After reaching a nadir in 2024, the tides have turned in home-based care M&A. Whether the turnaround is a single wave or a full, long-term sea change remains to be seen. A total of 29 home-based care transactions were reported in the first quarter of 2025, making it the most active quarter for the industry since 2023 and a return to pre-pandemic levels. Home-Based Care M&A Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. While it's hard to predict whether deal volume will hold through year-end, Mertz Taggart Managing Partner Cory Mertz points to a key driver: aging private equity funds with significant dry powder. These funds are eager to deploy capital into both platform deals and bolt-on acquisitions for existing portfolio companies. “We’re starting to see some deals finally get across the finish line,” Mertz said.  “Several deals that were slated to close in 2024 were ultimately pushed into Q1 of 2025. Deals are just taking longer to get done. Buyers are hungry, but they remained very disciplined in their investment approach.” Potential cuts to Medicaid will be a development to watch in the coming months. The Trump administration has signaled its desire to reduce federal costs via Medicaid spending, and the U.S. House recently passed a budget resolution targeting Medicaid cuts of up to $880 billion over the next decade. Detailed proposals for achieving the spending cuts are not yet under consideration in Congress.  This headline risk is enough to give many investors outside the industry pause on any platform opportunities, however existing industry buyers remain resolute in their approach, which culminated in a strong Q1 for Medicaid-funded personal care.  Home Health M&A   Eight transactions involving skilled home health providers were reported in Q1, up from the three announced in the prior quarter. Despite the ever-growing clawback risk from CMS’ perceived overpayments related to PDGM (currently at an estimated $4.5 billion), the uncertainty level is low enough for Medicare home health to continue to garner investment interest. “I’d say home health demand is fairly strong right now,” Mertz commented. “On a scale of 1-10, demand is at about an 8, but buyers are laser focused on deals that move the needle strategically. The risk and uncertainty levels are relatively low, and it remains central to most strategic buyers’ value-based care strategies.” The most notable home health transaction of Q1 was Pennant Group’s  (NASDAQ: PNTG) finalizing its two-stage, $80 million acquisition of Signature Healthcare at Home , adding its Oregon operations to the previously closed Washington and Idaho locations.  Providence , a not-for-profit health system, and Towerbrook- and Ascension-backed Compassus , a provider of home-based care services, announced the formation of a joint venture for home health, as well as hospice, community-based palliative care, and private duty caregiving services. The new entity is operating as Providence at Home with Compassus , with 24 home health locations and 17 hospice and palliative locations across four states, and private duty operations in Southern California. DispatchHealth  announced in March that it had reached an agreement to acquire Medically Home , “extending care into patients’ homes across 50 major metropolitan areas in collaboration with nearly 40 health systems and most major health plans and value-based care organizations,” according to a Home Health Care News report . DispatchHealth is backed by a consortium of venture sponsors, led by Optum Ventures. Baptist Health  announced the formation of a joint venture with Midwest-based home health provider Alternate Solutions Health Network to expand services across Kentucky, southern Indiana, and southern Illinois. Renovus Capital Partners , a lower middle-market private equity firm, announced a strategic partnership with Superior Health Holdings . The platform deal enables Superior to expand its home health and hospice services in Louisiana and into neighboring states. A Florida-based multi-location home health provider was acquired by an independent sponsor. Details remain confidential. Hospice M&A Hospice volume is up slightly, but still down the most of the three categories within the home-based care sector, relative to the bubble of 2021. Seven deals were announced in Q1, up from five the prior quarter. Demand remains very strong for hospice, but getting deals closed has been challenging. Buyers are rightfully nervous about potential risk for Medicare clawback because of poor billing documentation, Mertz said. “We’ve been advising owners to get a billing audit done before they go to market,” Mertz said. “If you’re considering a sale anytime in the next three years, get an audit done now.This will give you time to make the appropriate adjustments, if necessary, to limit the potential clawback exposure for the ultimate acquirer.” The following hospice deals were announced in Q1: Bristol Hospice , a portfolio company of the private equity firm Webster Equity Partners, acquired St. Agatha Comfort Care  in Las Vegas for an undisclosed sum.   Choice Health at Home remained active and expanded its services in Texas with its acquisition of Devotion Hospice . The deal was another step in Choice’s efforts to provide a home-based continuum of care in each of its Southwestern-based markets. Minnesota-based St. Croix Hospice  expanded its footprint in the Midwest with a pair of deals. St. Croix acquired Hospice of Siouxland in Iowa and some of Mayo Clinic Health System’s hospice assets in Minnesota. Financial terms of both deals were not disclosed, according to Hospice News . Uplift Hospice  acquired Star of Texas Hospice , expanding its average daily patient census to 450 across Arizona, Nevada, and Texas.  Home Care M&A Any uncertainty stemming from the potential cuts to Medicaid spending is not deterring strategic buyers. A total of 17 home care transactions were announced in Q1, doubling up on the total from Q4 2024. Of the 17 deals announced, 11 were funded by Medicaid, across 10 states with nine different sponsor-backed strategic buyers. The following deals were announced in Q1: Peak Rock Capital , a middle-market private equity firm, completed its acquisition of BrightStar Group Holdings , a franchisor of home care services with more than 400 agencies nationwide. Choice Health at Home  bolstered its continuum of care for patients in Texas, Colorado, and the Southwest by acquiring Family Tree Private Care . HouseWorks, an InTandem Capital portfolio company , expanded its footprint in Massachusetts with the acquisition of O’Connell Care at Home  in Springfield and Best Home Care, which serves the Greater Boston area. New Day Healthcare  made two deals to strengthen its presence in the Houston area. First, it acquired Christian Senior Care Services , it then acquired Patient Recovery Home Healthcare Services . Mertz Taggart provided exclusive M&A advisory services to this transaction, representing the seller. CareGivers of America announced a deal to acquire Florida-based Platinum Select Care . Martis-backed Community Based Care , which provides services in six states, expanded its portfolio with its acquisition of TLC At Home  in Albemarle, North Carolina. Family Matters In-Home Care  acquired Homecare California , with the latter set to take on Family Matters’ name and brand in the coming months. Great Point Partners’ Family Resource Home Care announced a deal to acquire Beneficial In-Home Care , which operates six home care agencies in eastern Washington. Gracepoint Home Care  in Mobile, Alabama, announced that it has acquired the assets of Touching Hearts Senior Care . A large Midwest adult day and HCBS provider sold to a financial sponsor. Mertz Taggart provided exclusive sell-side advisory services in this transaction.   VNS Health , a not-for-profit home- and community-based health care company, acquired Alliance Home Services , which serves the Bronx in New York. If you are interested, you can also download the Q1 2025 Home-Based Care M&A Report via the following link:

Introduction The Veterans Administration (VA) has long been considered a ‘payer of last resort’ for home care providers, offering below-market rates and slow pay for services to our veteran community that deserves better. As a result, this business line has often been viewed as important, but not desirable for home care operators, resulting in low M&A interest from industry consolidators. That changed in 2018 with the passage of the VA Mission Act of 2018 . This federal law aimed to enhance veterans' access to healthcare services within the VA system and through community care providers. Of particular interest to home-based care providers, the act replaced the Veterans Choice Program with the new Community Care Program . Community Care Program The new Community Care Program expanded the eligibility criteria for veterans, provided more stable funding, improved the program’s long-term sustainability, and standardized and streamlined access requirements to receive care. Additionally, the Act established the Community Care Network (CCN), which serves as the contract vehicle for the VA to “purchase” community care from community healthcare providers for veterans. The CCN established agreements with two third-party administrators (TPA), Optum Public Sector Solutions, Inc. (Optum), part of UnitedHealth Group, Inc. and TriWest Health Care Alliance (TriWest) and divided the country into five different regions: The TPAs are responsible for developing and administering the CCN within their assigned geography. Their scope of work includes the following: Provider Network Management: Establish and maintain networks of community healthcare providers, such as home care or home health providers. Appointment Scheduling: Help coordinate appointment scheduling for veterans. Claims Processing: Handle claims processing and payment from community healthcare providers. Authorization and Coordination : Assist in obtaining authorizations for medical services that veterans need from community providers and ensure necessary documentation is in place. Quality Assurance : Monitor the quality of care. Communication : Facilitate communication between the VA, veterans, and community healthcare providers. In order for a home-based care provider to provide services to veterans and get reimbursed for it, it needs to: Establish a contract with a TPA : This involves executing an agreement and going through certain credentialing. Build relationships with local VA representatives: This should be in the form of high-quality and timely care. Billing: Submit proper billing through established protocols and online portals Receive payment or follow up on unpaid claims: As with any payer, providers will need to follow up with TPAs on unpaid claims, but the majority of the time this will be due to minor and easy-to-fix issues Attractive Reimbursement In addition to the improved and more efficient Community Care Program, the VA also has attractive reimbursement rates for home-based care services: Personal Care Services: The rates for personal care services depend on the state/city/market serviced, but the majority will be in the low $30’s/hr. Home Health and Hospice Services: VA will reimburse at Medicare rates. Investor Interest Investors have caught wind of the improvements in the VA healthcare ecosystem and have developed a strong interest in home-based care providers that service veterans. Below are some of the reasons for the renewed investor interest: Payor Diversification : Increasing the number of payors reduces the risk that a certain payor will lower rates, stop reimbursement, change material terms in agreements, etc. High Reimbursement Rates: Current reimbursement rates are on the high end for home-based services. Uncertainty Other Payors: Private Pay: Concerns with the state of the economy could inhibit clients’ ability to pay high rates Medicaid: CMS’s proposed Medicaid Access Rule requiring providers to pass 80% of reimbursement to direct care workers jeopardizes the feasibility of the different state programs. Medicare: Looming proposed rate cuts increase risk Value-based Care Opportunities: An additional payor means an opportunity to care for more individuals, have more leverage when negotiating contracts, and capture higher-margin health services. “We are hearing more from strategic buyers interested in adding VA to their existing Medicaid home and community-based services business,” Mertz Taggart Managing Partner Cory Mertz said. “It’s a perfect complement to that business line. The models are very similar, payer diversity reduces risk, especially in light of the proposed 80/20 rule, and the current reimbursement rates are strong.” M&A Market For Home-Based Care Providers Servicing Veterans The strong investor interest in home-based care providers that service veterans and receive reimbursement through TPAs has increased the demand and value of these assets. Resources: VA Community Care Network VA Mission Act of 2018 VA Disability Calculator VA Disability Appeals Additional Veteran Resources As part of our commitment to supporting veterans and their families, we are pleased to share some valuable resources provided by Hill & Ponton , a law firm dedicated to advocating for veterans who have been denied benefits by the VA. These resources are designed to assist veterans in navigating the challenges they face, particularly in relation to mental and physical health issues. PTSD Guide :  A comprehensive resource tailored to assist veterans coping with post-traumatic stress disorder. 2024 Disability Calculator :  An up-to-date practical tool for evaluating disability compensation eligibility. Toxic Exposure Map :  A helpful tool designed to help veterans navigate potential exposure risks. Blue Water Navy Map :  An interactive Vietnam map for navigating exposure to Agent Orange. We believe these resources will be highly beneficial to our readers, offering practical tools and information to better manage the challenges that veterans often face.

