Home health and hospice mergers and acquisition activity increased by 20% in the second quarter over the first quarter, but deals were down 14% compared with the second quarter of 2022, according to recently released data from LevinPro LTC.
Private equity firms or their portfolio companies represented 33% of the buyers in home health and hospice in the second quarter of this year.
Home health deals exceeded deals in home hospice, palliative care and durable medical equipment/respiratory home care. Home health saw 12 deals last quarter, compared with five deals each in the other markets.
By comparison, the number of publicly announced senior living and skilled nursing-related mergers and acquisitions increased by 11% during the second quarter of the year, according to information separately released by LevinPro LTC.
“We saw a significant uptick in deal activity for home health agencies and providers,” Dylan Sammut, healthcare editor at Irving Levin Associates, said in a statement. “Demographic tailwinds have drawn interest from a wide range of buyers, from health insurance giants to major corporations. It has created a very active market.”
Announced spending increased from $395 million in the first quarter to $3.87 billion in the second quarter.
The largest deal by disclosed price in the quarter was Optum’s $3.3 billion ($100 per share) acquisition of Amedisys, a provider of home healthcare, provisional medical staffing and primary care in rural areas and outpatient surgery services, in June. Financial experts told McKnight’s Home Care that the transaction secures home care as a desirable area of the healthcare continuum.
Also in June, The Pennant Group, based in Eagle, ID, acquired Bluebird Home Health, Bluebird Hospice and Bluebird Home Care. The companies provide skilled home health, private-duty and hospice services across southwestern Idaho.
During an earnings call with investors in May, Pennant CEO Brent Guerisoli said that the company planned to build on the momentum of the past four quarters and keep investing in its home health and hospice operations. Pennant President and Chief Operating Officer John Gochnour noted at the time that deals would be forthcoming, with a home health and hospice pipeline “ripe with opportunities.”
LevinPro LTC also noted that Reliable Medical Supply was among the busiest acquirers in the home health and hospice arena in the second quarter, focusing mainly on acquiring durable medical equipment companies.
As for the future, Sammut noted that the possibility that the Centers for Medicare & Medicaid Services could decrease Medicare reimbursement for home health services next year “could slow the industry in the future, but for now, there’s plenty of opportunity for investors.”
