After experiencing a record-setting two years in Care-at-Home M&A, 2022 remains sluggish. A few key facts illuminate this decline. One, fewer companies are going to market in 2022, compared with 2020 to 2021. “Transaction volume from late 2020 through 2021, relative to historical periods, was up almost 40%. This was driven by sellers trying to get their transactions closed before the then-pending capital gains tax rate increase. This never came to fruition, but the threat has loomed since the current administration took office, only subsiding in early 2022.” Mertz Taggart Managing Partner Cory Mertz commented. Two, CMS’ proposed rule for home health activated a temporary slowdown in Medicare transactions, as providers tried to predict what reimbursement will look like in 2023. Now that the rule for 2023 is set, we should see an uptick in Q4. Note: Total industry transactions do not necessarily equal the sum of the sub-industries, as many transactions include more than one sub-industry. Despite the overall downturn, the lower middle market — companies with enterprise values between $3 million and $100 million — hasn’t taken a significant hit. Private equity and strategic buyers continue to pursue quality home health, hospice and home care opportunities. However, we are seeing the lower values in the public equity markets play out in several ways. First, at the higher end of the market, meaning values over $100 million. Larger home health and hospice companies that would command mid-to high-teens multiples of EBITDA in 2020 and 2021 are not drawing that level of interest so far in 2022. (The exception, of course, is LHC Group’s pending sale to United/Optum, which is a highly-strategic acquisition of a publicly-traded company). Second, there is now less demand for private-duty companies. “The usual consolidators are seeing demand for private-duty home care services softening across their networks, as individuals paying for these services are feeling the pinch in their financial portfolios, causing them to cut back on their hours,” Mertz says, “However, we are seeing this play out differently, depending on the geographic service area, with the more affluent areas less affected.” Home Health M&A Slows The third quarter saw the completion of 12 home health-related deals. One of these deals was LHC Group Inc . (Nasdaq: LHCG) and the University of Maryland Medical System’s (UMMS) joint venture agreement in September. The collaboration will offer in-home healthcare services in parts of Maryland. Additionally, LHC Group bought Eastman, Georgia-based Three Rivers Home Health . The deal is expected to create a $12 million revenue boost for the company. Another notable deal was Searchlight Capital-backed Care Advantage’s purchase of National Home Healthcare in August. This was Care Advantage’s 16th acquisition since 2018. The company is mostly a personal care provider, but has been bullish about entering the home health space over the last few years. “We’ll finish 2022 down about 10% from historical periods as a result, but with a stronger Q4, now that the Home Health final rule has been set,” Mertz said. Hospice M&A Leaps Ahead As for hospice, 11 deals were completed in Q3. In August, H.I.G. Capital’s St. Croix Hospice acquired Corpore Sano Hospice in Plymouth, Michigan, the company’s second location in that state. St. Croix has been growth-focused over the past couple of years. And in September, Ridgemont Equity-backed Agape Care Group bought GHC Hospice (GHC). “Our team is excited to welcome the 135 new teammates from GHC Hospice joining Agape Care Group,” Troy Yarborough, CEO of Agape Care Group said in a press statement. “GHC’s track record of strong clinical quality, patient-centered focus, and reach into more rural communities enables us to connect with more patients and families with high-quality end-of-life care services in underserved geographies. This further expansion in Georgia and South Carolina strengthens our team and solidifies our position as a leading hospice and palliative care provider across the Southeast.” Personal Care M&A Takes a Hit Non-medical home care M&A saw 12 deals during the quarter, the third consecutive quarterly decline. Earlier this month, Trive Capital’s Choice Health at Home acquired Instant Care of Arizona Inc., while in September, Avera@Home established a joint venture with personal care provider Kore Cares . “This is an essential part of the care continuum, especially as these patients are some of our most vulnerable,” Sandy Dieleman, CEO of Avera@Home said in a statement to the press. “These services are vital in helping patients maintain their independence, especially as more and more of our population wants to age in place.” In August, IL2M International Corp . closed its merger with Aamani Healthcare Group .