Mertz Taggart Behavioral Health M&A Report for Q1 2021 Significant tailwinds across the behavioral health sector propelled an active first quarter of 2021 with regards to merger and acquisition activity, keeping up momentum observed in the latter stages of 2020. A total of 29 behavioral health industry transactions were announced in Q1. Outside of a dip in the second quarter of 2020 during which only 19 transactions were announced—a slowdown fueled by the onset of the COVID-19 pandemic—the sector has settled into a pattern of roughly 30 deals per quarter dating back to the beginning of 2020. The volume of deals for Q1 2021 is “telling, but not unexpected,” said Mertz Taggart Managing Partner Kevin Taggart. “And it’s pretty evenly split between addiction treatment, autism treatment and mental health,” Taggart said. “Mental health transaction volume has picked up significantly over the past two quarters, buoyed by the pandemic.” Private equity continues to play a large role in the space, accounting for 22 of the 29 deals announced in Q1, including three platform transactions and 19 add-on transactions. With many private equity-backed strategic companies operating in the space continuing to grow, there is a possibility that one could announce a public offering, either traditionally or through a special purpose acquisition company (SPAC) in the coming months, Taggart said. Many treatment center owners, worn out by the pandemic could be ready to exit the space and sell, but the number of deals across behavioral healthcare to be announced over the rest of 2021 could hinge on the Biden-Harris administration’s stated intention to raise the capital gains tax, Taggart said. The administration’s recently announced infrastructure plan, however, does not directly address capital gains, instead focusing on corporate tax reform. In the meantime, private equity has a mandate to invest and grow. Firms will be watching closely as industries get back on their feet in a post-pandemic world. A key factor to watch will be which structural changes enacted to keep businesses afloat in 2020—both in the behavioral healthcare space and other industries—will stick permanently. Addiction Treatment Based on recent data, demand for addiction treatment services is expected to be high in the coming months. CDC reported that there were more than 88,000 deaths attributed to drug overdose in the 12 months ending in August 2020, the highest total for a 12-month period on record. The 11 transactions announced in the addiction treatment space were down slightly from Q4 2020 (14 transactions), but on par with the prior two quarters. After a busy quarter to close out 2020 , BayMark Health Services stayed busy in the new year, announcing the acquisition of Partners in Drug Abuse Rehabilitation Counseling , a medication-assisted treatment provider in Washington, D.C. The deal for PiDARC was announced between two acquisitions of office-based opioid treatment (OBOT) programs by AppleGate Recovery , a BayMark subsidiary. In February, AppleGate acquired Redemption Recovery , a portfolio of five OBOT clinics in Tennessee, and in late March, the brand announced a deal for Montgomery Addiction Clinic, an OBOT located east of Nashville. Platform deals were announced by private equity firms Health Enterprise Partners , which provided an investment in Aware Recovery Care in January, and Northlane Capital Partners , which announced an investment in global behavioral healthcare provider Empower Community Care in March. Summit BHC acquired The Pavilion , a 66-bed inpatient psychiatric facility, and The Farley Center , a 70-bed substance use disorder treatment provider. Both programs are located in Williamsburg, Virginia. Summit BHC’s portfolio now includes 24 facilities. The owner and CEO of Footprints to Recovery and Vogue Recovery , Michael Milch, added South Coast Behavioral Health to a portfolio that now includes seven facilities for the Costa Mesa, California-based group. Discovery Behavioral Health added to its network of facilities by acquiring Prosperity Wellness Center , a 40-bed residential program in Tacoma, Washington. Prosperity became the 10th brand in the Discovery family, which is backed by the firm Webster Equity Partners. Ohio-based BrightView Health announced a deal for Renew Recovery Centers , an SUD treatment provider with four Kentucky locations. Autism Services & Intellectual/Developmental Disabilities Nine deals in the autism services and intellectual/developmental disabilities space were announced in the quarter, matching the number of deals reported in Q4 2020. Lighthouse Autism Center continued to build its presence as the largest provider of applied behavior analysis therapy in Indiana, acquiring Access Behavior Analysis and A Step Ahead . Lighthouse also opened a new facility in Valparaiso, Indiana, as well as a center in Niles, Michigan. Acorn Health , which operates in seven states, strengthened its position in Florida with a deal for the assets of Sandcastle Centers . Stepping Stones Group acquired EBS Healthcare in Pennsylvania, although while the two organizations are led by one combined executive team, they will continue to function as separate companies. LEARN Behavioral has invested in Behavior Analysis Center for Autism (BACA), although the latter continues to operate as a separate brand. Proud Moments ABA expanded its footprint in the Southwest with a deal for Bridges: Educational Services for Children with Autism , based in Albuquerque, New Mexico. ACES continued scaling its clinical model with the acquisition of the Center for Language and Autism Support Services in Tulsa, Oklahoma. Private investment firm Comvest Partners completed a sale of D&S Community Services to The Mentor Network . After relocating its headquarters to North Carolina from Wisconsin last year, Broadstep Behavioral Health , part of the Bain Double Capital Impact Fund portfolio, added to its 90-plus facilities with a deal for Excalibur Youth Services in South Carolina. Mental Health Although deals in the mental health sector dropped by 33% from Q4 2020, from 15 to 10, activity in this sector was still significantly higher than the second and third quarters of 2020. Moreover, demand for mental health services, much like the addiction treatment sector, is expected to be high in the coming months, as social isolation and anxiety resulting from the COVID-19 pandemic have exacerbated mental health conditions for many individuals. Among the deals commenced in Q1, Marshfield Clinic Health System acquired Oswald Counseling Associates in Plover, Wisconsin, renaming the behavioral health practice Marshfield Clinic Health System-Plover Counseling Center. Philadelphia-based outpatient practice CM Counsel was acquired by the investment and business development firm Centra Capital in a platform deal. Following the investment by Centra, CM Counsel formed a strategic partnership with Savia Community Counseling Services , an in-home care provider in New Jersey. Two eating disorder programs, the Emily Program and the Veritas Collaborative , finalized a merger that allows the two brands to maintain their identities in their respective markets of Minnesota and North Carolina. Meanwhile, Nashville-based eating disorder program operator Odyssey Behavioral Healthcare acquired Shoreline Center for Eating Disorder Treatment , which operates multiple locations in Southern California. Talkspace , a digital and virtual behavioral healthcare company, and Hudson Executive Investment Corp., an SPAC sponsored by Hudson Executive Capital , announced a merger, as well as plans to become listed on the NASDAQ as the first exclusively virtual behavioral health company to be publicly traded. Mental health and wellness platform Modern Health reached a deal for mental health startup Kip , allowing the former to enhance its personalized care plans. Adventist Health Vallejo , a 61-bed psychiatric hospital in Vallejo, California, was acquired by Acadia Healthcare .

After an especially active first quarter and with signs currently indicating a healthy and active pipeline, analysts at Mertz Taggart are bullish in their outlook on the behavioral healthcare market for 2025. Behavioral Health M&A A total of 47 transactions involving behavioral healthcare organizations were reported in the first quarter of the year. This included 34 M&A transactions, the most since Q4 2022. Activity within the intellectual/developmental disabilities (I/DD) and autism sectors has seen a resurgence, with a reported 12 transactions in Q1—the highest volume recorded since 2021. Sales of organizations that provide applied behavior analysis (ABA) therapy have been especially competitive, said Mertz Taggart managing partner Kevin Taggart. “During COVID and right after COVID, a lot of ABA companies experienced wage inflation without getting rate increases, so there was some high-profile bankruptcy with some large providers that left California, Colorado and other states,” said Taggart. “The dust has seemed to settle on that over the last six months or so, and so now we’re seeing a lot of groups asking for ABA businesses. That’s a positive.” Within the subsector of mental health, demand has remained consistent for going on two-and-a-half years. 29 transactions (19 M&A and 10 growth deals) involving mental healthcare providers were reported in Q1, a figure roughly in line with the 30 deals announced in the final quarter of 2024.  Although it’s not readily apparent based strictly on the number of transactions announced, buyers’ interest in psychiatric hospitals is high, Taggart said. There simply aren’t enough smaller, independent providers available to meet the demand. “We’ve had more groups ask us for psych hospitals since Q1 this year than probably any quarter in the last three or four years,” he said. “But there are fewer smaller operators out there. There just haven’t been as many deals completed because there’s not enough supply. But there are definitely groups looking.” Finally, Taggart noted one additional trend to watch: the continued flow of growth deals at high valuations.  “Money has continued to pour in to these growth deals, which surprised us a bit,” he said. Addiction Treatment M&A Once a subsector that analysts could reliably expect to have the highest number of transactions in a quarter, addiction treatment deal volume has remained flat for two years now. Deals are still getting done, Taggart clarified, but not to the level of historical norms. Nine deals involving addiction treatment providers were reported in Q1, matching the total from each of the prior two quarters. This included seven M&A transactions and one growth deal. The following addiction treatment transactions were reported in Q1: Wellpath Recovery Solutions , a provider of services at inpatient psychiatric hospitals, residential treatment centers and mental health rehabilitation centers, as well as community-based services, was acquired by an undisclosed buyer in a deal that will cancel out about $375 million in debt of parent company Wellpath Holdings . Optimal Investment Group,  a Sherman Oaks, California-based private equity firm, made a strategic investment in Recovery Dynamics in Los Angeles . Substance use disorder (SUD) treatment provider Meridian Behavioral Health expanded its continuum of care with its acquisition of Gateway Recovery  in January. Denver-based addiction treatment providers AspenRidge Recovery  and Colorado Medication-Assisted Recovery  announced a merger in March. Both companies were founded by Cortland Mathers-Suter, who was named CEO of the combined company. Oceans Healthcare  acquired Haven Behavioral Healthcare , adding seven new locations across five new states, bringing the total number of states in which it operates to nine. The deal was backed by private equity firm Webster Equity Partners. The respective boards of directors of Family Service & Guidance Center  and Valeo   Behavioral Healthcare  announced their approval of plans to merge the two organizations into a single Certified Community Behavioral Health Clinic  within the next year.  Silver Hill Hospital  announced in February that it has completed its acquisition of Freedom Institute  to expand its psychiatric care services in New York City. As part of the deal, Freedom Institute has been rebranded as Silver Hill New York . 