were a total of five home health transactions, with two of the deals paired with hospice, according to Mertz Taggart data.


There were 18 home health, home care and hospice deals in total. That number is a decrease compared to Q2 2019 when there were 27 total transactions.

The decline of standalone home health deals is something that may continue for the coming months, Cory Mertz, managing partner at Mertz Taggart, told Home Health Care News.

“In the short-term, we will see fewer standalone home health deals,” Mertz said. “Buyers will want to see how agencies perform under the new payment model before making a competitive bid. They’ll need at least a few months of data and financial performance to do a thorough evaluation and submit an offer.”


The home health and hospice deal pairings are in line with the overarching strategy of most of the larger providers, which is to provide care for their patients across the post-acute continuum, he noted.

Amedisys is one example of that trend.

Over the past few years, the Baton Rouge, Louisiana-based provider has aggressively gone after valuable hospice targets, with deals including a $235 million acquisition of AseraCare Hospice. Historically a home health care giant, Amedisys is also now one of the five largest hospice providers in the country.

“All of the big providers have their eyes set on providing both home health and hospice in each of the areas they service,” Mertz said. “Most of the larger transactions over the past 24 months have been the traditional public home health companies acquiring hospices that have some geographic alignment with their home health [businesses]. This allows them to capture referral synergies and generate additional business. It also helps prepare them for future value-based and risk-sharing payment models.”

For many larger home health providers, these deals mean becoming one-stop-shops for care needs.

Hospice’s relatively stable regulatory environment has made it an attractive acquisition asset for buyers, too.

The standalone home health deals that did take place during the second quarter were highly-targeted, strategic deals, according to Mertz.

One such deal was the joint venture formed between LHC Group Inc. (Nasdaq: LHCG) and Orlando Health in Florida. The JV agreement is slated to close on Aug. 1.

The JV agreement allows LHC Group to further strengthen its Florida presence. LHC Group will acquire majority ownership and assume management responsibility of three current Orlando Health providers.

“This is in line with LHC’s hospital JV strategy,” Mertz said. “The other [standalone home health deals] were relatively small but allowed the buyers to further expand into an existing or contiguous geographic service area.”

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