Relative to the rest of the world of mergers and acquisitions, behavioral healthcare transactions continued apace in the third quarter. For the 3-month period ending September 30, a total of 33 behavioral healthcare deals were announced—a figure in line with the 33 deals reported in Q1 and the 35 deals announced in Q2. Although many behavioral healthcare organizations are beginning to shift their focus toward de novo growth, certain operators remain active buyers. Chief among them is ARC Health , the Beachwood, Ohio-based Thurston Group portfolio company, which acquired 3 more providers in the third quarter and has now made 19 acquisitions in 2023. Two of ARCs Q3 deals involved Mertz Taggart clients: In August, the company announced its acquisition of mental healthcare provider Grow Counseling . In September, the company announced that it completed a deal to acquire Manhattan Psychology Group, PC , a provider of mental health, autism, and tutoring services in New York. Private equity played a role in 13 transactions. Still, executives from behavioral healthcare organizations say investors are becoming more conservative in their approach. During the recent INVEST conference in Chicago, Discovery Behavioral Health CEO John Peloquin said investors are targeting operators with a solid clinical foundation for growth, according to the industry publication BH Business . Continuing a theme observed throughout 2023, the mental health subsector continued to represent the bulk of behavioral healthcare M&A activity, accounting for 24 of the 33 deals reported overall in Q3. “Despite the current interest rate environment, quality, cash-flow positive mental health providers continue to drive premium multiples, albeit not quite the premium that companies were commanding 12 months ago” Mertz Taggart Managing Partner Kevin Taggart said. Taggart also said, “there are providers that are still commanding multiples we were seeing a year ago, but those are the exception, not the rule”. Taggart added that interest rates— currently at their highest level in 22 years —will continue to be a key factor for M&A activity throughout the behavioral healthcare sector heading into 2024. Addiction Treatment Six transactions involving addiction treatment providers were announced in Q3, roughly on par with the 4 deals announced in Q1 and 7 reported in Q2. Among the deals announced in the addiction treatment subsector, Acadia Healthcare announced in July that it had acquired Turning Point Centers from InTandem Capital Partners , a specialty provider of substance use disorder (SUD) and primary mental health treatment services in Salt Lake City, Utah, as part of a larger growth strategy for Acadia in 2023. As a side note, Mertz Taggart sold Turning Point Centers to InTandem in early 2018. Other transactions involving addiction treatment providers include: H.E.R. Management acquired BeWell Network in July. Addiction and mental health treatment services provider Haven Health Management completed its acquisition of Recovering Champions , a Massachusetts-based drug and alcohol rehabilitation program. Florida-based Praesum Healthcare expanded the number of states it serves to six with its acquisition of Beacon Point Recovery Center in Philadelphia, Pennsylvania. Lower middle-market PE firm Renovus Capital Partners acquired Meridian Behavioral Health in a platform deal. Mental Health The 24 transactions involving mental healthcare provider organizations in Q3 matched the total from Q2 and brings the year-to-date figure to 75. While M&A activity in mental health for 2023 remains down from the record-setting 2022, it is still outpacing year-to-date volume for 2020 and 2021 through 3 quarters. In addition to its acquisitions of Manhattan Psychology Group and Grow Counseling, ARC Health completed its acquisition of Dayspring Behavioral Health in August. Dayspring is a mental health practice with 4 locations in the Seattle metroplex. Other private equity-backed strategic investments in mental healthcare provider organizations made during Q3 included the following: FullBloom , an educational services platform for students backed by American Securities , acquired EmpowerU , a provider of programs that improve student motivation, behaviors, and mental health. Health Connect America , a Palladium Equity Partners portfolio organization, acquired Specialized Youth Services of Virginia . The deal was HCA’s sixth add-on acquisition in less than two years. Hightop Health announced in July that it completed its acquisition of Atlanta Psych . Audax Group -backed New Story completed its acquisition of Thrive Alliance Group —one of 2 acquisitions for New Story in Q3, along with its deal for the Virginia locations of the Center for Autism & Related Disorders . Sterling Partners -backed Stella Center acquired ARK Integrative Medicine and Therapeutics from TAP Health Care Management . Other Q3 mental health transactions include: Youme Healthcare acquired Hurdle Health and rebranded as Backpack Healthcare . Bethany for Children & Families merged with Bridgeview Community Mental Health Center in a deal between providers serving the Quad Cities region between Iowa and Illinois. Sun Life Financial (NYSE: SLF) entered into an agreement to acquire Dialogue Technologies , a virtual healthcare platform. Pyx Health received