A greater supply of home health and home care businesses is fueling an increase in dealmaking activity, according to the latest M&A update from advisory firm Mertz Taggart. That’s also true for hospice transactions.
Overall, there were at least 44 home health, home care and hospice deals in the third quarter of 2021, three more than the previous quarter and 20 more more than Q1. Over the past three years, only the final quarter of 2020 saw more transaction activity, the Mertz Taggart update notes.
While deal numbers are up, the spike has little to do with a newfound interest from buyers or skyrocketing demand, Mertz Taggart Managing Partner Cory Mertz explained in the update.
Instead, ongoing industry burnout, the possibility of a capital-gains tax increase and the looming Home Health Value-Based Purchasing (HHVBP) Model expansion are generating stronger supply.
“All three sub-industries remain strong, but the increased activity has little to do with increased demand,” Mertz said. “Demand has been strong for several quarters and continues. This is a supply-driven market.”
There were at least 16 home health-related deals in Q3 2021, the same as in the second quarter of this year.
Just a few of them: In July, the Visiting Nurse Association (VNA) sold its home health and hospice operations to Amedisys Inc. (Nasdaq: AMED), while LHC Group Inc. (Nasdaq: LHCG) purchased Cavalier Healthcare Services in August. In September, LHC Group also announced the acquisition of 23 home health locations, 11 hospice agencies and 13 therapy businesses from the venture between Brookdale Senior Living Inc. (NYSE: BKD) and HCA Healthcare (NYSE: HCA).
Meanwhile, there were at least 18 home care-related transactions in Q3 2021, according to Mertz Taggart. That was slightly less than the 19 home care deals that took place in the previous quarter.
Major home care deals, for example, included Honor’s acquisition of Home Instead Senior Care and ModivCare Inc.’s (NYSE: MODV) $340 million purchase of CareFinders Total Care.
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