1888 Equity  acquired Jaywalker Lodge , a drug and alcohol rehabilitation facility in Colorado. Mertz Taggart  provided exclusive sell-side advisory services. Acadia Healthcare  completed its acquisition of North Carolina-based Sellati & Co .  Mertz   Taggart  provided exclusive sell-side advisory services. Two growth funding deals were also announced: You Are Accountable , a New York-based peer SUD support company, raised $1.9 million in funding, the company announced in February. Investors were not disclosed. Bicycle Health , a virtual opioid use disorder (OUD) treatment provider, completed a $16.5 million funding round led by Questa Capital Management . Mental Health M&A As mentioned above, demand has remained healthy for mental healthcare providers, particularly those that offer psychiatry and ancillary services, Taggart said. “There is still strong demand for mental health, especially psychiatry practices or groups that offer psychiatry services, even just medication management or ancillary services such as transcranial magnetic stimulation or ketamine-assisted therapy,” said Taggart. “There is still good demand for outpatient mental health—not to the level it was in 2022, but it’s been pretty steady in recent years, even with some notable strategic buyers taking a pause.” Those strategic buyers, he added, are now showing signs they are ready to get off the sidelines, a development that could spur more activity later this year. Deals involving mental healthcare organizations in Q1 included the following: Riverside Impact Capital , a firm that specializes in working with mental health practices, announced a strategic investment in Evergreen Counseling . Mertz Taggart provided exclusive sell-side advisory services. Traverse Pointe Partners  completed its acquisition of Soma Therapy  in a private equity platform deal.  Mertz Taggart provided exclusive sell-side advisory services. ARCpoint Inc. announced in January that it has completed the sale of 68% of its ownership interest in Achieve Behavioral Health Greenville . The buyer in the deal was not disclosed. Empower Community Care , a global behavioral health organization, acquired Brief Strategic Family Therapy Institute from the University of Miami  in a private equity-backed strategic deal. Avel eCare,  a telemedicine provider of clinician-to-clinician services, acquired Amwell Psychiatric Care,  a division of Amwell , in a private equity-backed strategic deal. The acquisition expands Avel’s footprint to over 45 states. Orchard Mental Health Group  (formerly known as Quince Orchard Psychotherapy ) made a private equity-backed strategic acquisition of GBCC Behavioral Health  and Oasis Behavioral Health Urgent Center . Eating Disorder Recovery Specialists ,  Mental Health Recovery Specialists ,  Sanctuary Psychology P.C. and  Well Williamsburg —entities founded by clinician-entrepreneurs Sarah Chipps, a psychologist, and Greta Gleissner, a licensed clinical social worker—have been merged to form Well Behavioral Health . Iris Telehealth  has acquired innovaTel  from Quartet Health  in a private equity-backed strategic deal. Days later, Quartet  itself was acquired by NeuroFlow , another behavioral health-focused tech company. Axess Family Services  and Children’s Advantage , a pair of not-for-profit providers that serve Portage County, Ohio, announced a merger in February. FullBloom , an academic, behavioral and mental health provider for schools, acquired school-based mental health provider CharacterStrong  in a move to support its increasing focus on mental healthcare. TPN.health , a behavioral health network platform, acquired All Counseling  and its provider-patient matching technology, TheraMatch . Boston-based The Stepping Stones Group  announced in March it has acquired Gallagher Pediatric Therapy in Fullerton, California, for an undisclosed sum. AI-powered mental health chatbot company Wysa  acquired April Health , a behavioral health company that works with primary care providers. Beacon Behavioral Partners  made two acquisitions in Q1, reaching agreements to acquire Shore Clinical TMS & Wellness Center and Cognizant Behavioral Health Services . Several mental healthcare organizations also announced growth funding transactions  in Q1, including the following: Mindful Health  completed a $12 million funding round led by WP Global Partners . Digital family mental health startup Little Otter  raised $9.5 million in a strategic funding round led by Next Legacy Management . Sonar Mental Health  raised $2.4 million in a pre-seed funding round for its AI-backed youth mental health startup. The funding round was led by Nina Capital . Digital mental health startup Nema Health  raised $14.5 million in a funding round that brought in two new investors: Deerfield Management  and CVS Health Ventures , the venture capital arm of CVS Health. Digital health company DarioHealth  raised $25.6 million from an undisclosed investor. Neurodivergent affirming therapy provider Prosper Health  raised $16.2 million in a funding round led by Kindred Ventures . Trail Mix Ventures   Fund II and Foreground Capital  led a $12 million investment round for Millie , a maternal mental healthcare company. TownHome Health  raised $500,000 according to SEC filings. An investor has not been disclosed. Digital alcohol use disorder treatment provider Ria Health  raised $12.5 million as part of a Series B funding round led by Peloton Equity . Bluebird Kids Health  raised $31.5 million in a funding round led by F-Prime Capital   Partners . Autism and Intellectual/Developmental Disabilities M&A The 12 transactions reported in the I/DD and autism subsector for Q1 were the most for a quarter since 2021.  One of the ABA therapy companies Mertz Taggart was working with in Q1, received the highest number of offers for any deal the firm has worked on since 2021, Taggart said. The following is a list of transactions involving providers of I/DD and autism therapy services: Ascend Capital Partners , a healthcare-focused private equity firm, acquired a majority stake in Unison Therapy Services . Healthcare-focused private equity fund Leavitt Equity Partners  partnered with Pediatrics Plus  in Conway, Arkansas. BrightSpring Health Services  divested its I/DD division to Sevita  (formerly known as The Mentor Network ) in a deal valued at $835 million. Already Autism Health  announced two acquisitions. First, it acquired Commonwealth ABA  in a deal backed by private equity firms Triton Pacific Healthcare Partners , Star Mountain Capital  and Ace & Co. The company also acquired C.A.B.S., Autism  and Behavior Specialists . Private equity firm Nautic Partners  acquired Proud Moments ABA  from PE firm Audax   Private   Equity . Three Maine-based not-for-profits— GMS , Uplift  and Independence Advocates of Maine —announced a merger. Meridian Executive Services  acquired Danville Services Corp.  In a private equity-backed strategic deal. Behavior Genius , a provider of ABA services, acquired Bay ABA  in the San Francisco Bay Area. Regency ABA  in Georgia acquired Magnolia Behavior Therapy  in Seattle, Washington. Strawberry Fields , a not-for-profit provider, became an affiliate of Devereux Advanced Behavioral Health . Delta Behavioral Health Group  was acquired by SpringHealth Behavioral Health   & Integrated Care . Frontera Health , an autism services startup that is backed by AI, raised $32 million in a seed funding round led by Lux Capital  and Lightspeed Venture Partners . If you would like to download this report in a PDF file, click the link below.

Mertz Taggart follows the publicly traded home-based care companies and reports on their earnings calls each quarter. As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively. Historically seen as the “ultimate consolidators”, the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A. Addus Homecare (Nasdaq: ADUS) Highlights Addus reported a surge in total revenue by 20.3% year-over-year to $337.7 million, primarily fueled by strong organic growth and contributions from recent acquisitions, notably the Gentiva personal care operations.  Adjusted EBITDA rose 25.1% to $40.6 million, and net income increased 34% to $21.2 million compared to Q1 2024, reflecting robust operational execution and profitability. The Personal Care segment, accounting for approximately 76.5% of total revenue, delivered a 7.4% organic revenue increase year-over-year, driven by higher volumes and a 5.5% rate increase in Illinois, the company’s largest personal care market. Home Health services represented 5.3% of total revenue, with organic revenue growth of 1.3% over the prior year, while Hospice services contributed $61.4 million, or 18.2% of revenue. Cash on hand stood at $97 million as of March 31, 2025, with net leverage under one-time adjusted EBITDA, providing ample flexibility for future strategic acquisitions. Key Financial Figures M&A Activity Addus’ major M&A activity in 2025 was the completion and integration of its $350 million acquisition of Gentiva’s personal care operations, which expanded its presence into seven states (including Texas and Missouri as new markets) and made it the largest personal care provider in Texas, adding approximately $280 million in annualized revenues. “Now that we have a strong presence in Texas following our Gentiva acquisition, our team has started to look for both clinical and non-clinical acquisition opportunities to increase both the density and geographic scope of our personal care service offerings in Texas and to add complementary clinical services to achieve our goal of broad coverage across the state for all three levels of home care,” CEO Dirk Allison commented. Guidance Management reaffirmed a minimum annual revenue growth target of 10% and expects same-store personal care hour growth of at least 2% per year. Adjusted EBITDA margin is projected to remain above 12% for the full year, with continued focus on operational and technological improvements. The company is monitoring potential rate changes in key markets, including Texas, and remains committed to selective, accretive acquisitions. Aveanna Healthcare (Nasdaq: AVAH) Highlights Aveanna reported total revenue of $559.2 million, up 14.0% from $490.7 million in Q1 2024. This result exceeded analyst expectations and was driven by growth in the Private Duty Services segment, which contributed $38.0 million of the increase. Home Health & Hospice revenue increased by $2.1 million. Gross margin rose 25.9% to $183.6 million, representing 32.8% of revenue (up from 29.7% in Q1 2024), reflecting improved operational efficiency and cost management. The Private Duty Services segment delivered approximately 10.9 million hours of care, a 6.1% volume increase, and revenue per hour rose 10.4% year-over-year, driven by preferred payer volume growth and rate enhancements. CEO Jeff Shaner highlighted the quarter as a reflection of continued positive momentum and strategic transformation, with all three operating divisions contributing to growth and improved profitability. Key Financial Figures M&A Activity Aveanna is actively re-engaging in M&A activity in 2025, with a primary focus on acquiring companies in the Private Duty Services (PDS) and Home Health & Hospice segments. The company announced an agreement to acquire Thrive Skilled Pediatric Care, with the transaction expected to close in Q2 2025. On the Thrive deal, CEO Jeff Shaner stated, “This is the perfect acquisition for Aveanna. I’ve told other folks it checks all the boxes. Our missions are very alike. What we do every day in both Aveanna and Thrive fit each other like hand in glove. So that’s, for us, most important. From a cultural and clinical standpoint, do we both think alike? And the answer is yes, we do.” Guidance Aveanna raised its 2025 outlook, now expecting revenue to exceed $2.15 billion and adjusted EBITDA to surpass $207 million, driven by strong Q1 results and continued growth in Private Duty Services. The company remains focused on operational efficiencies, strategic acquisitions, and strengthening payer partnerships to support long-term profitability. Key 2025 initiatives include strengthening partnerships, improving efficiency, and integrating acquisitions for long-term growth. The Pennant Group, Inc. (Nasdaq: PNTG) Highlights Pennant Group reported total revenue of $209.8 million for Q1 2025, a 33.7% increase over the prior year quarter, and significantly beating analyst expectations. The Home Health and Hospice segment delivered a standout quarter, with