a majority growth investment from TT Capital Partners for an undisclosed amount as it looks to expand its operations Penuma Behavioral Health expanded in North Carolina with its acquisition of adolescent outpatient mental health treatment provider Bright Path Behavioral Health . Southeast Kansas Mental Health Center announced a partnership with Ashley Clinic . In August, the state of Washington purchased the recently closed Cascade Behavioral Health Hospital a reported cost of $29.95 million. Cascade was shuttered by Acadia Healthcare in July. Sacramento, California-based Sutter Health added Sansum Clinic to its integrated healthcare system in a deal between not-for-profit organizations. Washington state-based not-for-profit organizations Childhaven and Washington Association for Infant Mental Health announced a merger in July. As has become the norm of late, several mental health VC transactions were reported. Though technically not M&A, these transactions are notable investments in the industry: Heading Health , a tech-enabled mental healthcare organization, raised $4.5 million in a Series A extension round led by VC firm Gron Ventures . Lux Capital was the lead investor on a Series B funding round completed by Daybreak Health as the virtual pediatric mental healthcare organization looks to expand into new states and add programs. Youth mental health startup Cartwheel Care completed a $20 million Series A funding round led by Menlo Ventures , with participation from Reach Capital, General Catalyst, BoxGroup , and Able Partners . Virtual behavioral health provider Better Life Partners raised $26.5 million in equity and options funding. Investors were not disclosed. Guidelight Health , a startup offering partial hospitalization and intensive outpatient programs for adolescents and adults, raised $16.5 million in funding led by Triple Aim Partners . Autism Services and Intellectual/Developmental Disabilities Another 5 deals involving autism services and intellectual/developmental disabilities (I/DD) therapy provider organizations were announced in Q3, matching the number of transactions within the subsector announced in the prior quarter. In addition to previously announced transactions, BrightPath Health Holdings , a provider of applied behavior analysis therapy that does business under the name ABA Connect , acquired Bright Behavior . ABA Connect is backed by MBF Healthcare Partners II . Meanwhile, in July, Dungarvin , a Minnesota-based IDD services provider, announced its acquisition of Bridges MN, Bridges WI , and Rumi . This transaction, effective September 1, added 103 locations to the Dungarvin portfolio.

The hospice mergers and acquisitions environment has never been more robust, with valuations reaching record levels and buyers hungry for assets of all sizes. Unlike the Patient-Driven Groupings Model (PDGM) uncertainty that the home health industry currently faces, the hospice business landscape has been overwhelmingly favorable. That means buyer interest in hospice agencies will likely remain high over the next several months, — and that there may be no better time for owners and operators to start planning their exits. Whether you’re looking for an immediate exit or one five years from now, here are seven key ways to maximize the value of your hospice. Grow Broadly, enterprise value is determined by income and a given multiple — a function of both risk and growth. Because growth rate impacts both parts of the valuation equation, that makes it an extremely important point for prospective sellers to consider and promote. “An agency that generates $10 million in revenue typically generates more income than one that generates $2 million,” says Cory Mertz, managing partner for M&A advisory firm Mertz Taggart. “On the multiple sides, which company is riskier: one that is generating $1 million in EBITDA (which we use as a proxy for cash flow) and growing 15% per year — or one that is generating $1 million in EBITDA, but did $1.5 million in EBITDA last year?” The bottom line: hospice buyers want to see that an agency hasn’t already peaked in terms of its growth potential. Sell at the right time Closely related to growth is timing, as it’s always best to sell your agency when it’s clearly on its way up. Doing so gives buyers comfort that the company still has some upward momentum they can capitalize on — and that it’s a well-run business. On the flip side, if your census has dropped noticeably quarter after quarter, that will likely give a buyer pause. Consider industry timing as well. Currently, hospices are commanding all-time high valuations with little apparent risk of a downturn. At least in part, this is because the industry has not been subject to significant reductions in payment, or to significant regulatory oversight (when compared to, say, home health). However, things can change with very little notice. We call it “stroke of the pen” risk, which could come at any time in the form of a CMS proposed rule or an Office of Inspector General (OIG) announcement — either of which could dampen the current enthusiasm for hospice. Equally uncertain is the impact of CMS’s hospice carve-in for Medicare Advantage plans, which will be tested starting in 2021. The big takeaway: It’s always better to sell too soon than too late. As American business