Home Health & Hospice M&A Rebounds

There’s nothing sleepy about the Home Health & Hospice sector. Through the end of July 2016, this market has seen 35 transactions, putting this year on track to beat 2015’s total of 51 deals. Eleven of these 35 deals disclosed prices, totaling approximately $610 million spent so far this year.

Sixty-percent of 2016’s home health & hospice acquirers have been other home health & hospice companies, with the busiest players being LHC Group (NASDAQ: LHCG) and privately held Jordan Health Services with two and three acquisitions, respectively. Five separate private equity firms announced five acquisitions, and Kindred Healthcare (NYSE: KND) announced four acquisitions in this time period.

This sector experienced a steady rise in acquisitions, climbing nearly 80% between 2011 and 2014. This increase came to a halt in 2015, with a 30% decline in deal activity. This slowdown is somewhat of an anomaly, seeing as most trends in providing care are pushing to expand home and community-based care or incentivize providers to become part of a post-acute network.

Government spending on home health care services is projected to increase by at least 6% annually through 2026, the year that the first baby boomers reach the age of 80. According to the Centers for Medicare and Medicaid Services (CMS), spending on home health care increased 17%, from $71.1 billion in 2010 to $83.2 billion in 2014, the last year for which data is available. CMS projected spending would reach $86.5 billion in 2015.

The aging population, coupled with the prevalence of chronic health conditions of that population and quicker hospital discharges, are all factors that would augur more M&A activity.

We’ll explore this sector’s M&A trends in our next webinar, “Home Health & Hospice: Buying, Selling, Valuing,”  on Thursday, August 18, 2016, at 1:00 p.m ET. Register for it here, and keep up with the market.



Leave a Reply

Your email address will not be published. Required fields are marked *