Home care transactions remained stable overall in the second quarter, but home health and home care trends continue to change.
According to a new report from Mertz Taggart, non-health home care transactions are driving the total number of transactions in the home care industry. Meanwhile, the proposed home health Medicare payment cuts are overshadowing future transactions in the industry.
“Our home care M&As other than medical care is spent time,” Cory Mertz, managing partner at Mertz Taggart, said in a statement. “We are more clear about OBBBA, and the impact on non-health home care will be less than many fears. The return of the DOL's proposed dating exemption and the multiple portfolio companies preparing for exits in the coming months will also serve as catalysts.”
Overall, 26 home care transactions were completed in the second quarter. This has shifted relatively steadily from 30 transactions in the first quarter.
Non-health home care accounted for 15 transactions, nine of which were involved in sponsored portfolio companies.
Pennsylvania-based Active Day and Chicago-based Feasterville-Trevose were particularly active in-home care players in the second quarter, with both providers shutting down in three deals. Active Day acquired three South Carolina-based businesses in the second quarter: Allcaregivers, New Generations Home Care of Florence and Goldencare. Help At Home also acquired three businesses in the quarter, including home care in Central Florida.
Seven from-home hygiene transactions were announced in the second quarter, including four sponsor-backed strategic transactions. While the number of home hygiene transactions had fallen slightly from the eight transactions that closed in the first quarter, Mertz suggests that the proposed Medicare home health regulations could debilitate some ongoing transactions. Mertz called the proposed cut “a very disappointing, but not a major surprise.”
Notable Q2 deals include the acquisition of Livewell Partners' Empower Home Health Services and Aveanna Healthcare Holdings (NASDAQ: AVAH) of $75 million skilled pediatric care.
“The volume of transactions seen in home hygiene is not consistent with demand,” Mertz said. “Buyers are eager to deploy cash on high quality, skilled home health assets, but they require that they do so in a more strategic and disciplined way than they have last few years. Quality assets that have recently come to the market enjoy a strong valuation.
