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Home health and hospice, which have been consolidating for many years, are in the midst of a surge in acquisition demand.  Reimbursement is comparatively stable, and population management and coordinated care initiatives have placed an even greater value on these services.  In particular, this has spiked interest in private duty and Medicaid and state funded agencies, segments that had previously been relegated to the sidelines. Private equity has doubled down on the space, and a new breed of non-traditional buyers have entered the fray, with new money – and new reasons – to acquire home health and hospice, setting the stage for another long run of M&A activity.

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Mark A. Kulik, M&AMI, CM&AP

Managing Director

Phone : 888-922-1838
Email: mkulik@thebraffgroup.com

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Bob Leonard , MBA

Managing Director

Phone : 888-922-1836
Email: bleonard@thebraffgroup.com

Market Data

In aggregate, home care has produced a remarkably steady volume of transactions over the past decade.

As coordinated care initiatives have cast home health, home care, and hospice as perhaps the best site to monitor patient health and prevent re-hospitalizations, private equity has seized the opportunity to lead the charge.

After producing plus/minus 80 deals between 2009 and 2014, deal volume has slipped over the past four years. The reasons? After a long stream of elevated deal flow, the supply of acquisition candidates is finally shrinking.

While certified home health deal volume has been down over the past five years, it is by no means a  referendum on interest in the space as evidenced by robust activity from private equity sponsors.

Hospice deal flow is on the rise as we get closer to the implementation of home health PDGM and the attendant uncertainty and market disruption.

2019 has yet to produce a new market-entry platform deal.  As overall interest in hospice has surged given uncertainty regarding Medicare PDGM, we suspect this is an anomaly and/or a function of a limited supply of sizeable acquisition candidates.

Although after four years of heightened activity, we may be seeing a fall-off in deal flow, private duty/private pay has seen the most dramatic change in deal flow. This is largely attributable to buyers seeing PD as a key to preventing re-hospitalizations.

In home personal care services continues to be seen as a valuable tool to ward off more costly acute care services.  However, with a relatively small pool of sizeable acquisition candidates, we are seeing a modest decline in PE activity.

We continue to see elevated activity in Medicaid home care. This is particularly so in pediatric Medicaid as private equity sponsors look to duplicate the success of Epic.

Although we have seen a modest decline in follow-on activity, sponsors continue to seek out market-entry platform deals in Medicaid.

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