There were at least 20 deals closed in home health, home care and hospice during the second quarter, in addition to a few major deals that were announced, but not finalized. Overall, recent months have shown a thaw in M&A may actually be in progress.
The home health sector saw at least 10 deals, while the hospice sector saw at least nine, according to the M&A firm Mertz Taggart. Home care dealmaking was a bit down, with only seven confirmed transactions in the quarter. Many of these transactions, of course, include more than one service line.
“We’re seeing optimism around a thaw in dealmaking,” Mertz Taggart Managing Partner Cory Mertz wrote.
It’s also worth noting that more confirmed deals from the second quarter will likely trickle in over the coming months.
While 20 deals is nothing to write home about, it’s up significantly from the 13 that Mertz Taggart reported in the first quarter.
The Pennant Group (Nasdaq: PNTG) remained one of the more active acquirers in the home-based care space. It announced deals for the Utah-based South Davis Home Health & Hospice and the Texas-based Nurses On Wheels.
In addition, it announced a partnership with Hartford HealthCare at Home, which will allow it to open up home health operations on the East Coast for the first time.
“We have the resources focused and dedicated to the East Coast, they’re all going to be focused and dedicated on this venture in the foreseeable future,” Pennant President and COO John Gochnour recently told Home Health Care News. “We can foresee a time when it makes sense to grow further on the East Coast, because we have a service center developed out there, we have a group of people who are part of those communities and are excited to continue to make a deeper impact.”
Vitas Healthcare’s acquisition of Covenant Care, for a reported $85 million, was also a highlight in the quarter.
As for the deals that were announced but not finalized, Amedisys Inc. (Nasdaq: AMED) agreed to divest locations to VitalCaring. That deal is contingent on the Amedisys-UnitedHealth Group (NYSE: UNH) deal closing, however.
The New York-based HCS-Girling agreed to acquire the personal care operations of Addus Homecare Corp. (Nasdaq: ADUS) in New York, as well as the Florida-based home health provider Pinnacle Home Care.
Home health cuts don’t appear to be going away, which could affect M&A for the rest of 2024. But, at the same time, National Association of Home Care & Hospice President William A. Dombi said Monday that he expects a less harsh final rule for 2025.
Meanwhile, interest rates – which have cooled M&A across industries for a couple of years now – are likely to come down in the near-term future.
That could also lead to private equity activity ticking back up. Mertz noted that, in the second quarter, PE was involved in a smaller proportion of deals than usual.
There’s likely another reason for that, too, however.
“We saw fewer private equity-backed strategic transactions hit the wire relative to the whole,” Mertz wrote. “This is primarily tied to the tightened credit markets, and an increasing number of smaller, in-market transactions that don’t get reported.”
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