magnate and philanthropist Warren Buffett once said: “If you wait for the robins, spring will be over.” Diversify your referral base While it’s always nice to have sure-fire, go-to referral sources, individuals looking to sell their hospice businesses need to cover all their bases and take a diversified approach. Why? Well, for one, having diverse referral sources helps mitigate risk, so a disturbance in one referral stream doesn’t impact the entire operation. “If you really want to maximize value, you need to diversify as much as possible to capture the highest multiple,” Mertz says. “While that skilled nursing facility that refers you 25% of your business will certainly boost your income, it is seen as a risk in the buyer’s eyes. If that referral source stops referring after the sale, then it’s a big risk.” If you want to maximize the value of your hospice business, you’ll likely need professional help. Generally speaking, buyers value businesses based on accrual numbers — and if you don’t provide accrual statements, they will provide or create their own. Accrual statements recognize revenue when it is earned, ideally the day of the visit. Meanwhile, cash-based statements, which most organizations use and pay taxes on, recognize revenue when it comes in the door. But the problem is that the two don’t always correlate. “There are a number of things that can slow down payments,” Mertz says. “ADRs and other billing issues can have an impact, and it’s common for owners to bill a little slower at the end of the year.” The problem: If reported on a cash basis, a company is likely to understate income and could be leaving money on the table. Create a self-operational management team Ask most private equity buyers, and they’ll tell you that they don’t want to start from scratch in terms of creating an entirely new management team. Strategic buyers will have the corporate overhead and associated synergies in place but likely will not have local management to run the day-to-day operation. Creating a layer of management that can operate the business in the owner’s absence can be a major appeal in any deal. In many ways, the brains, relationships, and culture of an operation are what buyers are ultimately investing in. Put differently, if the glue of an organization walks out the door along with their referral relationships and management team after a sale, that’s a huge risk for a prospective buyer. Time and time again, providers are reminded just how valuable a second set of eyes is when it comes to ensuring coding and billing accuracy. That’s true for audits, too, and hospice agencies looking to sell should make sure to do a third-party billing audit. Recent oversight actions were taken by the U.S. Department of Health and Human Services OIG make this especially relevant. “If you pass your billing audit with flying colors, great,” Mertz says. “If not, it imposes too much risk in a buyer’s eyes, and they may walk away from the deal.” Furthermore, it’s important to note that passing a survey is not an indicator of spotless billing. A state survey or accreditation and a billing audit are two very different things. Coordinate a competitive bid process After you’ve conducted a third-party billing audit, created a layered management team, diversified your referral sources, and checked all other boxes, it’s vital to foster healthy sale conditions. Sellers are advised to get multiple credible buyers involved in the process, working to encourage them to make the best offer. This can be done by consistently and subtly reminding them that there are several players with seats at the table. Take baseball, for example, A team trading a star player gets the most blue-chip prospects back when multiple teams are bidding against each other, repeatedly upping their antes. We’ve all seen those charity auctions and fundraisers where one person’s interest drives up the interest of other buyers, and the bidding war starts. The same holds true for quality hospices on the market when the process is run correctly and confidentially. Start now Whether you’re looking to sell now or in a few years, following these seven steps will help you maximize the value of your hospice. While some of the steps can be carried out quickly, others take time, so be sure to start solidifying your sale plan today.

Optimism around an M&A rebound. Value-Based Care. Quality deal flow will dictate activity.   Those were the most common themes as the nation’s largest home-based care providers shared their M&A strategies with Mertz Taggart for the next 12-24 months.   The healthcare M&A advisory firm interviewed 51 of the most active acquirers interested in home-based care M&A, including home health, hospice, personal care/home care and private duty nursing. ​ Survey Overview: 51 of the most active acquirers in home-based M&A: 4 publicly traded companies 41 sponsor-backed home-based care portfolio companies 6 non-profit, health system and facility-based strategic acquirers ​ Total respondent estimated revenue: $19 billion ​ Topics covered: Geographical preferences Service line/payer preferences Value-based care Acquisition appetite: 2024 vs 2023 2024 outlook ​ If you are interested in receiving a copy of the Buyer Survey Report, please visit www.mertztaggart.com/buyer-survey and sign up for your copy.

