Home Care Deals Heat Up In Q2, While Home Health Deals Cool On The Horizon

Home-based care dealmaking remained steady overall in Q2, though trends in home health and home care are continuing to diverge.

Non-medical home care dealmaking is driving the total number of deals in the home-based care industry, according to a new report from Mertz Taggart. Meanwhile, the proposed home health Medicare payment cut is casting a shadow over future dealmaking in the industry. 

“Non-medical home care M&A is having its time,” Cory Mertz, Mertz Taggart managing partner, said in a statement. “We have more clarity around the OBBBA, and its impact on non-medical home-based care will be less than many feared. The DOL’s proposed return of the companionship exemption, and multiple portfolio companies gearing up for an exit in the next several months, will also serve as catalysts.”

Overall, 26 home-based care deals were completed in Q2, a relatively steady shift from 30 deals in Q1.

Non-medical home care accounted for 15 deals, of which nine involved sponsor-backed portfolio companies.

Feasterville-Trevose, Pennsylvania-based Active Day and Chicago-based Help at Home were especially active home care players in Q2, with both providers closing on three deals. Active Day acquired three South Carolina-based businesses in Q2: AllCaregivers, New Generations Home Care of Florence and Goldencare. Help at Home also acquired three businesses in the quarter, including Home Care Now of Central Florida. 

Seven home health deals were announced in Q2, including four sponsor-backed strategic deals. The number of home health deals was only slightly down from eight deals completed in Q1, but Mertz suggests that the proposed Medicare home health rule may cause some deals currently in progress to falter. Mertz called the proposed cut “very disappointing, but not a huge surprise.”

Notable Q2 deals include LiveWell Partners’ acquisition of Empower Home Health Services and Aveanna Healthcare Holdings’ (NASDAQ: AVAH) $75 million acquisition of Thrive Skilled Pediatric Care. 

“The transaction volume we are seeing in home health doesn’t match demand,” Mertz said. “Buyers are eager to deploy cash into quality, skilled home health assets, but are mandated to do it in a more strategic, disciplined manner than in years past. Quality assets that have gone to market recently have enjoyed strong valuations. We expect this to continue.”