Despite Muted M&A To Start Year, Private Equity Still Pursuing At-Home Care

This week brought some big news in the at-home care space, with the acquisition of BrightStar Care by a private equity firm.

The deal is not the only PE-driven transaction to make headlines this year, with other examples including Renovus Capital Partners’ investment in Superior Health Holdings and Levine Leichtman Capital Partners’ acquisition of SYNERGY HomeCare.

Yet, overall activity is more muted than some market watchers expected at the outset of 2025.

Analysts had predicted a resurgence in health care deals in 2025, fueled by falling interest rates, increased capital reserves and expectations that the Trump administration would take a more favorable stance on PE investment. However, increased regulatory scrutiny, concerns about care quality and a negative perception of PE involvement in health care sectors, and question marks related to public and economic policy could be constraining activity.

“The [private equity] industry is certainly anxious to make deals, but the year’s early slowdown in M&A activity globally suggests that the dreaded U word (uncertainty) continues to keep markets on edge,” Bain & Company analysts wrote in a piece published Monday. “With inflation and interest rates in the balance, investors are looking for clarity amid back-and-forth signals regarding tariffs and other macro issues.”

Data shared today by Irving Levin Associates showed 114 healthcare transactions in the firm’s database for February. That’s a 49% decline from the number of deals announced in January 2025 and a 17% year-over-year decline. Private equity accounted for 31% of the deals, just a tick higher than the 30% of health care deals that PE drove in February 2024.

“If healthcare M&A activity of February 2025 is any indication for how the rest of the year will play out, 2025 may not be a year of strong activity,” the firm noted.

“There have been limited announcements, that’s true,” Kristopher Novak, managing partner at The Braff Group, told Home Health Care News. “However, I believe activity and interest remain on the upswing. Several strategic groups are digesting integrations from 2024 or continuing to build toward increased M&A activity, which may explain why announcements are lighter than anticipated. There is a reason for optimism, and we continue to be positive about the overall M&A market in home care as we move through the year.”

Optimism remains

As of Feb. 3, Pitchbook reported that 14 home care acquisitions had been completed in 2025. While most of these deals were likely initiated in 2024, they signal a promising start to the year.

Historically, home care has drawn PE firms due to its consistent demand, growing aging population, and an increasing preference among Americans to age in place and receive care at home rather than in assisted living or nursing facilities.

Additionally, private duty companies aren’t as impacted by staffing shortages related to skilled nursing labor, as their services are non-medical. Furthermore, many state Medicaid programs reimburse home care through home- and community-based service waivers.

“It’s still early, but we’re on track for a strong Q1 2025 transaction volume,” Cory Mertz, managing partner at Mertz Taggart, told HHCN. “So far in Q1, we’ve seen at least 20 home-based care deals close. We’re not yet two-thirds of the way through the quarter, so if the current pace of deals continues, we could have the best quarter since Q4 2023, which saw 36 transactions. Of the 20 deals we’ve tracked, 17 involved private equity.”

Ben Bogan, a partner at Stoneridge Partners in Louisville, Kentucky, noted that while PE firms may have experienced some initial hesitancy due to concerns about Medicaid reimbursement and staffing, interest in opportunities remains strong.

“We’re still seeing significant interest from PE,” Bogan stated. “They are actively looking for opportunities. While some may be hesitant or cautious, many are not. There are numerous PE firms and relatively few opportunities in this space compared to others. Issues related to Medicaid reimbursement and staffing have always existed, so we haven’t observed any slowdown in interest at all.”

Despite regulatory challenges and high interest rates, PE firms continued to invest steadily in U.S. health care companies in 2024. The Private Equity Stakeholder Project (PESP) tracked 39 deals in home health and 23 deals in home care in 2024, marking a 26.5% increase from 2023. Over the last five years, PE firms have invested nearly $70 billion in this sector, according to Pitchbook.

Different varieties of private equity

Private equity firms vary greatly in their scale and in the extent of their involvement in the at-home care sector, Bogan emphasized. These factors also need to be considered when trying to anticipate market activity.

For instance, PE firms that aren’t in the space currently and are looking to make an initial platform investment might be concerned by uncertainty around Medicaid policy or other issues. However, the situation is different for firms that are already invested in at-home care and pursuing a growth strategy.

“Those with a platform, that are in the midst of a roll up, they need to continue to execute on their plan, and they’re going to continue to be to be active regardless of what’s going on out there externally,” Bogan said.

Furthermore, he observed that while large deals will be announced publicly, smaller tuck-in transactions are less likely to be trumpeted via a press release, and they might not be counted in publicized tallies of private equity deals.

And he emphasized that transactions closing in the first quarter of 2025 likely were agreed to months ago. So, if investors are indeed getting cold feet right now, that won’t be reflected until well into the future.

“Anything that you’re seeing about hesitancy now won’t have an impact for another six, 12, 18 months,” he said. “Anything that you’re going to hear about [closing] now – January, February, March, the first quarter of 2025 – those decisions were made long ago.”