LOUISVILLE, Ky.–(BUSINESS WIRE)–Kindred Healthcare, LLC (“Kindred” or the “Company”) today announced it has signed a definitive agreement with WellBridge Healthcare (“WellBridge”) to acquire two behavioral healt h hospitals, WellBridge Greater Dallas and WellBridge Fort Worth, in the Dallas-Fort Worth metropolitan area. WellBridge Greater Dallas and WellBridge Fort Worth provide a full continuum of inpatient and outpatient behavioral health services to senior and adult populations in North Texas. Each hospital has 48 licensed beds and both are regional leaders in behavioral healthcare with a history of providing exceptional behavioral health treatment services and superior clinical outcomes. Kindred plans to continue using the WellBridge name. This acquisition advances Kindred’s objective of expanding the Company’s behavioral health services. Kindred is dedicated to providing hope, healing and recovery for the most medically complex patients – a mission that naturally extends to those suffering from behavioral health issues. Through Kindred Behavioral Health (“KBH”), Kindred is focused on addressing the unmet need for high-quality, specialized and compassionate behavioral health services, including crisis stabilization for acute mental health and substance use disorders; detoxification from alcohol, opiates, cocaine and other drugs; suicidal thoughts or actions, anxiety, depression and post-traumatic stress disorder; and many other behavioral health illnesses. Under the leadership of Rob Marsh, Senior Vice President and Chief Operating Officer for Behavioral Health, Kindred intends to continue growing its behavioral health footprint across the United States through joint ventures and distinct part unit management with leading hospital systems, in addition to opportunistic acquisitions and organic growth opportunities. Kindred believes that behavioral health services are highly complementary to Kindred’s other facility-based healthcare services and build upon its existing clinical and operational capabilities. To learn more about KBH and the services it provides, go to www.KindredBehavioralHealth.com. “Kindred is proud to provide specialized, high-quality care for patients who are acutely sick or facing medically complex diagnoses,” said Jason Zachariah, Kindre d’s Chief Operating Officer. “O ur expansion into behavioral health services is consistent with our mission and is a natural extension of the high-quality services we provide in our long-term acute care hospitals and inpatient rehabilitation facilities. We look forward to applying our expertise and experience to serve more patients with behavioral health issues.” Mr. Zachariah added, “Kindred has a successful track record of incubating new business lines to address unmet healthcare needs, and this expansion extends that record and advances the Company’s long-term growth objectives. Rob Marsh, along with his seasoned leadership team, bring significant industry and operational expertise, and we are confident KBH is poised for growth and success under their leadership.” Mr. Marsh said, “Since joining Kindred last year, I have been inspired by the tireless commitment of team members across the Company to supporting our patients and their families. By expanding KBH, Kindred will be able to help more patients reach their highest potential for health and healing. I am thrilled to have an experienced leadership team alongside me at KBH and, supported by the clinical, operational and financial strength of Kindred, I am confident we will successfully expand Kindred’s behavioral healthcare continuum and drive strong revenue growth and patient outcomes.” The transaction is expected to close in the summer of 2020, subject to the receipt of standard regulatory approvals and customary closing conditions. Read more here…  BusinessWire

Treatment Center Value Insights: It’s All About the Multiple (…Or Is It?) I get asked all the time…’what kind of multiple would my treatment center command?’ ‘Not So Fast’…There’s No Straight Answer. I would go as far as saying it’s irresponsible to give guidance simply in the form of a multiple without knowing the other half of the valuation equation – Adjusted EBITDA. The Adjusted EBITDA can be dramatically different depending on whether it is based on a trailing twelve-month (TTM) period, calendar year, annualized pro- forma, or some other formulation. It can also vary significantly based on the buyer and which adjustments will be considered. The question should be, ‘what kind of VALUE would my treatment center command?’ which is more complicated. Let’s take a step back and explain the value equation that is commonly used in the industry. Value = (Adjusted EBITDA) x (the Multiple), whereby: Adjusted EBITDA (or Earnings Before Interest, Taxes, Depreciation and Amortization) is a proxy for “normalized” cash flow (normalizing for typical variations in a company’s revenue cycle). The Multiple is the inverse of the go-forward risk of that cash flow continuing after the transaction is complete. The lower the risk of cash flow deterioration, the higher the multiple. For example, a 7x multiple implies a 14.3% return and a 5x implies a 20% return, so the 5x multiple is viewed as a riskier investment for the buyer, therefore he/she requires a higher rate of return. Pretty straightforward, right? Well, not always. And here’s why …Adjusted EBITDA is in the eye of the beholder. Consider three case studies to illustrate: The Fast Growing Company We represented the seller of an opioid treatment program with the following value drivers: Trailing 12 months (TTM) revenue of $9,100,000 Trailing 12 months adjusted EBITDA of $2,400,000 (~26% of revenue) Strong growth Multiple locations Strong clinical and compliance program No seasonality After receiving multiple bids, and