Compliance And Scarcity Define The Next Wave Of Home-Based Care Dealmaking 

Compared to the dealmaking frenzy of five years ago, home-based care M&A is entering a new phase defined by more selective buyers and a greater emphasis on clinically strong, compliant providers, industry experts told Home Health Care News.

Buyers emphasizing geographic density and quality outcomes in dealmaking could accelerate dealmaking into the next year and beyond.

“If you have a squeaky-clean company, you’re doing everything right, the accounting is accurate; those tend to still command premium values,” said Cory Mertz, co-founder and managing partner of Mertz Taggart. “It’s the, for lack of a better term, average or below-average companies that had transacted in the past that just aren’t selling right now.”

Fort Myers, Florida-based Mertz Taggart is a healthcare M&A advisory firm.

In 2021, inexpensive capital and a more aggressive acquisition environment dominated the home-based care M&A space, said Les Levinson, partner and co-chair of the transactional health law group at Robinson+Cole. Low interest rates also allowed private equity firms and other buyers to finance deals heavily with debt.

That dynamic has since shifted. Buyers now must commit more equity to transactions, making deals more expensive and requiring private equity firms to deploy more capital or pursue acquisitions more selectively.

Founded in 1845, Hartford-based Robinson+Cole is a law firm specializing in business transactions, health law, real estate, development and other sectors.

Dealmaking performance has since cooled this year. In particular, the first and second fiscal quarters of 2026 showed weaker-than-expected performance, largely due to macroeconomic conditions, Levinson said.

“Interest rates, global disruptions, really had much more of a chilling effect than I think people gave credence,” Levinson added.

Despite the downturn in M&A activity, an August report from the Pittsburgh-based Braff Group found that home-based care dealmaking is gaining momentum. Deals could spike in volume and transactions, with momentum potentially carrying through to 2027, the report stated.

That momentum could be fueled by investors’ interest in keeping care costs low, making home-based care companies attractive, said Jason Growe, founder and chief development officer of LiveWell Partners.

“There’s a lot of investor capital that is looking to be deployed, and home-based care is an attractive place to look,” Growe said. “It is cheaper to care for someone in the home, and the patient and person would rather receive their care in the home.”

Growe agreed that M&A activity is on the upswing, though the industry has not reached the peak dealmaking frenzy of about five years ago. However, today’s deals are of higher quality than in the past in terms of profit and loss (P&L) and quality of care, Growe said.

St. Louis, Missouri-based LiveWell Partners provides home health and hospice services across Illinois, Kansas, Missouri, Michigan and Ohio.

Moratoria, rate increase and compliance

Buyer demand remains strong, Mertz said, though purchasers have become more selective amid heightened audit and clawback concerns. That selective pressure is spurred in part by the Centers for Medicare & Medicaid Services’ (CMS) home health Medicare enrollment moratorium.

The moratoria, designed to reduce Medicare fraud, will benefit existing, compliant home care companies looking to sell, Levinson said. Since new companies cannot enroll in Medicare, existing ones will become more enticing deal targets.

“One of the unintended consequences of the moratorium is that people are beginning to realize, there’s a scarcity factor, and existing home care agencies that have been around for a while and meet the moratorium standards… are going to be available to transact,” Levinson said.

The true winners will be the most compliant companies, Levinson, Growe and Mertz said.

“The regulatory compliance feature has always been the most important,” Levinson said. “It’s the factor most likely to either hold value [or] to cause a deal to have a hiccup or fall off the rails, or to maybe get you an increased value.”

A company’s compliance affects how they behave in transaction deals, Levinson added. “Buttoned-up” organizations with strong compliance and the ability to answer questions quickly and authoritatively create confidence in the buyer. However, companies who respond to questions with uncertainty about their compliance practices tend to make buyers anxious.

Compliance issues are a growing concern as regulatory requirements increase, Growe said. For instance, LiveWell recently acquired Michigan Community VNA Home Health and Hospice in July. The acquisition marked LiveWell’s third M&A deal in the state.

In both the Michigan Community VNA acquisition and prior deals, LiveWell has been focusing on compliance above all else.

“[Over] the past couple of years, we really increased our focus on compliance issues and due diligence,” Growe said.

Future M&A activity

CMS’ proposed Medicare home health payment rule also positions home health care companies as increasingly attractive. In July, the CMS proposed a 2.4% aggregate pay increase to home health payments.

“Because the proposed rule out of the gate was more favorable than expected, there is more certainty around what’s going to happen in 2027,” Mertz said. “The coast is fairly clear for the next 12 months until the next proposed rule comes out.”

Growe predicted that the velocity of the industry’s deal pipeline is set to accelerate over the next two to three years.

Demand has also increased for Medicaid-reimbursed personal care and private duty nursing, Mertz said, because those programs are run by states.

Buyers are also set to change geographic tactics, Levinson said. In 2021, he noted a trend of buyers acquiring companies “all over the place,” creating integration challenges.

Buyers will increasingly focus on creating regional clusters or enhancing existing regional clusters, Levinson said.

LiveWell is one example of a company taking a density-first mindset. Growe said that LiveWell is working to build density within the Midwest. Beyond that, company leadership plans to build density within the existing states it already operates in.

“We believe in geographic density,” Growe said. “We think that is the way to build a great company as opposed to a smattering of plots on one map.”

The long-term success of an acquisition hinges on evaluating a potential acquisition’s workforce, Growe added. When vetting potential targets, Growe views clinical excellence as the driver of financial durability. He examines branch-level leadership, clinician culture and patient satisfaction when evaluating potential deals.

“Our job is to identify the right partners that share our belief that great clinical care starts with great clinical teams,” Growe said. “If we can build that team together and focus them on delivering high-quality outcomes and elevated patient experiences, the P&L will eventually follow.”