This article is part of the HHCN+ membership
Today's turbulent legislative environment, including the proposal for Home Health Care and One Big Beautiful Bill Act (OBBBA) rules in 2026, is challenging the financial bottom of home-based care providers. However, most home healthcare leaders look at hope on the horizon and predict their positive outlook for 2025.
A common theme in the second quarter revenue report I reviewed this season was a balance of strong patient demand and an increase in the volume of service against ongoing reimbursement rate pressure and labor shortages. Companies are responding by streamlining operations, overhauling growth strategies, and diversifying payer mix.
Others are taking more dramatic measures or closure branches.
While several organizations have reported significant amounts of growth, they also note the continued pressure from reduced refunds and payer dynamics.
This week's exclusive member-only HHCN+ update shares my thoughts on the current financial environment of the home care industry and discusses decisions that some organizations are being forced to ensure a stable future for the workforce and patients. We provide analysis and key points, including:
Revenues from publicly traded home care companies are rising despite the struggle for how M&A changes as home health fees were reduced in 2026.
Despite rising revenues, rising challenges
One common theme during the second quarter revenue call for some of the industry's biggest providers is that the challenges of refunds are still not entirely clear, but warning signals are ringing, and the worst, but the best, is the time to want the best.
Enhabit Inc. (NYSE:EHAB) experienced a year-on-year decline in home health income due to a decline in the volume of Medicare patients. This closed or closed 11 branches, with at least two plans planned by the end of the year, and a voluntary early retirement programme. The company also saw the departure of CEO Barb Jacobsmeyer.
With this in mind, I was surprised that the company reported total revenue of $266.1 million and plans to open 10 new locations by the end of the year. One of the keys to Enhabit's success in this financially tough period was the payer strategy, according to Jacobsmeyer, which we will discuss later in this update.
Other organizations are confident in their ability to withstand the storm.
Pennant Group (NASDAQ: PNTG), for example, said that Medicare accounts for only a small portion of home health income, so the proposed home health regulations should have limited effects. Despite only a small impact from the cut, the company has taken an unprecedented approach to advocacy work, indicating that potential cuts are a serious concern.
They also announced plans to build a “center of strength” by acquiring home hygiene and hospice institutions sold by Amedisys (NASDAQ: AMED) and UnitedHealth Group (NYSE: UNH). Pennant leaders told HHCN that the home health regulations would not affect planned acquisitions.
To address labor shortages and increased costs, providers are making strategic investments in their labor force and leveraging technology to enhance operations.
Addus HomeCare (NASDAQ: ADUS) and Aveanna Healthcare (NASDAQ: AVAH) invest in caregivers wages and use technologies such as caregiver applications to support recruitment and retention efforts.
Aveanna reported that EBITDA increased the nearly 94% increase in EBITDA to $88.4 million for operational efficiency.
Despite the challenges, most home health providers remain optimistic about growth by focusing on the relationship between high-demand services and favorable payer.
Moderated M&A expectations
Home-based care organizations continue to expand their footprint, particularly in hospice care. Enhabit, Pennant and Addus all reported robust hospice growth in the second quarter. The private services segment was also a major driver of Abeana's growth.
Still, providers are showing signs of tension due to the 2026 home hygiene payment rules.
Through his third year of strategic change, Aveanna CEO Jeff Shaner highlighted “the continuing momentum of continuous momentum in all three operational sectors.” The company acquired Thrive's skilled pediatric care in April, and Shaner said the acquisition demonstrates Aveanna's dedication to expanding to new markets to support current market investments and growth.
Headquartered in Atlanta, Aveanna Healthcare offers pediatric and adult health care services including nursing, rehabilitation, occupational therapy, treatment services, day care centers, home hygiene and hospice care. The company operates 327 locations in 34 states.
In highlighting the recent acquisition, Shaner said in a call to Aveanna's second quarter revenues that it has suspended plans to acquire another home health business later this year, until the results of the proposed home health regulations are confirmed.
This coincides with predictions from Mertz Taggart. In its second quarter M&A report, the company highlights several reasons for the rise in home care transactions, predicting that some of the proposed Medicare home health regulations will decline.