after negotiations, the successful buyer (a large private equity fund) came in with a valuation of $34,000,000. Clearly a healthy multiple of 14.2x ($34,000,000/$2,400,000), right? I can assure you the buyer was looking at this differently. Remember, this was a fast growing company that had no seasonality. Trailing 12 months (TTM) Last 3 months, annualized Revenue $9,100,000 $16,800,000 Adjusted EBITDA $2,600,000 $4,500,000 Multiple 14.2 7.6 So, what was the multiple? Depends on who you ask. The buyer was telling their board that they got this company for a fair price – a multiple of 7.6 My client, the seller, was telling his golf buddies he sold for a multiple of 14.2x… EBITDA & multiples are in the eye of the beholder. Corporate Overhead and Synergies Here’s an example of a multi-location residential treatment center we represented: Trailing 12 months revenue: $9,600,000 Trailing 12 months adjusted EBITDA: $1,600,000 Modest growth Strong clinical and compliance program Primarily in-network revenue After running a competitive bid process, the buyer agreed to pay $21,000,000. This company commanded a multiple of 13.1x, ($21,000,000/$1,600,000) right? Maybe/Maybe not… In this case, the seller was paying an annual salary of $500,000 to a high-priced CEO who was not an owner of the company, but a close confidant who had a long business relationship with the seller, and worked part-time in the business. Although he was instrumental in the success of the company, he was not needed by the buyer. The buyer had a regional VP who had the bandwidth to take on these responsibilities. So the buyer would enjoy an immediate $500,000 bump in EBITDA on day one – to $2,100,000. To the buyer, this company was purchased for a multiple of 10x ($21,000,000/$2,100,000). The Low Margin Business Another example: Trailing 12 months revenue: $5,100,000 Absentee owner, not involved in the day-to-day operation Trailing 12 months EBITDA: $300,000 Revenue derived primarily from public funding The sale price was $7,000,000, or a multiple of 23.3x ($7,000,000/$300,000). Clearly not a standard industry multiple for a single-location, privately held treatment center, but it was a competitive process and the company had a high strategic geographical interest to this industry buyer. In this case, the buyer saw opportunity that wasn’t being capitalized by the current owner. This buyer had a very strong marketing group and in-network relationships that could bring the center’s occupancy from 12% to 70% within 12 months. Because of the competitive nature of the offering, they valued the treatment center based on it’s pro-forma financial performance – what they could do with it after the closing. So that begs the question…what is the multiple of a break-even (or money-losing) treatment center that sells for any price? It’s all about the value. -Mertz Taggart

Autism and I/DD Organizations Led the Sector this Quarter Mertz Taggart has just released its quarterly M&A report for the behavioral health sector. According to the report, transaction activity in behavioral health has rebounded in the third quarter of 2020, with a total of 26 transactions. Autism and intellectual/developmental disabilities organizations led the sector, accounting for 13 announcements in Q3. “We anticipate strong demand for behavioral health organizations of all types over the next 12 months,” said Mertz Taggart Managing Partner Kevin Taggart. “The strong demand for specialty care, coupled with the providers’ smart pivot toward telehealth services, creates an attractive landscape for investments and follow-on deals.” Taggart pointed out that private equity buyers are gauging their portfolios against long-term propositions. Yet for now, with uncertainty in market circumstances, many buyers will be hyperfocused on the executive leadership of any potential deal target. Note: The sum of sub-industries (broken down below) does not always equal total sector deal volume, as some transactions include more than one sub-industry. “Several CEOs who have been leading some of the industry’s well-known legacy brands in addiction treatment announced this quarter that they would be retiring or moving on, launching a series of simultaneous succession plans,” Taggart said. “Experienced executives have always been valuable assets in any deal, but that could very well become a top priority if we start to see a trickledown effect that results in up-and-coming leaders shifting between organizations or taking on new roles.” CEOs at Hazelden Betty Ford , Rosecrance, Universal Health Services, and Caron Treatment Centers all announced that they would step down or retire in the coming months. Across behavioral health, sellers should be standing their ground on valuations, according to Taggart. They especially should consider pushing back against any perception that the global coronavirus pandemic has devalued operations. “In fact, history has proven that healthcare is quite resilient, and behavioral health continues to be an attractive buy,” he said. “We often see slow-moving deals suddenly pick up pace in the fall, so sellers would be wise to present solid, reasonably optimistic valuations.” What’s more, the managed care outlook is decidedly bullish for 2021, according to the largest insurance company leaders. That translates into an extra advantage for any behavioral health provider that has in-network contracts and established relationships with payers. In the past five years or so, behavioral health has witnessed not only a flurry of mergers and acquisitions , but organic expansion as well, Taggart said. Combined synergies have created opportunities to enter into new geographic markets and to add new clinical offerings. The industry forecast leans toward plenty of deal volume yet to be realized in 2021. Addiction