Home Health, Hospice Still Have Highest Multiples in All of Health Care

Health care dealmaking is on a blistering pace in 2021, with particular action around the home health and hospice spaces.

And while transactions are being driven by private equity firms with plenty of dry powder, they’re also propelled by regulatory shifts, emerging care models and the transformation of the sector, a new mid-year dealmaking report from PricewaterhouseCoopers (PwC) reveals.

“Pandemic progress means dealmakers are starting to refocus on pursuing competitive advantage,” Nick Donkar, PwC’s U.S. health services deals leader, wrote in the report. “We see investors adding capabilities and rethinking ecosystems, with a laser focus on value and patient-centricity.”


With at least 352 health care deals, the fourth quarter of 2020 saw the highest quarterly deal volume ever, according to PwC. That record didn’t stand for long, as there were at least 426 transactions in the first quarter of 2021.

In the 12 months ended May 15 of this year, there were at least 1,304 health care deals. Of those, at least 95 were for home health and hospice assets, a 16% increase compared to the same 12-month period a year prior.

Although that volume is certainly impressive, home health and hospice more so stood out in terms of deal value. 


The long-term care and physician groups sub-sectors recorded at least 330 and 285 deals in the 12 months leading up to the middle of May, for instance. Collectively, the over 600 individual deals came in at a value of $11.8 billion, according to PwC.

The 95 home health and hospice deals — a far lesser total — were valued at a combined $11.8 billion as well.

“EV/EBITDA multiples have dropped slightly in just three subsectors: managed care; labs, imaging and pharmacy; and ambulatory care, rehabilitation and dental,” the PwC report described. “At [26.2 times], home health and hospice’s multiple is still the highest in the sector, by far.”

In comparison, the sector-wide mean enterprise value to EBITDA multiple for the 12 months through May 15 was 16.1 times.

There are several reasons why the home health and hospice sub-sectors own the highest multiples in all of health care.

For starters, seemingly everyone — from PE firms, health systems and insurers — is actively trying to “own the home.” That trend began long before the COVID-19 pandemic, with most viewing home-based care as an essential tool for lowering U.S. health care spending.

Since the pandemic, the federal government has also started to support home-based care as an alternative to facility-based care.

Among the major home health deals to take place within the 12 months prior to May 15 was Humana Inc.’s (NYSE: HUM) move to acquire its remaining stake in Kindred at Home from TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) for an “all-in” financial commitment of about $7.1 billion. Announced in April, Humana expects the deal to close sometime during the third quarter.

Also within that window was ModivCare Inc.’s (Nasdaq: MODV) acquisition of Simplura Health Group. Announced in September and finalized in November, the transaction placed a $575 million enterprise value on Simplura, formerly owned by One Equity Partners.

“We bought something that had a degree of materiality to it,” ModivCare CEO Daniel Greenleaf recently told Home Health Care News. “We didn’t want to do a $10 million company, then another $10 million company. We really wanted to get into this business in a big way.”

Beyond pure acquisitions, the early part of 2021 has seen its fair share of both traditional and SPAC-driven IPOs in health care, PwC’s report pointed out.

Home-based care-related IPOs include those from Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) and InnovAge (Nasdaq: INNV).

“Looking ahead, we anticipate ongoing interest in the public markets, given recent activity,” the PwC said. “For years, there were no pure health services IPOs, but 2021 has already seen four. This count excludes SPAC-backed IPOs, of which there have been at least 10 in the 12 months through May 15.”

In reality, it’s not just health care dealmaking that’s hot in 2021.

From 2016 through 2020, annual U.S. deal value averaged about $1.8 trillion per year. Through May 2021, deal value was already $1.4 trillion, according to PwC.

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