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Q1 2023 Home Health, Hospice, and Home Care M&A Update

Updated: Apr 18, 2023


Mertz Taggart Logo in White on a blue background and a title that says Home Health, Hospice, and Home Care M&A Report: Q1 2023

Mergers and acquisitions got off to a record-low start in the first quarter of 2023, with only 14 home health, hospice and home care deals reported.


There were many factors contributing to the M&A slowdown, one that shouldn’t continue for much longer.



A bar graph outlining Home Health, Home Care, and Hospice Transactions by Quarter from Q2 2019 through Q1 2023
Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry.

“There are fewer quality targets on the market,” says Mertz Taggart Managing Partner Cory Mertz. “If you ask the buyer universe, they’ll tell you they are seeing a lot of opportunities, but most of them are not quality — whether financially, clinically or both.”


As debt becomes more expensive, providers and PE firms are being more disciplined with their M&A strategies. That has led to a misconception that valuations will be down as well. Yet for high-quality providers, that is not necessarily the case.


“Many owners feel, incorrectly, that they missed the top of the market,” says Mertz. “We are not seeing that on the ground.”


In fact, given that buyers are looking for quality opportunities — and not “fixer-uppers” — strong home-based care sellers remain in high demand. That’s especially the case in the lower-end of the market, which would be considered any seller below $50 million in enterprise value.


But because of the M&A rush in 2021, there’s been less of those sellers out there this year. That’s why, in addition to economic headwinds, 2022 and 2023 transaction numbers have been lower.


The $5.4 billion UnitedHealth Group (NYSE: UNH)-LHC Group deal did close in the first quarter, marking one of the biggest home-based care transactions in modern history. UnitedHealth Group’s health care services arm, Optum, is rapidly growing. And it will likely be easier for the company to grow acquisitively through Optum moving forward than it will be to grow on the insurance side.


That’s why the LHC Group deal made sense. UnitedHealth Group has committed to reducing spend and improving outcomes through home-based care capabilities. But it also has cash to burn, meaning provider acquisitions will likely be part of its strategy for years to come.


“The significance of a payor — paid on a PMPM basis — seeing strategic, financial and clinical upside in taking care into the home cannot be ignored,” says Mertz. “When one of the biggest health care companies — and biggest companies in general — in the country is investing in this space, it’s worth paying attention to.” United paid approximately 33x EBITDA.


Home Health M&A


Home health dealmaking was the biggest reason for the lowest transaction numbers on record. There were only three home health deals completed in the quarter.


Among them:

  • The aforementioned LHC Group deal

  • Amedisys’ deal for Capital Health Home Care’s West Virginia location. Mertz Taggart provided exclusive M&A advisory services in this transaction, representing the seller.

  • Stillwater Hospice’s deal for Kosciusko Home Care & Hospice Inc.

a bar graph showing Medicare certified home health transactions by quarter Q2 2019 - Q1 2023

As one of the only subsectors that can actually contribute to global savings for the health care system at large, home health care M&A is unlikely to remain quiet for long. It is still a fragmented industry, and its value is becoming more pronounced by the day.


“It’s all about quality opportunities,” says Mertz. “But also, the rate environment has made investors of all kinds more careful of late.”


Indeed, the anticipated payment rate cuts for 2023 from CMS put a short-term damper on the market. Likewise, the proposed payment rule for 2024 — which will be released this summer — will also likely have an effect.


But it shouldn’t keep investors away for good, so long as more buttoned-up sellers come to market.


Hospice M&A


Many of the home health M&A considerations apply to hospice, which also had a low transaction total for the quarter, at four. Quality hospices remain in demand, but there are fewer available.


A bar graph showing hospice transactions by quarter Q2 2019 - Q1 2023

“To command the premium multiples, they really need to check the boxes from a clinical, compliance and cash flow perspective,” says Mertz. “Buyers are getting more disciplined.”


For example, Enhabit Inc. (NYSE: EHAB) has mentioned publicly — and repeatedly — that it is taking a more disciplined approach to home health and hospice deals. Strategic buyers are no longer just buying up smaller agencies to grow market share or expand their footprint. The deal has to make sense from every perspective.


Other providers have echoed that sentiment.


“There’s less of those [quality] assets out there today, but more so on the hospice side,” Traditions Health CEO David Klementz recently told Home Health Care News. “It’s a very fragmented space. And it’s a bit of a challenge. … But we don’t want another fixer-upper.”


Home Care M&A


Personal home care was responsible for the bulk of Q1 transactions with 10 total. Among them:

  • The Lorient Capital-backed PurposeCare acquired the St. Joseph Michigan-based Home Sweet Home In-Home Care. Mertz Taggart provided exclusive sell-side M&A services for this transaction, representing the seller. More details for this transaction can be found here.

  • Amedisys offloaded its personal care division to the InTandem Capital-backed Houseworks, which has cemented itself as one of the biggest home care providers in the Northeast. Amedisys won’t necessarily lose the care coordination benefit of its personal care unit, as it will still work closely with HouseWorks. For Amedisys, the deal allows the company to focus more on high-acuity care in the home. For Houseworks, the deal significantly furthers density in existing markets. HouseWorks CEO Mike Trigilio used to lead Amedisys’ personal care division.

  • The Vistria Group-backed Help at Home continued its steady activity, acquiring both the Atlanta-based Prosper Home Care and the Pennsylvania-based Open Systems Healthcare, with the latter adding 1,500 patients to its census. A Medicaid-focused provider, Help at Home now has more than 180 branch locations across 12 states.


a bar graph showing home care transactions by quarter from Q2 2019 - Q1 2023

Private-pay home care providers are grappling with rising billing rates and how to best mitigate the effects of that as their client base deals with the effects of a volatile public equities market, which can impact their retirement accounts and their ability to maintain care hours.


Help at Home and similarly placed providers, however, are dealing with a much more rosy Medicaid landscape compared to previous years, especially pre-pandemic. That is attracting investors, too.


“We are seeing much stronger interest in home and community based services today than at any time pre-pandemic,” says Mertz Taggart Managing Partner Cory Mertz. “It’s coming from private equity groups seeking platform opportunities and strategic buyers executing on their care continuum strategies.”




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