Treatment New openings continue in the addiction treatment space—an indicator of an optimistic outlook for the long-term rate of service demand. While the Northeast and California have seen the most noteworthy ribbon cuttings, smaller markets are responding to local needs as well. “Service expansion is typically a factor in deal targets,” Taggart said. “Buyers still have their eyes on building the continuum as well as breaking into new markets.” BrightView , an outpatient addiction treatment provider with 18 locations in Ohio, announced that it has acquired Rebound Recovery Centers with multiple locations in Kentucky. The company offers medication-assisted treatment and counseling services. The not-for-profit First Step of Sarasota and Coastal Behavioral Healthcare merged on July 1 and began operating under the First Step brand. With the transaction, First Step brings its number of locations to 33 throughout the Sarasota, Florida, region. It offers residential, crisis, inpatient and outpatient services. Hunter Street Partners and Healy Capital Partners have jointly invested in Ark Behavioral Health in Massachusetts. The provider offers detox, residential, partial hospitalization and intensive outpatient services in four locations. Capital will be dedicated to expanding Ark’s number of treatment centers. Providence Treatment has acquired Main Line Recovery , which will now operate under the Providence Treatment brand. The organization offers outpatient addiction treatment services in Pennsylvania. Pinnacle Treatment Centers announced its acquisition of HealthQwest and the organization’s five outpatient centers in Georgia. It will continue to operate under the HealthQwest brand. Pinnacle operates inpatient and outpatient facilities in eight states. Averhealth , a provider of drug testing services for courts and social programs, has acquired the testing services of Treatment Assessment Screening Center , a private, not-for-profit in Arizona. Private equity firm Five Arrows Capital Partners provided the investment. Outreach Recovery has acquired More With Doc C, LLC , expanding its medication-assisted treatment services in Maryland. The company operates multiple locations in four states. Autism Services & Intellectual/Developmental Disabilities There’s a renewed effort to encourage early diagnosis and intervention for children with autism spectrum disorder. With a higher prevalence rate, the demand for services will continue to grow. Meanwhile, with attention focused on job growth for the balance of 2020, advocates will likely ask for more assistance in care coordination for those with intellectual and developmental disabilities (I/DD). Such services will be an attractive complement to traditional supports among deal targets. Proud Moments ABA in July acquired Autism & Behavior Consulting Services, LLC. Founded in 2014, Proud Moments ABA offers applied behavior analysis (ABA) at 11 locations nationwide. Acorn Health , a national provider of autism services for children, has acquired the ABA therapy assets affiliated with Concord Foundations Network . The deal enables Acorn Health to expand services into Maryland, Pennsylvania, and Tennessee, while increasing capacity in Michigan and Virginia. The Center for Social Dynamics, LLC, a portfolio company of NMS Capital , has acquired Behavior & Development Center, LLC, located in Southern California. The deal marks the portfolio company’s second transaction since June. The Columbus Organization in July announced it had acquired assets of Rendon Support Services , a Florida-based provider of I/DD support services. In September, it also acquired the assets of Advocates in Action , a New Jersey-based care coordination provider. The organization operates under the HealthEdge Investment Partners, LLC portfolio and is CARF-accredited. Texas-based Caregiver Inc. in August closed the deal to acquire Pine Ridge-Pine Village Inc. in Ohio, which provides residential, day treatment and supported living I/DD services. The transaction represents Caregiver’s seventh acquisition in the state. Mental Health Because overall costs are high for individuals with mental health conditions, providers can make an excellent case for payers to continue on with policies that enable access to care, such as telehealth options. In fact, payers report annual costs as much as 3.5 times higher for those with mental health and addiction disorders. A recent survey also found that 81% of behavioral health providers began using telehealth for the first time this year in response to the COVID-19 pandemic. Additionally, 70% said they plan to continue offering telehealth moving forward. Summit BHC in July acquired Highland Hospital in Charleston, West Virginia, marking its first entry into the state. The hospital has 115 beds for acute and residential psychiatric care as well as a 16-bed crisis residential/detox substance use disorder treatment center. The deal was Summit’s second acquisition of the year, and has grown its network to 15 states. Column Health in July announced the acquisition of the Center for Psychiatric Medicine . The organization’s community-based outpatient clinics are located throughout Massachusetts and Connecticut, offering psychiatry, neuropsychiatry and addiction treatment services. The Comprehensive Counseling LCSWs counseling practice in September was acquired by LearnWell , a Massachusetts-based mental health services company, which gains new multilingual virtual counseling capabilities as a result of deal. Eagle Private Capital and 424 Capital provided the investment. Private equity firm Enhanced Healthcare Partners has invested in NeuroPsychiatric Hospitals , an acute care provider with four locations in Indiana. The funding will help scale up services and expand into other geographic areas.

