New Day Healthcare is an active acquirer of home health, personal care and hospice organizations, but the company's top executives are taking breaks in more home health transactions.
The proposed Medicare home health rate reduction will affect “all” for multiservice line providers, CEO G. Scott Herman told Hospice News, sister publication of Home Healthcare News. Therefore, New Day worked to reduce the total speed reduction of 6.4%.
Based in Texas, New Day Healthcare provides home hygiene, hospice, pediatric, clinical decision support and personal care services in Texas, Missouri, Kansas, Illinois, Indiana and New Mexico. The company's 10,000 team members serve approximately 180,000 patients a year. Family Office Cartrocon North America owns a new day.
Although it is currently slowing down the M&A strategy's at home health, New Day still continues to gain trends. It acquired several home care providers in 2025, including Heritage Home Healthcare, Patient Recovery Home Healthcare Services, and Christian Senior Care Services.
Herman shared the company's growth, how the new day prepares for the final rules for Medicare home health, and C-Suite's strategy for future changes.
The following conversations have been edited for length and clarity.
Has the current regulatory and economic environment influenced how you approach M&A or growth in general?
Herman: I slowed down the acquisition of skilled home health care until the final rules were clear. It doesn't mean we stopped them. We slowed them down.
The market multiples that exploded at hospice during Covid settled down a little later. We're back in the Hospice acquisition market. We were not involved in the frenzy. We just remained clear. We never messed up personal care acquisition because we believe it will be at the core of continuum development.
Our balance sheets are sound, access to capital is very robust, and we continue to look for disciplined and strong assets. Our desired ability to acquire is not suppressed. The availability of assets that meet our standards is declining. That's not to say you don't have the assets to buy. Many excellent companies are doing business, but fewer and fewer companies want to sell for the market.
What I mean is a provider that may have been acquired in 2000 and may have a five-year retention period in a private equity fund, purchased at something higher than the desired multiple, and may be in debt. It makes rational trading of today's values a bit more difficult. Many companies own it to improve the market. Small businesses may have pricing expectations based on previous history, and that is being adjusted. Brokers and investment banks do a good job of resetting the bar for those guys, but some of them are just going to wait.
Interest rates primarily impacted highly utilized organizations, with debts more than doubled in some cases. They always create difficult environments to manage. If the owner has high debt, it is more difficult to trade to buy the company at a value that makes sense to the owner. Some of these companies were purchased higher than the recognized market price
Several big rollups are falling apart and are beginning to sell parts. As long as the parts sold meet our strategic initiatives, we are engaged in those processes and haven't seen much of the impact from tariffs, so we negotiated a much wider agreement than many of our competitors. These charges are hedged considerably through responsible and responsible transactions, so we do not see many customs duties issues.
What is your ideal acquisition target?
We have a unique strategy and we are very disciplined in adhering to this strategy, but the first thing we have to do is strategic fit. How do organizations fit into multi-state, multi-service lines, and value creation models?
So, on a macro level, you're not buying anything on the West Coast. If that doesn't suit where we are, our footprints, our geography, we won't entertain it. But before strategic models, geography, continuum models, compliance, before finance, before anything, when you find something that fits the initial assessment.
We believe that culture beats strategy every time. If our cultures don't match, if the organization has a mission statement that doesn't match the statement of purpose and they don't live that statement, we just leave.
Next, check for compliance. If an organization doesn't have a clean compliance record or a very clear path to clean compliance, we'll leave. We don't do that because it's too difficult to address compliance issues during integration.
Next, start your financial assessment. Organizations should have a solid foundation with sustainable performance combined with strong clinical processes and control. I'm not looking for best-in-class revenue, I'm not looking for turnarounds. We like good, solid business, built on core principles with morality and mission integrity. If they work to do the right thing, we want to be their partner.
Could you please talk a little about your top goals for New Day 2025?
In 2025, four acquisitions have been concluded. For all industry accounts, 2025 is a rather lean acquisition year. So we are one of the major acquirers of the year. In 2026, we will target 4-5 acquisitions within our current geographic footprint. Add a service line to the complete continuum.
We are trying to fill some geographical gaps to fill Oklahoma with a continuum. It's kind of a blank space for us now. It also expands to adjacent states as opportunities arise. In 2025, we strategically expanded to New Mexico and Indiana adjacently, but we also demonstrate our platform's ability to expand and expand as we continue to commit to our neighboring states. While researching my goals for 2026, I made material advances with Caralytics Software. Of course, we tie all the loose ends from these acquisitions.
As you grow your organization, you need to reach a level and move your organization and team to the next level. An example is CFO Jeff Aspatcher. He is retired this year. He did an amazing job of bringing us to our current size. Together, he and I realized that in the next stage of our organization's greatest benefits and our development, he is able to serve the best on our advisory board and requires a more systematic and larger CFO. Therefore, we have moved into this new phase over the past few months, with long-term industry experts gaining experience in scale conversion. The CFO will be Jeff Bonham.
What are the major headwinds we must strive to achieve these goals?
As a diverse platform with six service lines that connect everything with macros and an integrated paralysis system, we find ourselves in an enviable position that we can alleviate many of the pitfalls of refunds, as we are not overexposed in certain areas.
That being said, the uncertainty there, the macros are Medicaid and Medicare. Medicaid uncertainty is well navigated to affect the state's line of service, and there is a complete state-level effort that continues to understand the state's impact, maintain our position, influence lawmakers, and ensure that they know our story. It works for us.
Of course, the current mentality of a multiservice line provider is the 6.4% interest rate reduction proposed for Medicare's home health. If you are an integrated system, whether you are six service lines like us, or your two service lines, home health and hospice, you will receive a 6.4% rate reduction in any arena, which will affect everything. But we are actively working in multiple efforts within the organization to mitigate it, but before the final rules are published, we are mitigating it.
Historically, preliminary interest rate cuts and finals have usually softened, but given that we have information at hand, our team has been working to ease the full cut, given 6.4%.
Considering the market penetration of Medicare Advantage, we have developed an operational plan for Medicare Advantage, which will soon become a business challenge to penetrate hospice, but we have developed an MA plan and a virtual system that will mitigate these challenges. So we actually welcome the business.
Jim Parker, senior editor at Hospice News, contributed a report to the story.