revenue up 37.2% year-over-year to $159.9 million while home health admissions jumped 28.9% to 18,878, and hospice average daily census increased 28.1% to 3,794. The Senior Living segment also grew, with revenue rising 23.6% to $50 million and average monthly revenue per occupied unit up 11.3% to $5,193, though occupancy remained flat at 78.5%. Total admissions grew to 18,878, an increase of 4,229 or 28.9%. Medicare admissions rose 19.7%, and Medicare revenue per episode increased by 9.3% each over the prior year quarter. Key Financial Figures M&A Activity In August 2024, PNTG completed the first phase of its $80 million acquisition of Signature Healthcare at Home’s Washington and Idaho assets. In Q1 2025, it finalized the two-stage acquisition, closing on Signature’s Oregon assets. The Company claims to have successfully integrated these operations ahead of schedule, with many new sites already outperforming expectations. President and COO John Gochnour commented, “We continue to evaluate a strong pipeline of acquisition opportunities in both segments. As always, we will approach these opportunities with discipline, pursuing only those we believe we have the leadership capacity and operational strength to support. Guidance PNTG continued with the full-year 2025 guidance as follows: Revenue: Range of $800 million to $865 million Adjusted EBITDA: Range of $63.1 million to $68.2 million Adjusted EPS: $1.03 to $1.11 The company also indicated it is trending toward the upper end of this guidance range based on strong Q1 performance and momentum. Enhabit Home Health & Hospice (Nasdaq: EHAB) Highlights Enhabit’s Q1 2025 net service revenue was $259.9 million, down 1% from the prior year, but the company delivered strong profitability with net income of $17.8 million-boosted by a $14.7 million after-tax gain on an investment sale. The home health segment faced a 5.9% revenue decline to $200.6 million yet saw sequential improvement with a 3.7% increase in average daily census and nearly 1% year-over-year admissions growth, while cost per patient day dropped 2.4% because of operational efficiencies and productivity gains. Hospice operations were a standout, with revenue surging 20.5% year-over-year to $59.3 million, average daily census climbing 12.3%, and admissions up 8%. Enhabit reduced its bank debt by $25 million during the quarter, bringing total debt to $489.8 million and lowering its leverage ratio to 4.4x. Key Financial Figures M&A Activity Enhabit has not announced any M&A deals but remains open to a sale, merger, or other strategic options. The company met its Net Leverage Ratio requirement (as per credit agreement with Wells Fargo) for June 2025 one quarter ahead of schedule, bringing it below the 4.5x threshold. This early compliance will now allow the company to benefit from better credit terms and financial and operational flexibility including the capability to pursue acquisitions one quarter earlier than expected. Guidance Enhabit reaffirmed its guidance for full-year 2025 as follows: Revenue: Range of $1.05 billion to $1.08 billion Adjusted EBITDA: Range of $101 million to $107 million Adjusted EPS: Range of $0.41 to $0.51 This guidance reflects its long-term growth strategy in home health and hospice. Stabilized Medicare census, a renegotiated national contract, and a growing hospice segment highlight its strengthened market position. These developments reinforce its commitment to operational and financial improvement in 2025. BrightSpring Health Services, Inc. (NASDAQ: BTSG) Highlights BrightSpring Health Services delivered a strong Q1 2025, with net revenue rising 25.9% year-over-year to $2.88 billion, driven by robust growth in both Pharmacy Solutions (up 28% to $2.53 billion) and Provider Services (up 12% to $346 million). The company achieved a major turnaround in profitability, posting net income from continuing operations of $9.2 million compared to a $56 million loss in Q1 2024. Pharmacy Solutions was the primary growth engine, benefiting from BrightSpring’s scale and focus on specialty pharmacy for chronic and complex conditions, while Provider Services saw higher home health care volumes and average daily census. Provider Services saw notable gains, particularly in Home Health Care (up 20.9%), with average daily census rising 11.6% to 30,241 patients, though the segment’s EBITDA margin dipped slightly to 14.8%. Gross profit increased 15.7% to $338 million, reflecting not just revenue growth but also improved operational efficiency and cost discipline. Key Financial Figures M&A Activity In Q1 2025, the Company acquired a Provider Services business for approximately $6.8 million to expand its service offerings and geographic footprint. The transaction resulted in $6.4 million of goodwill and a $0.4 million non-compete intangible asset. The acquisition contributed $0.8 million in revenue and $0.3 million in operating income for the quarter. Further, the company continues to pursue strategic tuck-in acquisitions. CEO Jon Rousseau mentioned, “We continue to execute on our disciplined M&A strategy, focusing on acquiring complementary businesses that align with our core services and expand our geographic footprint.” Guidance BTSG has provided revenue and Adjusted EBITDA guidance for the full year 2025 as follows: Revenue: Range of $12.0 billion to $12.5 billion Adjusted EBITDA: Range of $570 million to $585 million This guidance underscores confidence in continued robust growth across its core pharmacy and provider service lines in 2025. Option Care Health, Inc. (NASDAQ: OPCH) Highlights Option Care Health reported Q1 2025 revenue of $1.33 billion, a 16.3% increase from $1.14 billion in Q1 2024, driven by balanced growth across both acute and chronic therapy portfolios and continued expansion in alternate site infusion services. Gross profit was $263.1 million, or 19.7% of net revenue, up 10.3% from $238.5 million in Q1 2024, though gross margin declined from 20.8% last year due to higher operating expenses, which rose 8.5% to $183.9 million. Net income increased to $46.7 million, compared to $44.8 million in Q1 2024, and adjusted EBITDA increased by 13.7% to $111.8 million, reflecting strong operational performance and profitability. The company significantly improved cash flow from operating, using only $7.2 million versus $68.8 million in the prior year, and repurchased approximately $100 million of its own stock during the quarter, signaling confidence in its growth trajectory. Key Financial Figures M&A Activity Option Care Health continued emphasizing mergers and acquisitions as a core pillar of its growth strategy in Q1 2025, with management reiterating commitment to deploying capital for accretive acquisitions and expanding the company’s national footprint. In January 2025, Option Care closed it’s $117 million acquisition of Intramed Plus, a South Carolina-based infusion provider. This deal was aimed at broadening Option Care’s advanced practitioner model and enhancing its clinical capabilities, particularly in complex infusion therapies. Option Care Health maintains a strong pipeline of potential acquisitions and continues to evaluate both tuck-in and larger deals, supported by its solid balance sheet and healthy cash flow, which provide flexibility for future M&A, share repurchases, and internal investments. Guidance OPCH has now updated their guidance for the full year 2025 as follows: Revenue: Range of $5.4 billion to $5.6 billion Adjusted EBITDA: Range of $455 million to $470 million Adjusted EPS: Range of $1.61 - $1.70 Key drivers for the raised guidance are strong Q1 results, operational improvements, and continued expansion, signaling confidence in sustained growth for the remainder of the year. To download the .pdf version of this report, click below.

Insights from David Jackson, CEO of Choice Health at Home Mertz Taggart recently launched its “Behind the Curtain” webinar series , aimed at providing agency owners with a transparent look at the inner workings of healthcare M&A. In our first session, David Jackson—Founding Partner & CEO of Choice Health at Home—shared his playbook for sustainable growth and acquisition success. Joined by Mertz Taggart’s Cory Mertz and Michael Lloyd, Jackson detailed what strategic buyers are really looking for in today’s market—and how operators can position themselves for a premium outcome. "If you're driving toward quality, you're already driving toward value-based care."  – David Jackson, CEO, Choice Health at Home From Therapist to CEO: Building a Scalable Healthcare Platform Jackson’s journey began as a physical therapist inspired by personal family experiences. That early passion led to the founding of a rehab business in 2007, which evolved into today’s Choice Health at Home —a diversified provider spanning home health, hospice, personal care, and rehab, with thousands of employees across seven states. “We started with three credit cards and a bad line of credit. But we had a vision—to deliver care in the home and build something that lasts.”  – David Jackson What Buyers Like Choice Health At Home Look For Whether you're preparing to sell now or positioning for a few years down the road, here’s what stands out most to strategic buyers like Choice: Compliance First Buyers conduct compliance audits before anything else. A history of failed audits or unclear documentation is often a dealbreaker. “Compliance precedes everything else. If there’s a red flag, it’s a non-starter.”  – David Jackson Quality Metrics That Matter From HHVBP performance to CMS star ratings, quality metrics directly affect enterprise value. Jackson emphasized that quality and financial health are closely linked. Well-Organized Financials Accrual-based accounting, clean P&Ls, and clearly defined gross margins are critical. Jackson cautioned that “cash-based” books create complications during diligence. “Get your financials in order. $2,500 a month with a good accountant could be the best investment you make pre-sale.”  – David Jackson Sustainable Payer Mix Buyers expect your payer mix to align with your market. If you are in a market dominated by Medicare Advantage, yet 90% of your revenue comes from traditional Medicare, it can be concerning. Home Health, Hospice, and Personal Care: Tailored Strategies for Each Sector Jackson broke down his acquisition lens across each of Choice’s three core service lines: Home Health Top priorities:  Compliance, CMS quality scores, gross margin structure, and alignment with local payer trends. Bonus:  Regional density can command a premium. “Home health remains the most viable vehicle for reducing re-hospitalization and delivering care at the lowest cost.” Hospice Focus:  Regulatory compliance is the #1 challenge in today’s transactions, especially in enhanced oversight states like Texas, Arizona, Nevada, and California. Outlook:  AI is creating real opportunities to automate compliance workflows and pre-screen documentation. Hospice Enhanced Oversight States (2024) “We’re excited about AI’s ability to audit 100% of our hospice charts. Compliance in this sector is everything.” Personal Care Challenges:  Labor compliance, Medicaid rate uncertainty. Strategy:  Diversification. Choice maintains a 60/40 Medicaid-to-private-pay mix to protect against policy swings. “We want to care for people, regardless of what the government hands us. Being diversified helps us do that.” David Jackson, Founding Partner & CEO, Choice Health at Home The Value of Using an Advisor As a buyer who has executed 20 transactions since recapitalization, Jackson had some clear advice for founders: “You’ve built something valuable. When it’s time to sell, get help. A good advisor can prepare you, manage the process, and protect your interests.” He added that some of Choice’s most successful deals came after initially being a backup bidder—only to win the deal when others fell short. Looking Ahead: Growth in the Southwest and Beyond Jackson and his team at Choice remain active buyers, with a current focus on home health and personal care assets in the Southwestern U.S. But their disciplined approach to building density, scalability, and long-term value will resonate in any geography. “We're not just buying businesses. We're building infrastructure for the next decade of care.” Watch the Full Webinar Catch the full discussion between David Jackson, Cory Mertz, and Michael Lloyd for deeper insights: 👉 Visit this link .