“Demand is not consistent with the volume of trading seen in home hygiene,” said Cory Mertz, managing partner at Mertz Taggart, in a statement. “Buyers are eager to deploy cash on high-quality, skilled home health assets, but are required to do so in a more strategic and disciplined way than in the past few years.”
So, Addus HomeCare CEO Dirk Allison said he is cautious about M&A after a home-based care provider has acquired $21 million in support of home care services.
Addus trading plans have not been suspended. Allison said it will continue to evaluate its clinical and personal care transactions on the company's second quarter revenue.
Based in Frisco, Texas, Addus offers home care services, including personal care, hospice and home health to approximately 62,000 patients and clients, through 260 locations in 23 states.
Addus could be more powerfully positioned for expansion than Aveanna due to its recent acquisition of Gentiva's personal care operations, increasing the company's organic growth by more than 7% in the second quarter. Addus's personal care segment accounts for more than 77% of its business.
Brightspring Health Services highlighted the rapid growth of all business units in its second quarter revenue calls, as not all companies show the same bullishness.
Chairman, president and CEO John Rousseau said Brightspring's approach to home health is “stable but measured growth.” He also said it is not “the large-scale home health provider of today,” but it has expanded into space over time, but he thinks it is an interesting time to become a provider growing into space.
I agree with that feeling. That also feels like an understatement.
Based in Louisville, Kentucky, Brightspring Health Services offers integrated home and community-based pharmacy and healthcare solutions for a complex population that requires professional or ongoing care. The company operates in all 50 states.
Based on executive perspectives on second quarter calls, home-based care transactions will not halt anytime soon, but they may stomp. Providers that continue to grow through acquisitions in 2025 will know if those who progress with more attention will benefit the most.
Evolving Providers – Wage Dynamics
Finally, businesses are focusing on partnering with payers to reduce costs and provide value.
Aveanna expanded its preferred payer agreements to allow for greater investment in the workforce.
According to Jacobsmeyer, Enhabit strengthened its position by reviewing its payer strategy, securing an episode redemption agreement with most of its payer partners while renegotiating several contracts.
The company has successfully renegotiated several contracts and secured episode redemption agreements with most of the payer partners, but recently it has faced “confusion” in one payer relationship. Furthermore, we believe that the company's size, size and technology investments will allow management to withstand reduced refunds.
According to Mertz Taggart, insurers also reported an increase in the use of home health services, indicating an increase in demand among payers.
From that perspective, Humana Inc. (NYSE: HUM) revised its full-year forecast for 2025, showing greater confidence in the increase in revenue remaining for the year, highlighting the results of the “solid” Q2. The company highlighted multi-year transformation focused on scalable growth, cost reductions and technology integration during its second quarter revenue calls.
Combining the provider's payment strategies and increasing demand for services, the evolving payer strategies and payer strategies and the rewards from increasing demand for services demonstrate the industry's resilience. Patients still prefer to care at home, and providers can innovate to withstand headwinds, but may not have permanent scars in the form of closures or other structural changes.
Unite for a cause
Overall, the home healthcare industry is united in raising concerns with the Centers for Medicare and Medicaid Services (CMS), highlighting the detrimental impact of payment reductions on patient access to care and advocating for payment adjustments that reflect the overall financial situation and an increase in healthcare shifts to homes.
In the quarterly revenue calls, leaders highlighted the serious financial burden caused by cuts and disproportionate burdens on providers, compared to other payers, and the risk of home healthcare closures, ultimately hurting Medicare beneficiaries.
Home health institutions such as the National Alliance for Care at Home (The Alliance) have submitted public comments against payment cuts. Industry groups are also urging CMS to adopt a more comprehensive approach to payment adjustments, taking into account the broader payer landscape, including inadequate rebates from MA and Medicaid as well as traditional Medicare.
As lawmakers expect, if results are not taken at the voting booth, midterm elections could affect these changes in interest rate cuts. At the very least, we hope that efforts from the home care industry will not be overlooked and lawmakers will be willing to work with providers to grow the ageing population. Or we hope to see more dramatic moves from home care providers next quarter.
As Jacobsmeyer said in Enhabit's revenue, “It goes without saying that if CMS does not change extreme positions, something has to be given.”
