Q3 2025 Home-Based Care M&A Report
- Emin Beganovic
- 3 days ago
- 5 min read
Updated: 1 day ago
As uncertainty continues to loom in both the industry’s regulatory environment and the broader economy, home-based care M&A volume dipped slightly, predominantly from a decline in non-medical home care transactions. While activity slowed relative to the two prior quarters in 2025, Q3 remains in line with the transaction volume seen in 2024.
Home-Based Care M&A
A total of 20 home-based care transactions were completed during the quarter. Public company transactions accounted for four deals, while sponsor-backed strategic and private equity platform acquisitions accounted for eight and three, respectively. Despite the number of non-medical home care deals falling compared to the previous quarter, the sub-vertical still leads in M&A activity with 11 closed transactions during Q3.
While speaking about the outlook for home-based care M&A through the rest of 2025 and beyond, Cory Mertz, managing partner at Mertz Taggart, highlighted the impact of future rate cuts by the Federal Reserve. He noted, “We’re seeing more optimism in the market after the latest quarter-point cut last month, especially from buyers looking for add-on acquisitions.” Mertz also touched on demand resulting from sustained levels of undeployed capital in private equity, “Although the overall number has come down recently, there’s still near-record dry powder that funds are actively looking to invest. If they can’t sufficiently invest out of their current fund, raising their next fund will become more of a challenge.”
Home Health M&A
Seven home health transactions closed during the quarter, matching Q2 and maintaining the pace set at the start of the year. Three of the seven were public company transactions, with the The Pennant Group being responsible for two. It announced the acquisition of GrandCare Health Services, a home health agency serving California’s Los Angeles, Orange, Riverside and San Diego counties, and Healing Hearts Home Health, a Wyoming-based agency offering home health, non-medical home care and outpatient therapy services in seven communities throughout the state.
Rounding out this quarter’s public company transactions was Optum’s long-awaited $3.3 billion acquisition of Amedisys, a formerly publicly traded home health and hospice provider with 500+ locations across 37 states and Washington, DC. The deal closed after a two-year delay and a settlement with the Department of Justice where both parties agreed to divest over 150 assets, consisting primarily of home health locations, to BrightSpring Health Services and The Pennant Group.
The remaining four transactions were private equity-related, split equally between sponsor-backed strategic and platform acquisitions. Sacred Heart Health Care, a portfolio company of Creach Family Holdings operating under the Faith Home Health and Hospice brand, announced the acquisition of Freudenthal Home-Based Healthcare, a Missouri-based home health provider, as it maintains its focus on becoming the leading in-home service provider in the Midwest. Marathon Nursing, a Massachusetts-based provider, was bought by Team Select Home Care, a portfolio company of Court Square Capital Partners.
Regulatory uncertainty, particularly concerning CMS’s proposed rate cut of 6.4%, has remained at the forefront in the minds of acquirers when evaluating deals in the home health space. The proposed rule is set to be finalized in November and would take effect in January 2026. However, there is still considerable demand for quality assets in a space that’s historically had strong and consistent deal volume. Cory Mertz noted that “Although buyers are well-aware of the risks involved with a potentially large reimbursement cut, high-quality assets are still in strong demand. Of the major home-based care providers who are building a continuum of care in their efforts to negotiate value-based payment arrangements with the payors, skilled home health is the most prominent of the service lines.”
Hospice M&A
Hospice deal activity remained steady with six hospice transactions announced in Q3, one more than in Q2 and in line with both the 2024 and year-to-date 2025 averages.
Among the six announced transactions was the acquisition of St. Gabriel’s Hospice & Palliative Care, a Texas-based provider of end-of-life care, by LifeCare Home Health, a Medicare-certified hospice, home health and private duty care provider in Texas, Nevada and Florida and portfolio company of healthcare services-focused private equity firm Zenyth Partners. BaneCare Management, a Massachusetts-based senior care services provider, also announced its acquisition of Longwood Hospice, enhancing its care continuum throughout the state.
Concerns surrounding Medicare clawback risk continue to be present amongst buyers as billing and compliance diligence remains the key hurdle to consummating transactions in the hospice space, particularly in the so-called enhanced oversight states of California, Nevada, Arizona and Texas. Mertz Taggart maintains its firm guidance to would-be hospice sellers to seek out a comprehensive billing and compliance audit as a key first step prior to engaging a sell-side advisor when preparing for a sale. Cory Mertz noted, “It’s important to use a group that will quantify the clawback risk, financially.”
Cressey & Company announced a partnership with Paradigm Health. Paradigm management, along with the company’s existing investor, Havencrest Capital Management, also made investments as the company pursues its next phase of growth.
Despite strong demand, deals have proven difficult to get to the closing table. Diligence around billing and compliance have caused many proposed deals to fall apart.
Buyers are fearful of Medicare clawback risk, a concern that is amplified in four “enhanced oversight” states—California, Arizona, Nevada, and Texas. As such, Mertz Taggart continues to strongly recommend that providers considering a transaction in the next 24 to 36 months first invest in a billing and compliance audit.
“We are strongly recommending a pre-market audit for operators, especially in those four states,” Mertz noted. “It’s important to use a group that will quantify the clawback risk specific to those four states, considering the current enhanced oversight environment.”
Home Care M&A
Non-medical home care M&A activity declined this quarter compared to the relative highs of Q1 and Q2 this year but generally stayed in line with last year's deal activity.
The largest announced deal this quarter where the purchase price was publicly disclosed was Addus Homecare’s $21.2 million acquisition of Helping Hands Home Care Service, a home care provider with three locations throughout western Pennsylvania serving approximately 600 patients daily. Addus CEO Dirk Allison said during the company’s most recent earnings call, “As we have with this most recent acquisition, our development team will continue to focus on both clinical and non-clinical acquisition opportunities that increase both the density and geographic coverage of our current states. We will be evaluating smaller clinical transactions along with personal care service transactions that fit our strategy.”
In line with historical trends, sponsor-backed strategic buyers made up the bulk of the deals closed this quarter. Among them was Amivie, a multi-regional provider of non-medical home care and portfolio company of Martis Capital, which acquired FosterBridge, an in-home care provider serving patients in 23 counties across southeastern Ohio.
Q3 also saw a platform investment in Elder Care Homecare, an in-home provider serving New York, New Jersey, Connecticut and Massachusetts, by private equity firm Rallyday Partners, opening the door for add-on acquisition opportunities throughout the Northeast.
Non-medical home care held on to its spot as the darling of home-based care services investors, and Cory Mertz expects that trend to continue into both Q4 and 2026 as deal activity inches up, saying, “We’re still seeing high levels of interest in the home care space, driven primarily by sponsor-backed portfolio companies that are seeking additional cash flow before their scheduled exits in the next 12-18 months. We are also seeing an uptick in demand for private duty home care, as some of the strategic acquirers are looking to diversify their payor mix.”
If you are interested, you can also download the .PDF version of the Q3 2025 Home-Based Care M&A Report via the following link:
Comments