Deal volume across the behavioral healthcare sector continued to drop in the third quarter of 2024 to levels not seen since the onset of the COVID-19 pandemic. Analysts at Mertz Taggart, however, say all signs point to a major rebound in 2025. Behavioral Health M&A Even when factoring in venture capital growth deals, just 31 behavioral healthcare transactions were announced in Q3. Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. “It’s gotten tougher to get deals done in the second half of this year, and the numbers would certainly reflect that,” Mertz Taggart Managing Partner Kevin Taggart said. “A lot of the strategic buyers are sitting on the sidelines right now with regards to both the mental health side and the addiction side.” In the addiction treatment space, larger strategic buyers could be counted on to complete four or five deals in a quarter. Right now, though, some of those buyers are choosing to sit out, and deals that are getting done are often taking longer to complete in 2024, Taggart said. On the mental health side, deal volume has declined significantly from the halcyon days of 2022, when 42 transactions were reported in the third quarter alone. For comparison, just 19 such deals were announced in Q3 of 2024. “Buyers are becoming much more discerning,” Taggart said. “some of the buyers that are still digesting some of the acquisitions they did over the last couple years are sitting on the sidelines. I'm optimistic that they'll be back in the market. It might not happen until 2025, though.” In becoming more selective, buyers are showing a greater affinity for medical practices than counseling-only businesses. Those that provide other types of services, such as ketamine treatments, for example, mixed in with medical and counseling services are also a plus. “As providers are thinking about what services to offer, medical businesses are getting a premium relative to the counseling-only businesses,” Taggart said. Looking ahead, the degree to which behavioral healthcare transaction volume experiences a resurgence in 2025 could hinge on two factors, Taggart said: Whether the Federal Reserve makes good on its pledge to move forward with a series of rate cuts.  The Fed has made two rate cuts since September, and there is optimism that the cuts will continue in the new year. Whether private equity firms finally tap into their large reserves of dry powder they’ve been waiting to put to use.  “They have to do something with that money eventually,” Taggart said. “And returning it to their GP partners, uninvested, is not what anyone wants.” Addiction Treatment M&A Just six deals involving addiction treatment service providers were announced in Q3, a drop from the 11 reported in each of the prior two quarters.  Deals either completed or announced in the quarter include the following: Aware Recovery Care , a provider of in-home addiction treatment services in 11 states, has raised $3.5 million of new capital in a round led by Connecticut Innovations. Tulip Hill Healthcare announced in August that it has taken a majority ownership stake in two detox facilities: Tennessee Detox Center  and  Live Again Detox to expand its presence in Kentucky and Tennessee. DisposeRx announced a sale of its  Coaches vs Overdoses  program to Pennant LLC . The program was developed by DisposeRx to help combat the opioid crisis by raising awareness, reducing stigma, and empowering high school coaches and athletes to become prevention and recovery advocates. Magnificent Legacy Capital and Legacy Quest Partners acquired Windmill Wellness Ranch  in a private equity platform deal. Bradford Health Services  announced it has acquired Lakeview Health , which operates four programs. The acquisition was backed by Lee Equity Partners. In July, Ethema Health Corporation  announced that it had entered into a letter of intent agreement to purchase all of the assets of Edgewater Recovery Center  of Morehead, Kentucky. Two other deals involving facilities that include addiction treatment among their services offered were also announced: Prairie Ridge South , formerly known as Prairie Ridge Integrated Behavioral Healthcare, merged with Substance Abuse Treatment Unit of Central Iowa . The latter will now operate as Prairie Ridge South. San Angelo, Texas-based Shannon Medical Center acquired River Crest Hospital  from Universal Health Services . River Crest is an 80-bed facility that offers behavioral health and substance use disorder treatment programs for children, adolescents, adults, and military members. Mental Health M&A A total of 19 deals involving mental healthcare providers was announced in Q3, roughly on par with the 18 reported in the prior quarter. Five mental healthcare-focused deals were of the growth funding variety: Pomelo Care raised $46 million for its maternal health platform in a Series B funding round led by venture capital firms First Round Capital and Andreessen Horowitz Bio + Health. Patient-matching platform Headway closed a $100 million funding round led by Spark Capital, bringing its valuation to $2.3 billion. Spring Health , a New York City-based mental health solution for employers and health plans, announced that it raised $100 million in a Series E funding round led by Generation Investment Management, along with participation from existing investors Kinnevik, William K. Warren Foundation, RRE, and Northzone. Mental health chatbot company  Slingshot AI raised a $30 million funding round led by Andreessen Horowitz. BeMe Health , a Miami, Florida-based provider of teen-focused digital mental health services, raised $12.5 million in a Series A funding round led by growth capital investor Hesperia Capital. Other deals included the following: Iredell Health System signed a definitive agreement to acquire Davis Regional Psychiatric Hospital from subsidiaries of Community Health Systems, Inc. Vibrant Emotional Health , a New York-based not-for-profit mental health organization, announced its acquisition of  Stars of HOPE , a program of the New York Says Thank You Foundation. Release Recovery , a New York-based substance use and mental health recovery organization, acquired MANUAL , a personal development and wellbeing platform for young men that is currently available in more than 50 colleges and high schools. Lightyear Capital completed a strategic investment in CuraLinc Healthcare,  a provider of employee assistance, student, and workforce mental health programs. Virtual mental healthcare services provider Uwill acquired competitor Virtual Care Group  in a private equity-backed deal.  Fabric , a healthcare technology and care enablement system, acquired MeMD , a provider of virtual behavioral, urgent, and primary care benefits, from Walmart. Beacon Behavioral Partners , a provider of support services for behavioral healthcare practices, announced its first partnership in Pennsylvania with Nexus Group , a Pittsburgh-based outpatient mental health facility. Neuronetics and Greenbrook TMS  announced in August that they have entered into an agreement for Neuronetics to acquire all outstanding common shares of Greenbrook in an all-stock transaction. Riverside Impact Capital made an investment in Denver Mental Health Collective .  Pneuma Behavioral Health  announced a partnership with Crossroads Counseling Center , a behavioral health practice in Hickory, North Carolina. Autism and Intellectual/Developmental Disabilities M&A Although deal volume remained modest in the subsector of autism and intellectual/developmental disabilities (I/DD), Taggart said he sees potential for a surge in demand among investors for providers of applied behavioral analysis (ABA) therapy in 2025. Factors, such as labor costs, that have created headwinds for ABA companies in recent years have started to settle, and the result could be more deals getting done next year, he said. The following transactions involving autism and I/DD therapy providers were announced in Q3: ABA and autism diagnosis provider  Soar Autism  secured $19.3 million in a funding round. Investors were not disclosed. Autism Testing 4 Kids  raised $2.5 million, with 46 unnamed investors participating in the funding round. Beacon Specialized Living acquired  Community Concepts Inc.  and Community Visions LLC , marking Beacon’s first foray into Virginia. ABA Connect announced its acquisition of ABA Therapy of Houston , giving the company two clinics in Katy, Texas, and a network of 12 clinics across Texas and Colorado overall. Behavioral Framework  of Rockville, Maryland, announced that it has acquired Behavior Consultation & Psychological Services , a provider of clinic-, home-, and school-based ABA therapy and autism diagnosis services in North Carolina. If you are interested, you can also download the Q3 2024 Behavioral Health M&A Report via the following link:

Behavioral Health M&A A recent uptick in behavioral healthcare mergers and acquisitions and pent-up demand by private equity to transact has buyers both new and old appearing poised to hit the ground running in 2025. A total of 37 transactions—26 traditional M&A deals and 11 growth deals—were reported in the fourth quarter of 2024, bringing the total for the year to a combined 155 transactions. The 11 growth deals in Q4 had a combined value of about $170 million. Traditional M&A activity for 2024 was fairly consistent with the prior year. As 2024 came to a close, the volume of chatter among potential buyers from all corners increased, Mertz Taggart Managing Partner Kevin Taggart said. “If you look at most active buyers, it's pretty well spread out,” said Taggart. “Buyers who had been sitting on the sidelines for a while reached out to us late in Q4 to catch up before the new year, and we're starting to see some of the old buyers who haven’t been as active the past couple of years show interest in looking at deals again. That's a positive sign. Overall, we’re very optimistic about 2025.” The return to the White House of President Donald Trump for a second term could provide a catalyst for an increased flow in deals, with the Trump administration’s demonstrated preference for deregulation viewed as a positive for deal-making, Taggart said. With that being said, over the last few weeks things have been moving very quickly in Washington, which has given some buyers pause for certain sectors of behavioral health. If behavioral healthcare M&A activity does ramp up in 2025, Taggart pointed to two subcategories that could be poised for a comeback: addiction treatment, which has several strategic buyers showing renewed interest in making acquisitions, and autism, where slightly new models are attracting the attention of different buyers. Addiction Treatment M&A Just 8 deals involving addiction treatment providers were reported in Q4, up from 6 deals reported in Q3. Overall in 2024, 36 addiction treatment provider transactions were announced, a modest increase from 2023, which saw 29 deals, but still an unexpectedly low total and a far cry from the halcyon days of 2021, in which 79 transactions were completed. “If we look at the addiction subcategory, it was pretty anemic in 2023, and it was still slow in 2024,” Taggart said. “But I think that's going to rebound because some of the buyers that are coming back into space are more in the SUD side.” Among those buyers making a splashy return: Acadia Healthcare , which acquired 3 South Carolina-based opioid addiction treatment programs in October. The Franklin, Tennessee-based behavioral healthcare services company acquired Recovery Concepts , Recovery Concepts of the Carolina Upstate , and Clear Skye Treatment Center . Those programs were rebranded as Clinton Comprehensive Treatment Center, Easley Comprehensive Treatment Center and Ridgeland Comprehensive Treatment Center, respectively. Other transactions involving addiction treatment providers in Q4 included the following: Santé Center  in Argyle, Texas, was sold to two staff members—Sam Slaton, MEd, LPC, MBA, MHSM, and Michelle Luttrell, MA, LMFT-S, MBA, MHA—and Keith Klein, MC, CPA. Lawrence Medical Center  acquired  New Horizons Medical , which operates six clinic locations, as well as a mobile clinic. Owner Resource Group, an Austin, Texas-based private equity firm, announced that ORG Opportunity Fund IV and its affiliates completed an investment in Purpose Healing Center . Peace Medical  in Oakland Park, Florida, was acquired by an undisclosed “healthcare professional with an existing general health practice,” according to a news release. Mental Health M&A The fourth quarter of 2024 saw 25 deals involving mental healthcare providers, bringing the total for the year to 99 transactions. When excluding growth deals, transaction volume in 2024 was down from the previous two years. While there is still demand for medical outpatient and psychiatry practices, valuations for outpatient mental healthcare care facilities have come down slightly, Taggart said. Demand for counseling-only practices is down as well, he added. Q4 deals involving mental healthcare providers included the following: Carlyle Group-backed Odyssey Behavioral Healthcare , traded hands for the first time since 2018. JLL Partners acquired the platform in November. Odyssey provides facility-based behavioral health care that addresses substance use, eating, mental health, and process disorders. American Health Partners announced a transaction for Unity Psychiatric Care  in a private equity-backed strategic deal. Los Angeles-based  Amae Health  announced that it raised $6 million through a partnership with nonprofit academic health system Cedars-Sinai Medical Center . Clinica Family Health  announced a merger with Mental Health Partners  to form Clinica Family Health & Wellness. CuraLinc Healthcare  acquired the employee assistance program of Wellspring Family Services in a deal backed by primary investor Lightyear Capital. Family of Kidz  in Westbury, New York, acquired Milestones for Munchkins . Private equity firm Fireside Strategic Corporation made an investment in South Lake Center for Self Discovery in Davidson, North