Home Health, Hospice Sectors Still Among M&A Leaders In 2022

While there may not have been as many traditional deals in home health care and hospice this year, some large ones have still brought total deal values above 2021 levels.

That’s according to a recent report from PwC’s Health Research Institute, which also suggests that home health and hospice is one of only two subsectors that saw growth in announced deal value compared to 2021.

Specifically, there were 114 home health and hospice deals in the 12 months examined by PwC, which ended on Nov. 15. Those deals contributed to a 74% increase in deal value from 2021.


Of course, the two deals that mattered most – at least in terms of total deal volume – were UnitedHealth Group’s (NYSE: UNH) pending acquisition of LHC Group Inc. (Nasdaq: LHCG) and CVS Health’s (NYSE: CVS) pending acquisition of Signify Health. Those deals were worth about $6 billion and $8 billion, respectively.

CVS Health’s deal for Signify is expected to close in the first half of 2023, while UnitedHealth Group’s deal for LHC Group is expected to close in the first quarter of the new year.

Also of note for the home-based care world, but not considered a home health or hospice deal specifically, was VillageMD’s acquisition of Summit Health-City MD for $8.9 billion. VillageMD – backed by Walgreens Boots Alliance (Nasdaq: WBA) – also has its Village Medical at Home division. The company is a major proponent of primary care at home.


In terms of health care services overall, deals also increased, but PwC did mention that deals have tapered off a bit thus far in the fourth quarter. Over 250 deals had been announced through Nov. 15, while 307 had been announced during that time period in 2021.

“Year-over-year deal volumes increased in each quarter through Q3-22,” PwC wrote. “While deal volumes have continued to increase, deal values have declined from the peak set in 2021, a function of smaller value roll-up and platform add-on transactions representing a greater portion of activity in the current year.”

Industry wide, enterprise value and EBITDA multiples have also declined since peaks at the end of 2021.

“As of Nov. 15, the average multiple across health services sub-sectors was 14.4x, down from 15.9x as of Dec. 31, 2021 and 14.9x as of Dec. 31, 2020,” PwC wrote. “Multiples dropped in four of the seven sub-sectors whose multiples we track, led by outsourcing (down from 19.2x to 15.0x) and managed care (down from 17.3 to 14.2).”

This is a trend that has also come to fruition in home health and hospice.

“Buyers typically look forward in their evaluation,” Mark Kulik, senior managing director of The Braff Group, said earlier this year. “They factor in rate changes, and they try to estimate different depressants to a business. Sellers typically look backward. That difference of forward versus backward creates a valuation gap that I think we’re going to see for a period of time.”

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