After months of home health trading uncertainty sparked by the largest-ever proposed cut to Medicare's home health benefit, a looser-than-expected final rule paves the way for increased investor confidence in the sector in 2026.
Meanwhile, the non-medical home care industry reported some strong trading quarters, but had its weakest trading quarter in 2025, according to a report from M&A advisory firm Mertz Taggart.
“There are a number of highly acquisitive, sponsor-backed portfolio companies in this space that are gearing up for exit in 2026, meaning they are looking to bring a few more companies onto their platform and add additional cash flow before going to market,” Corey Mertz, managing partner at Mertz Taggart, said in a statement. “We are also seeing increased interest in private home care from strategic acquirers looking to diversify their payer mix.”
Demand for private services has increased dramatically in the pediatric field, experts previously told Home Healthcare News, but treating the population comes with unique challenges.
In the non-medical home care sector as a whole, the number of deals closed continued to slow each quarter, with the number of deals closed falling to 11. Notable deals include Amivie's acquisition of Atrio Home Health Care, NexPhase Capital's acquisition of Always Best Care, and Addus Homecare's $7.4 million acquisition of Texas-based Del Cielo Home Care Services.
Adas CEO Dirk Allison previously said of the deal, “This transaction continues our acquisition and development strategy to enhance our geographic reach and density in Texas.” “Going forward, our development team will continue to focus on both clinical and non-clinical acquisition opportunities to increase both our current state density and geographic coverage.”
While greater certainty in the home health sector is likely to lead to more deals, only three deals were completed in this space in Q4 2025, the same number as in Q4 2024.
“Some buyers who were previously hesitant to take risks due to the level of uncertainty are starting to feel comfortable looking at home health assets again,” Merz said.
Specifically, VitalCaring Group acquired Traditions Health's home health business, adding five states to the provider's footprint.
Meanwhile, hospice deals reached their highest volume since 2021, with a total of 16 deals completed during the quarter. Concerns about Medicare clawbacks have led to wariness about transactions in this area, and Mertz recommends premarket audits for hospice operators considering transactions within the next two to three years.
Across the home care sector, lower interest rates kept buyers interested in closing deals.
“While there were some new curveballs throughout 2025, including macroeconomic uncertainty, a new administration looking to shake things up, regulatory concerns about CMS home health rules, and increased oversight of hospice compliance, M&A activity remained relatively strong as the Fed continued to lower interest rates and buyers saw an opportunity to deploy the dry powder they had been hoarding,” Merz said.