Carolina. Hightop Health , an outpatient mental health group, expanded its network of programs in the Atlanta area to 7 facilities with its acquisition of Georgia Psychiatry & Sleep  in a private equity-backed strategic deal. Neuronetics  completed its previously announced acquisition of Greenbrook TMS . Paramount Health Management  acquired St. George, Utah-based  Life Launch Centers and its four facilities in the state. The Queen’s Health Systems has acquired O‘ahu-based Kahi Mohala  from California-based Sutter Health Pacific. Kahi Mohala is the only freestanding, not-for-profit psychiatric hospital in the state of Hawaii. Mental healthcare provider Resilience Lab  announced an expansion of its services to include medication management and treatment of severe mental illness with its acquisition of AI-enable psychiatry provider Options MD . Stella ,   an interventional psychiatry practice, acquired the 5 Utah wellness clinics of psychedelic-assisted therapy provider Numinus Wellness for $3.53 million in a private equity-backed strategic transaction. Lynchburg, Virginia-based mental health provider Thriveworks acquired Synchronous Health , an AI-powered behavioral health company based in Nashville, Tennessee. Autism and Intellectual/Developmental Disabilities M&A After a slower 2023, the autism and intellectual/developmental disabilities (I/DD) subsector saw 7 deals announced in the fourth quarter of 2024 and 30 total deals for the year. Major bankruptcies, large strategic ABA companies struggling,  and wage inflation for registered behavior technicians (RBTs) were among the factors that have strained the autism and I/DD subsector in recent years, Taggart said. "Many providers struggled post-COVID, but some of the dust has settled on that, and we expect it to continue to improve, as buyers are showing interest in jumping back in,” Taggart said. “We're also seeing some slightly new models in that space that I think are attracting some interest from different buyers.” The following deals involving providers of autism and I/DD services were announced in fourth quarter: Autism Spectrum Interventions  acquired Los Angeles-based applied behavior analysis (ABA) therapy provider Quality Behavior Solutions  in a strategic deal backed by private equity firm Fletch Equity. Goldman Sachs Alternatives acquired autism therapy provider Center for Social Dynamics  in a private equity platform transaction. Helping Hands Family (HHF), a provider of ABA therapy, acquired Mission Autism Clinics  (MAC). The 12 MAC facilities will transition to the HHF brand as part of the deal. Living Innovations Home Care  acquired Momentum , a Maine-based provider of shared living and other behavioral health services to individuals with I/DD. Kelly , a workforce solutions provider, acquired Children’s Therapy Center . The childhood therapeutics company will be integrated into the Pediatric Therapeutic Services arm of Kelly's education workforce solutions provider, Kelly Education. Proven Behavior Solutions , a provider of outpatient therapy services for Massachusetts children with autism, acquired Prism Autism Education & Consultation  of Connecticut. If you are interested, you can also download the Q4 2024 Behavioral Health M&A Report via the following link:

Insights from the April 10, 2025 Capital + Strategy panel discussion sponsored by Mertz Taggart On April 10, 2025, Mertz Taggart hosted a practical, experience-driven panel titled “Closing the Deal: Overcoming Common Challenges in Home-Based Care M&A".   The discussion featured Bruce Vanderlaan, Managing Director at Mertz Taggart, alongside Cameron Cordts (PurposeCare) and Mike Trigilio (HouseWorks)—three seasoned professionals who’ve collectively closed dozens of transactions across the home-based care spectrum. Bruce Vanderlaan (Mertz Taggart), Cameron Cordts (PurposeCare) and Mike Triligio (HouseWorks). The session provided valuable insights for any agency owner wondering how to sell a home health agency  or navigating the early stages of preparing for an exit. While the conversation covered a wide range of topics, one consistent theme emerged: sellers who prepare early, stay engaged, and partner with experienced advisors are far more likely to achieve a successful—and smooth—transaction. Insights for Agency Owners Preparing to Sell 1. Selling Your Agency Is a Full-Time Job Bruce Vanderlaan opened the conversation by stressing the intensity of the process: “This isn’t something you do on nights and weekends. It’s another full-time job on top of running your agency.” Cameron Cordts added that PurposeCare addresses this by breaking down due diligence into weekly milestones, helping sellers stay on track without becoming overwhelmed. 2. Understand the Emotional Commitment Whether you’re asking, “How do I sell my home health agency?”  or already deep in discussions, sellers often underestimate the emotional aspect of the decision.“It’s not uncommon to see tears at the closing table,” Bruce noted. “These businesses are personal legacies.”Mike Trigilio, who has led and sold multiple businesses, agreed: “Even institutional sellers get emotionally invested. Letting go is never as easy as it looks on a spreadsheet”. 3. Trust Is a Must Vanderlaan emphasized that one of the biggest hidden challenges is a seller’s hesitation to share information, often driven by a lack of trust. “Our role is to connect them with vetted, reputable buyers. That credibility makes a difference”. To reinforce transparency, Cameron shared that PurposeCare introduces sellers to their local leadership team early—providing peace of mind about the future of their business post-close. 4. Keep Clean Financial Records When discussing the valuation of a home care business, all panelists stressed the importance of accurate, clear financials. Bruce recounted deals where large personal expenses were mixed into business records. “If buyers can’t separate the owner’s lifestyle from the agency’s true earnings, it impacts perceived value." Clean, well-documented financials directly influence how buyers approach valuation and confidence in the deal. 5. Working Capital Creates Tension A common sticking point in nearly every transaction? Working capital.“Sellers feel like they’re giving up their hard-earned receivables,” Cameron noted. “Buyers just want to avoid funding payroll on Day One.” Bruce likened it to selling a car: “You want to hand it off with an empty tank; the buyer wants it full. Our job is to agree on how full it needs to be”. 6. Labor and Compliance Can Be Deal-Killers All panelists underscored how wage and hour violations, improper classification, or missing documentation can create last-minute complications. Mike explained, “We’ve never gone through a deal where something didn’t pop up. The key is to find it early and manage the risk”. 7. Choose Advisors Who Know Healthcare M&A The session concluded with an important reminder: your advisory team matters.“If your attorney doesn’t specialize in transactions, or your accountant isn’t responsive, the entire deal can suffer,” Bruce warned. Cameron and Mike agreed—smooth deals tend to happen when sellers are supported by advisors who understand healthcare and know how to manage the M&A process. Final Thoughts Whether you're simply exploring how to sell your home health agency  or actively preparing to take your business to market, this session delivered valuable, actionable advice. Bruce Vanderlaan summed it up best: “The deals that succeed are the ones where the seller is prepared, the advisory team is aligned, and there’s mutual trust between both sides. That’s when everything starts to click”. Bruce Vanderlaan, Managing Director at Mertz Taggart If you’re considering an exit and want to understand what goes into the valuation of your home care business  or how to position yourself for a successful deal, Mertz Taggart is here to help. If you're asking yourself, "How do I sell my home health agency?"  or want to better understand the valuation of your home care business , the best next step is a conversation with an experienced M&A advisor. At Mertz Taggart , we specialize in helping home-based care providers—like you—navigate the complexities of selling. From valuation to deal structure, we guide you every step of the way. 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Mertz Taggart follows the publicly traded home-based care companies and reports on their earnings calls each quarter. As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively. Historically seen as the “ultimate consolidators”, the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A. Addus Homecare (Nasdaq: ADUS) Highlights Addus reported strong operating results in Q4 2024, with total revenue increasing by 7.5% to $297.1 million from $276.4 million in Q4 2023. This growth was driven by a combination of solid organic expansion and contributions from recent acquisitions.  The personal care segment, representing 74.1% of total revenue, experienced a 5.8% organic growth in Q4 2024 compared to Q4 2023, driven by strong demand and favorable reimbursement across its markets. In Q4 2024, the company successfully expanded its caregiver workforce while maintaining historically low turnover rates.  Home health admissions saw steady growth in Q4 2024, supported by increased physician referrals and expanded partnerships with payers. The company continued to invest in technology and care coordination efforts to enhance service delivery and improve patient outcomes. The company had strong operating cash flow in Q4 2024 enabling them to pursue acquisitions while maintaining disciplined expense management and stable margins. Key Financial Figures M&A Activity Addus continued to grow through strategic acquisitions, completing two major transactions in 2024. The Gentiva Acquisition, finalized on December 2, 2024, expanded the company’s personal care business, while the acquisition of Upstate Home Care Solutions on March 9, 2024, further strengthened its presence in key markets. Acquisitions completed in 2024 contributed $22.6 million in net service revenues for the year, highlighting the company’s successful execution of its acquisition strategy. This compares to $18.8 million in net service revenues from acquisitions completed in 2023. “As we continue to look for acquisitions that align with our growth strategy, our primary objective is to find operations and markets where we can leverage our strong personal care presence and add clinical services so we can offer all three levels of home-based care,” CEO Dirk Allison stated. Guidance Illinois' FY 2025 budget raises in-home care service rates to $29.63 per hour, effective January 1, 2025, benefiting AddusHomeCare's revenue and profitability in the state. The company had a strong Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. Aveanna Healthcare (Nasdaq: AVAH) Highlights Revenue for Q4 2024 totaled $422.2 million, reflecting a 9% increase compared to Q4 2023. Aveanna achieved growth across all three operating divisions, with Private Duty Services increasing 10% & Medical Solutions rising 5% y-o-y. EBITDA for the quarter was $54.9 million, representing a 70% increase y-o-y. This growth was primarily driven by higher core volume, an improved payer rate environment, and the successful implementation of cost-reduction initiatives. Aveanna recognizes that the primary challenge remains the labor environment, particularly the shortage of available caregivers. In the past quarter, the company made notable progress in caregiver hiring and retention, positively impacting service capacity and financial performance. Key Financial Figures M&A Activity Aveanna CEO Jeff Shaner stated, “We feel like we have not only stabilized the company but put the company back on the rightful path for growth and success. And we believe it’s time for us to reenter the M&A market.”  The company plans to close transactions in 2025, focusing on acquisitions within the Private Duty Nursing and Home Health & Hospice segments as part of its inorganic growth strategy. Guidance In 2024, Aveanna has secured 12 state rate increases for Private Duty Services, with additional states expected to implement increases in early 2025. The company has worked closely with the California Governor, Medi-Cal Department, and the Legislature to highlight how private duty nursing rate investments reduce healthcare costs and will continue partnering with California officials to pursue further rate increases in the 2025/2026 budget.  Aveanna has provided full-year 2025 guidance as follows: Revenue range - $2.1 - $2.12 billion and an adjusted EBITDA range of $190 - $194 million owing to the expected continued organic volume growth, improved clinical outcomes, and enhanced profitability into 2025 The company had a good Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. The Pennant Group, Inc. (Nasdaq: PNTG) Highlights The company achieved total revenue of $188.9 million in Q4 2024, marking a 29.4% increase compared to the same period in 2023. This growth reflects strategic investments in leadership, occupancy enhancements, improved revenue quality, and operational efficiencies.  The Home Health segment continued to show strong growth, with quarterly revenues reaching $78.6 million, a 50% increase year-over-year. Total home health admissions increased by 40.9%, while Medicare home health admissions increased by 30.1%. The Hospice segment achieved a 17% increase in revenue year-over-year, supported by improvements in hospice programs and the successful integration of recent acquisitions, which have helped differentiate its operations within the community. Hospice admissions increasing by 21.7%. The Senior Living segment generated $46.9 million in revenue, representing a 29% increase over the prior year quarter. Key Financial Figures M&A Activity In August, PNTG completed the first phase of its planned acquisition of Signature Group, LLC operations (Washington and Idaho assets). This acquisition added four home health agencies and one hospice agency to the Company’s portfolio. According to PNTG’s President & COO, John Gochnour, “The integration and transition of these operations is proceeding well, and we are starting to unlock additional value by implementing our unique operating model, sharing best practices, and providing world-class support from our service center.” The Oregon assets of Signature represent the second and larger portion of the transaction, with preparations for closing on January 1, 2025.  