Home-Based Care M&A Volume Mostly Flat At End Of 2022

Home-based care’s deal volume remained flat in the fourth quarter of 2022, ending a slow year overall for transactions.

The quarter saw at least 24 completed transactions, right on par with Q3’s 25 deals, but was lower than previous years in the home-based care space, according to a report from M&A advisory firm Mertz Taggart.

Volume was down about 40% and 30% from 2021 and 2020, respectively. In total, 2022 saw a little more than 100 transactions, which is in line with pre-pandemic levels.


Because of the drop off, M&A experts believe that 2020 and 2021 were outlier years, driven by significantly more quality opportunities in the marketplace.

“Demand for quality providers remains very high,” managing partner Cory Mertz said in the report. “As a result, the lower M&A transaction volume, at least in the sub-$100 million range, has been primarily seller-driven. Generally speaking, buyers have become more disciplined, however, as their cost of capital has gone up.”

In the fourth quarter, there were at least 11 Medicare-certified home health transactions, up slightly from quarters two and three. The reason Q4 didn’t see a sharp decline from previous quarters is partially due to the final rule being more favorable than anticipated.

Source: Mertz Taggart

The somewhat surprising increase to 2023 home health payments of 0.7%, or $125 million, from the U.S. Centers for Medicare & Medicaid Services (CMS) in October likely served as a short-term catalyst for home health M&A transactions, Mertz Taggart reported.

However, buyers will likely remain cautiously optimistic in 2023 as they evaluate the landscape. Particularly, those buyers are likely to look for providers that are well-positioned for 2024 and the Home Health Value-Based Purchasing (HHVBP) performance years.

Transactions in Q4 included Enhabit’s acquisition of Southwest Florida Home Care’s Fort Myers location; Addus’ acquisition of the Chicago-based Apple Home Healthcare and the Pennant Group’s acquisition of the assets of the Wisconsin-based Kenosha Visiting Nurse Association.

Personal home care, on the other hand, finished the year on a downward trend. There were nine transactions completed in Q4 and 49 in 2022 overall.

“If you look historically, 2021 was the outlier for personal care,” Mertz wrote. “However, 2022 is stronger than the previous years. The bullishness is buoyed by the evolving health care eco-system focused more closely than ever on value-based care for our growing elderly population.”

Source: Mertz Taggart

Care Advantage was active in Q4, completing two transactions in the quarter, both in Virginia.

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