Guidance Considering the company’s geographic distribution and the finalized wage index updates, Pennant anticipates a net neutral effect on per-episode reimbursement under the 2025 Final Rule. PNTG has provided full-year 2025 guidance as follows: Revenue: Range of $800 million to $865 million Adjusted EBITDA: Range of $63.1 million to $68.2 million Management's projections account for reimbursement adjustments and exclude acquisition-related costs and other non-core expenses, emphasizing a focus on operational performance and cash flow. The company had a strong Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. Enhabit Home Health & Hospice (Nasdaq: EHAB) Highlights The company reported net service revenue of $258.2 million for Q4 2024, a slight decrease of $2.4 million (0.9%) compared to the same period in 2023. Home Health revenue declined by 4% y-o-y. Non-Medicare admissions dropped 20.1%, driving total admissions growth of 4.8% year-over-year. Of these non-Medicare visits, 45% are now under payer innovation contracts at improved rates. However, while admissions grew, recertifications declined due to more admissions from acute care facilities with shorter stays and a changing payer mix in congregate living settings. This drop in recertifications was the main factor in the revenue decrease. Hospice revenue grew by $6.8 million or 13.3% year-over-year, driven by higher patient days and increased Medicare rates. Since January 2024, the average daily census has risen during the year 2024. Key Financial Figures M&A Activity The company remains limited by its credit agreement, which restricts acquisition opportunities due to current debt levels. As Enhabit Senior Vice President and Treasurer Jobie Williams stated, “We have focused this year on accelerating cash and paying down debt, and our success can be seen in our results. Our leverage decreased for the third quarter in a row. We ended the third quarter with a leverage ratio of 4.8 times.” Guidance Enhabit has provided guidance for full-year 2025 as follows: Revenue: Range of $1,050 million to $1,080 million Adjusted EBITDA: Range of $101million to $107 million This guidance reflects its long-term growth strategy in home health and hospice. Stabilized Medicare census, a renegotiated national contract, and a growing hospice segment highlight its strengthened market position. These developments reinforce its commitment to operational and financial improvement in 2025. The company had a strong Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. The company had a good Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. BrightSpring Health Services, Inc. (NASDAQ: BTSG) Highlights BTSG total revenue in Q4 2024 was $3.02 billion, representing 27% growth from the prior year period.  Pharmacy Solutions segment revenue was $2.4 billion, achieving growth of 33% year-over-year. Within the segment, Infusion and Specialty revenue showed a 22% increase compared to last year. And home and community pharmacy revenue grew of 11% year-over-year.  The Provider Services segment had revenue of $655.8 million, representing growth of 11% compared to the prior year period. Home health revenue was $1041.3 million for 2024, growing 13%, over 2023, with average daily census rising close to 45,000. This growth was driven by strong clinical quality, including 30-day readmission rates that are 60% lower than the national average, particularly notable in the company’s emerging primary care services. Community and rehab care revenue was $1,470.9 million for 2024, representing growth of 6.4% year-over-year. Gross profit increased across all segments compared to Q4 of last year. EBITDA reached $263.9 million, reflecting a 9% year-over-year growth. Key Financial Figures M&A Activity During the nine months ending September 30, 2024, BTSG completed seven acquisitions across its Pharmacy Solutions and Provider Services segments, aimed at expanding its services and geographic reach.  On September 1, 2024, BTSG announced the acquisition of North Central Florida Hospice, Inc. ("Haven Hospice"), which provides hospice and palliative care services throughout Florida. As CEO Jon Rousseau stated, “Towards the end of the third quarter, we announced the closing of the Haven Hospice acquisition, and we look forward to expanding our quality care to high-need patients in Florida. Our hospice business continues to show strong growth, with excellent patient satisfaction, currently holding an 84% overall care rating according to the Consumer Assessment of Healthcare Providers and Systems.” Guidance BTSG has provided revenue and Adjusted EBITDA guidance for the full year 2025 as follows: Revenue: Range of $11.6 billion to $12.1 billion Adjusted EBITDA: Range of $545 million to $560 million, reflecting anticipated growth of 18.4% to 21.7% compared to 2024.  The company had a good Q4 2024, however, Federal Medicare and Medicaid funding changes may modestly impact future momentum. Option Care Health, Inc. (NASDAQ: OPCH) Highlights OPCH reported Q4 2024 revenue of $1,346.4 million, a 20% increase from $1,124.4 million in Q4 2023, driven by strong growth in its rare and orphan portfolios and continued expansion in established therapeutic categories.  Gross profit was $568.4 million, or 19.9% of net revenue, up 9% from $100.3 million in Q4 2023. Gross profit continues to improve, and spending leverage is strengthening, with SG&A down nearly 1% year-over-year. EBITDA reached $104.5 million in 2024, reflecting a 4% increase from $100.3 million in the last year.  While Hurricane Helene impacted operations in the Southeast at the end of Q3 continuing to Q4, it did not materially affect overall results.  The company generated $323.4 million in cash flow from operations during 2024, reflecting a 13% drop from $371.3 in 2023. The company ended the quarter with cash balances of $412.6 million. There was also a decline in cash flows from financing activities as the company refinanced its debt securing $50.0 million in proceeds, which was offset by a $250.0 million stock repurchase over the year. Key Financial Figures M&A Activity 2024 was another quiet year for acquisitions for Option Care. But that is changing. Though it is a Q1 announcement, it is worth noting Option Care acquired Intramed Plus in January 2025. Intramed Plus is a home-based and AIC provider with pharmacy infrastructure and four locations in South Carolina.  The company paid a multiple of EBITDA in the “mid-teens” according to CFO, Mike Shapiro. Shapiro added further that Option Care expects this to normalize down into the low-teens fairly quickly, as a result of cost synergies. Option Care raised its revenue and EBITDA targets by $100 million and $5 million respectively, primarily as a result of the Intramed deal. They were quick to point out the $5 million in incremental EBITDA was after cost-synergies. Intramed will allow Option Care to further expand its advanced practitioner model. Guidance OPCH has provided revenue and Adjusted EBITDA guidance for the full year 2025 as follows: Revenue: Range of $5.3 billion to $5.5 billion Adjusted EBITDA: Range of $450 million to $470 million Cash flow from operations: $320 million Overall positive guidance, despite the $60 million to $70 million anticipated gross profit reduction as a result of the STELARA price change, which goes into effect January 1, 2026. To download the .pdf version of this report, click below.

The slowdown continued. But the pick-up is happening. After a booming M&A landscape in 2021 gave way to a moderate 2022 and 2023, home-based care dealmaking slowed considerably in 2024, dropping from 183 deals in 2021 to 110 in 2023 down to just 72 in 2024. That decline in 2024 ended with just 14 transactions in Q4, tied for the lowest quarter for home-based care M&A activity since the pandemic. But don’t expect things to stay that way. “Things are starting to move,” says Cory Mertz, Managing Partner at Mertz Taggart. “More transactions are moving forward. They just haven’t gotten across the finish line. But expect they will in 2025.  At the risk of getting ahead of ourselves, we’re seeing a fast start to Q1 2025, in terms of deals closed.” Home-Based Care M&A Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. Home care led the way with eight transactions, followed by six in hospice and just two in home health. Nine of the deals featured PE-backed companies. Election Impact on Home-Based Care M&A The most significant event in Q4 was undoubtedly the election.  While impacts from DOGE and the current administration’s view on Medicaid funding (and its potential impact on home-based care) are not yet known, positively or negatively, the Trump administration is expected to bring a positive shift to the healthcare M&A landscape by encouraging private sector growth and reducing regulatory hurdles. Recent scrutiny of private equity investment in healthcare in the form of legislation at both the federal and state levels has created uncertainty in the market, but the new administration’s anti-regulatory stance could reverse this trend and foster a more transaction-friendly environment. Added Mertz, “By focusing on deregulation, the administration is creating a climate where private equity investors have more confidence they can get deals more efficiently, unlocking opportunities in the healthcare sector.” Home Health M&A   Of the past 16 quarters, the two lowest quarters in home health M&A came in 2024: Q1, with four deals completed, and Q4, with just two. The first of those two was announced on October 13, when Brooklyn-based home health care agency Prime Home Health Services acquired the assets of Visiting Nurse Association of Staten Island (VNASI), which had ended its operations September 27. “That operation closed down, and Prime will do our best to continue to service the community by using and recognizing the name and how it resonates,” Prime Home Health Services CEO Christopher Doulos said in a statement. The second deal came less than a month later, when Choice Health at Home acquired the Oklahoma City-based Accentra Home Health and Hospice . As Choice noted, the acquisition means it will be able to cover 90% of Oklahoma’s urban and rural geographies. “This will improve the lives of our nurses, there will be less travel time and more density of patients in the metro areas,” Choice CEO David Jackson told Home Health Care News . “But also, it gives us the license numbers in the state to really be able to reach out and touch people in the rural areas as well. So, from a strategic planning perspective, we want to cover the Southwest, with Oklahoma included. Within that, we’re really intent on providing care in rural and urban settings, and this gives us the opportunity to do so.” Hospice M&A Choice’s acquisition of Accentra is also a hospice transaction, one of five that closed in Q4. The other four were all solely hospice. Hospice transaction activity has taken the biggest hit post-COVID of any of the three sectors; 2024 saw 25 hospice deals, down from 30 in 2023, 41 in 2022 and 81 in 2021. The four other hospice deals in Q4: Private equity firm Martis Capital acquired Dallas-based Three Oaks Hospice for $150 million. Chapters Health System acquired four non-profit hospices, including Hospice of Santa Cruz County . Long-term care company Mission Health Services acquired Utah-based Angel’s Crossing Home Hospice . Nevada-based Eden Health acquired A Plus Hospice Care . “This acquisition represented an expansion opportunity into an adjacent market within a state where the buyer, Eden Health, had developed a growing footprint,” Spencer Walters, senior director of Eden Health,  told Hospice News  in an email. “Eden Health has successfully grown their regional presence by supplementing organic growth efforts with an aggressive acquisition strategy.” Home Care M&A The busiest sector in Q4 was home care, with eight deals completed.  The biggest mover: Vistria-backed Help at Home, who completed four transactions in the quarter, including Helpmates Home Nurses in Pennsylvania, and Florida-based Caregiver Services (CSI). “CSI knows what it takes to be an employer that can cultivate a compassionate care workforce, and they’re also focused on providing high-quality care and being a trusted partner with the state of Florida and their payers in the communities they serve,” Ray Smithberger, chief operating officer of Help at Home, told Home Health Care News  following the deal. Other notable transactions in Q4 include: Canada-based Nova Leap Health acquired a Florida-based private duty home care agency in Florida.  While the selling company’s name has been withheld at Nova Leap’s request, the financial terms were made public.   Nashville-based Avenues Home Care acquired Texas-based Clear Path Home Care . Havencrest-backed Avid Health at Home, LLC acquired Sandhills Home Care in North Carolina. 2025 Outlook “We expect activity to pick up in 2025 relative to 2024.  There is too much pent-up demand from private equity, driven by aging dry powder.  These are committed funds from their LP investors that they have not yet been able to invest.   Leaving committed funds uninvested can make raising their next fund more of a challenge, so there is an impetus to invest now,” Mertz said. “We also expect to see more activity by sponsor-backed portfolio companies seeking an exit.  Some of them have shared with us that they’ve held off on their previously planned exits and see 2025 as the year to transact so they can ultimately give their investors a return on their capital.  If it’s a successful exit, and many will be, they will then be armed with good results that they can boast as they raise their next fund.” If you are interested, you can also download the Q4 2024 Home-Based Care M&A Report via the following link:

Mertz Taggart follows the publicly traded home-based care companies and reports on their earnings calls each quarter. As a group, public company performance and share price serve as a proxy for industry performance and investor sentiment, respectively. Historically seen as the “ultimate consolidators”, the publicly traded home-based care trading multiples have a downstream effect on lower middle market home-based care M&A. Addus Homecare (Nasdaq: ADUS) Highlights Addus delivered strong operating results in Q3 2024, with total revenue increasing by 7% to $289.8 million from $270.7 million in Q3 2023. This growth was driven by a combination of solid organic expansion and contributions from recent acquisitions. The personal care segment, representing 74% of total revenue, experienced 6.7% organic growth in Q3 2024 compared to Q3 2023, driven by strong demand and favorable reimbursement across its markets. In the Q3 2024, the company hired 79 personal care caregivers per business day, while turnover rates remained historically low. The hospice and home health segment's revenue growth was primarily driven by the 2023 acquisition of Tennessee Quality Care. The hospice segment’s average daily census grew modestly to 3,534 in Q3 2024, a 2.3% increase from 3,453 in Q3 2023. The Company maintained a stable gross profit margin of 32%, consistent with the levels reported in both Q3 2023 and Q2 2024. Key Financial Figures M&A Activity Addus is moving forward with the acquisition of Gentiva’s personal care business to strengthen the scale of its personal care segment. As Addus CEO Dirk Allison noted, “upon the close of this transaction, Addus will be the largest provider of personal care services in the state Texas, which is primarily a managed Medicaid market. In addition, this transaction will give us a larger presence in Arkansas, strength our California and Arizona private pay and Veterans Affair businesses and will add a location in Eastern Tennessee to our existing operations in the state and provide entry into both Missouri and North Carolina.”  ADUS expects the Gentiva acquisition to close in fourth quarter and will add $280 million in annualized revenues in personal care services. On May 21, 2024, the company agreed to sell its New York operations to HCS-Girling for up to $23 million, with the transfer contingent on regulatory approvals.  Guidance Addus expects a positive impact on the personal care segment from favorable reimbursement rates across its operating states. Starting January 1, 2025, Illinois, the largest state for personal care services, will implement a 5.5% rate increase. Aveanna Healthcare (Nasdaq: AVAH) Highlights Revenue for Q3 2024 totaled $509 million, reflecting a 6.5% increase compared to Q3 2023. Aveanna achieved year-over-year growth across all three operating divisions, with Private Duty Services increasing 6.4%, Medical Solutions rising 12.6%, and Home Health & Hospice growing 2.2% compared to the same period in 2023. EBITDA for the quarter was $36.8 million, representing a 14.3% increase year-over-year. This growth was primarily driven by strong performance in its private duty division, an improved payor rate environment, the successful implementation of cost reduction initiatives, and focus on episodic payers within its home health division. Aveanna recognizes that the primary challenge is the labor environment, particularly the shortage of available caregivers. In the past quarter, the company has seen notable improvements in caregiver hiring and retention trends, positively impacting its financial performance. Organic growth across all segments compared to the prior year: Private Duty hours grew 3.8%, Home Health & Hospice episodes grew 1%, and Medical Solutions had a 4.5% increase in unique patients served. Key Financial Figures M&A Activity Aveanna CEO Jeff Shaner stated, “We feel like we have not only stabilized the company but put the company back on the rightful path for growth and success. And we believe it’s time for us to reenter the M&A market.”  The company plans to close transactions in 2025, focusing on acquisitions within the Private Duty Nursing and Home Health & Hospice segments as part of its inorganic growth strategy. Guidance Aveanna expects to continue the momentum into 2025. Year-to-date, Aveanna has secured 12 state rate increases for Private Duty Services, with additional states expected to implement increases in early 2025.  In addition, the Company is in the early stages of implementing the preferred payer strategy in Medical Solutions to be fully realized by the end of 2025 The Pennant Group, Inc. (Nasdaq: PNTG) Highlights For Q3 2024, the company reported total revenue of $180.7 million, an increase of $40.5 million or 28.9% compared to Q3 2023. The company has invested in leadership, increased occupancy, improved revenue quality, and enhanced operational performance to drive this growth. The Home Health segment continued to show strong growth, with quarterly revenues reaching $72.9 million, a 43% increase year-over-year. Total home health admissions increased by 38.5%, while Medicare home health admissions increased by 30.8%. The Hospice segment achieved a 25% increase in revenue year-over-year, supported by improvements in hospice programs and the successful integration of recent acquisitions, which have helped differentiate its operations within the community. Hospice admissions increasing by 22.8%. The Senior Living segment generated $45 million in revenue, representing a 16.3% increase over the prior year quarter. Key Financial Figures M&A Activity In August, PNTG completed the first phase of its $80 million planned acquisition of Signature Group, LLC operations (Washington and Idaho assets). This acquisition added four home health agencies and one hospice agency to the Company’s portfolio. According to PNTG’s President & COO, John Gochnour, “The integration and transition of these operations is proceeding well, and we are starting to unlock additional value by implementing our unique operating model, sharing best practices, and providing world-class support from our service center.” The Oregon assets of Signature represent the second and larger portion of the transaction, with preparations for closing on January 1, 2025.  Guidance Considering the company’s geographic distribution and the finalized wage index updates, Pennant anticipates a net neutral effect on per-episode reimbursement under the 2025 Final Rule. PNTG has raised its full-year 2024 guidance as follows: total revenue between $665.3 million and $706.5 million, adjusted earnings per diluted share between $0.90 and $0.96, and adjusted EBITDA between $51.9 million and $55.2 million. This guidance update reflects strong expected performance through year-end, hospice reimbursement adjustments, lower interest expenses, and contributions from joint ventures and management agreements. Enhabit Home Health & Hospice (Nasdaq: EHAB) Highlights Enhabit total revenue was $253.6 million for the third quarter down $4.7 million or 1.8% year-over-year. EBTIDA was $18.1 million up $2.6 million or 16.8% year-over-year. EBITDA still lower than Q1 2024, and Q2 2024.  Home Health revenue declined by $9.9 million. Non-Medicare admissions grew 20.1%, driving total admissions growth of 5.6% year-over-year. Of these non-Medicare visits, 45% are now under payor innovation contracts at improved rates. However, while admissions grew, recertifications declined due to more admissions from acute care facilities with shorter stays and a changing payor mix in congregate living settings. This drop in recertifications was the main factor in the revenue decrease. Hospice revenue grew by $5.2 million or 11% year-over-year, driven by higher patient days and improved reimbursement rates. Since January 2024, the average daily census has risen monthly, with a 6.9% increase in Q3, including 5% same-store growth. Key Financial Figures M&A Activity The company remains limited by its credit agreement, which restricts acquisition opportunities due to current debt levels. As Enhabit Senior Vice President and Treasurer Jobie Williams stated, “We have focused this year on accelerating cash and paying down debt, and our success can be seen in our results. Our leverage decreased for the third quarter in a row. We ended the third quarter with a leverage ratio of 4.8 times.” Guidance Enhabit has revised its 2024 guidance due to lower recertifications in Q3 and the impact of hurricanes. In Q3, 29 home health branches were affected by Hurricane Helene, and 21 by Hurricane Milton, with 12 impacted by both, resulting in an estimated loss of 425 to 450 admissions.  The revised full-year revenue forecast for 2024 is $1.031 billion to $1.046 billion, with adjusted EBITDA expected between $98 million and $102 million. Starting October 1, 2024, the hospice segment received a 4% reimbursement rate increase, expected to generate an additional $8 million annually. For home health, 2025 revenue is projected to grow by low- to mid-single digits, driven by admissions, census growth, and a shift to higher-paying Medicare Advantage plans. This growth is also supported by a continued focus on operational efficiency. BrightSpring Health Services, Inc. (NASDAQ: BTSG) Highlights BTSG total revenue in Q3 2024 was $2.9 billion, representing 29% growth from the prior year period.  Pharmacy Solutions segment revenue was $2.3 billion, achieving growth of 35% year-over-year. Within the segment, Infusion and Specialty revenue was $1.7 billion, reflecting a 42% increase compared to last year. And home and community pharmacy revenue was $588 million, marking growth of 19% year-over-year.  The Provider Services segment had revenue of $641 million, representing growth of 10% compared to the prior year period. Home health contributed $265 million, growing 13%, with average daily census rising 16% to over 46,000. This growth was driven by strong clinical quality, including 30-day readmission rates that are 60% lower than the national average, particularly notable in the company’s emerging primary care services. Community and rehab care revenue was $376 million, representing growth of 8% year-over-year.  Gross profit increased across all segments compared to Q3 of last year. Adjusted EBITDA reached $151 million, reflecting a 16% year-over-year growth. Key Financial Figures M&A Activity During the nine months ending September 30, 2024, BTSG completed seven acquisitions across its Pharmacy Solutions and Provider Services segments, aimed at expanding its services and geographic reach.  On September 1, 2024, BTSG announced the acquisition of North Central Florida Hospice, Inc. ("Haven Hospice"), which provides hospice and palliative care services throughout Florida. As CEO Jon Rousseau stated, “Towards the end of the third quarter, we announced the closing of the Haven Hospice acquisition, and we look forward to expanding our quality care to high-need patients in Florida. Our hospice business continues to show strong growth, with excellent patient satisfaction, currently holding an 84% overall care rating according to the Consumer Assessment of Healthcare Providers and Systems.” Guidance BTSG has revised its revenue and Adjusted EBITDA guidance for the full year 2024 as follows: Revenue: Increased to a range of $11.0 billion to $11.3 billion Adjusted EBITDA: Revised to a range of $580 million to $585 million, reflecting anticipated growth of 14.2% to 15.2% compared to 2023.  Option Care Health, Inc. (NASDAQ: OPCH) Highlights OPCH reported Q3 2024 revenue of $1,278.5 million, a 17% increase from $1,093.0 million in Q3 2023, driven by strong growth in its rare and orphan portfolios and continued expansion in established therapeutic categories.  Gross profit was $256.7 million, or 20.1% of net revenue, up 1.0% from $254.3 million in Q3 2023. Gross profit continues to improve, and spending leverage is strengthening, with SG&A down nearly 1% year-over-year. Adjusted EBITDA reached $115.6 million, reflecting a 5.3% increase from $109.8 million in the same period last year.  While Hurricane Helene impacted operations in the Southeast at the end of Q3, it did not materially affect overall results.  Cash flow generation remains strong, with $160.4 million in cash flow from operations for the quarter. The company ended the quarter with cash balances of $483 million, after deploying approximately $42 million on share repurchases. As CFO Mike Shapiro stated, “We believe the balance sheet has never been stronger, and we remain engaged in a number of acquisition opportunities while continuing to execute our multifaceted capital deployment strategy.” Key Financial Figures M&A Activity In Q2 2024, OPCH repurchased approximately $78 million of its stock. Given the strong momentum in cash flow generation, the company remains focused on deploying capital through M&A and share repurchase strategies. In Q3 2024, the company repurchased an additional $41.9 million of stock. Guidance Option Care Health has updated its financial guidance for the full year 2024, projecting: Revenue: $4.9 billion to $4.95 billion Adjusted EBITDA: $438 million to $443 million. Supply chain disruptions from Hurricane Helene, especially in intravenous solution production, have significantly impacted operations. As a result, the company is currently limited in its ability to onboard new patients, particularly those requiring intravenous antibiotics and nutrition support therapy.  The company expects the supply situation to improve over the coming weeks and months as imports resume and production ramps up at plants and other producers. The updated guidance incorporates the IV bag supply chain disruption. The Company expects that the disruption will negatively impact the fourth quarter financial results and is considered in its updated 2024 guidance. To download the .pdf version of this report, click below.