NEW ORLEANS (PRWEB) May 15, 2020 AppleGate Recovery, a BayMark Health Services company, announced this week the acquisition of Medication Assisted Recovery Centers (MARC), an office-based opioid treatment (OBOT) program with two locations near New Orleans, LA. The clinics, situated in Metairie and Slidell, provide medication-assisted treatment (MAT) and recovery services in a physician’s office setting. AppleGate Recovery now operates 8 clinics serving the residents of Louisiana who struggle with opioid use disorder. Our programs provide outpatient MAT with buprenorphine and buprenorphine compounds such as the well-known Suboxone®, as well as Bunavail® and Zubsolv®. These medications, when supported by counseling, provide a comprehensive treatment modality that addresses physical withdrawal symptoms and psychological cravings. AppleGate Recovery is equally pleased that Dan Forman, Co-Founder of the MARC programs, will be joining the AppleGate Recovery team as a Regional Director, Operations. Dan brings 10 years of experience as a health care executive and recovery advocate. Dan’s wealth of knowledge will help AppleGate continue to innovate enhancements to patient care and lead our programs in partnering with their communities to provide treatment to those who need it most. “My founding partner and I have been in the field of addiction treatment for many years. We opened the MARC programs because we saw a great need in the New Orleans area for proven opioid addiction treatment, free of judgement, and knew we had the ability to help,” shared Dan Forman, Co-Founder of MARC. “BayMark has established themselves as the leader in opioid addiction treatment. We feel they have the expertise to not only maintain but grow our ability to serve our patients, and I am thrilled to be joining the AppleGate team who is going to do just that.” In addition to providing MAT services in office, AppleGate will be offering patients flexible telehealth options in all locations, including Metairie and Slidell. This enhancement to the already flexible OBOT treatment model will give our patients the freedom to focus on their recovery and rebuilding their lives. Our programs also provide laboratory services, case management and collaborative treatment during pregnancy. Offering patients access to medical providers, counselors and administrative staff whose focus is to help them rebuild their lives and ensure their overall health is our goal. “We are proud to continue our efforts to support the State of Louisiana and its residents in their fight against the opioid crisis,” shared Mike Saul, BayMark Division President. “We look to work with organizations which have established themselves as quality providers of patient care and MARC has absolutely done that. In addition, we’ve added a strong member to the AppleGate family in Dan Forman and look forward to the positive impact he will have on our team.” This article originally appeared in PRWeb . Trackbacks/Pingbacks Behavioral Health M&A Report: Q2 2020 – Mertz Taggart - […] was a busy quarter for BayMark Health Services. In May, its AppleGate Recovery brand announced the acquisition of Medication… First Step, Coastal Behavioral Healthcare Officially Merge - [...] After a nine-month consolidation process, First Step of Sarasota and Coastal Behavioral Healthcare have officially – as of July 1...

Mertz Taggart and McBee have collaborated on numerous transactions over the years. The following is one example of the many risk areas we uncover during our diligence process. “Knowledge is power” is a universal truth across many settings and industries, including post-acute mergers and acquisitions. Having the most current and accurate information possible is key whether you are evaluating day-to-day operations, preparing to put an organization on the market, or as a buyer evaluating a potential home health acquisition. Confidence in your data and compliance makes the difference between real value and breezing through due diligence, and a long, difficult, and disappointing process. One of the most significant aspects of clinical diligence reviews is technical issues around face-to-face (F2F) requirements, such as the encounter visit completed by the certifying physician. If the F2F visit records are not completed in a timely manner or do not match the reason for service, it can have serious ramifications. Though there have been no changes in F2F regulation, many organizations have F2F elements that do not meet Medicare billing requirements that can put the full reimbursement amount at risk. A weak F2F completion process can be indicative of more significant compliance or performance issues in an agency. Understanding any potential level of risk is a vital part of the clinical due diligence process. Whether determining if you are compliant now, preparing for a sale, or evaluating a potential acquisition, a thorough clinical compliance review will help organizations understand their historical trends, evaluate current risks, as well as identify specific areas for improvement. These diligence assessments provide vital insight into how well an organization is delivering care with complete and compliant documentation to justify that the services provided meet Medicare regulations. This is the first in a series of home health & hospice transaction considerations. Next up will be examples of face-to-face weaknesses and failures that have been encountered. About McBee McBee is a recognized leader in providing financial, clinical and operational strategic advisory services that have addressed the unique needs of more than 3,800 providers across the healthcare industry. Since 1973, McBee has designed services to address challenges and ensure the success of healthcare organizations across the continuum of care by delivering meaningful insights, tailored strategies, and sustainable results. With an average of over 20 years of experience, McBee’s consulting professionals have extensive expertise and in-depth knowledge of healthcare regulations, operations, and policies. Home health, hospice, long-term care, skilled nursing and other healthcare organizations across the nation look to McBee to provide comprehensive services and expert resolution of the various issues they encounter. McBee is a trusted strategic advisor to our clients in their efforts to go to market or conduct buy-side clinical compliance reviews. During the 2020 calendar year, McBee supported our clients in completing 19 publicly reported transactions carrying a purchase price exceeding $1.8 billion *(based on disclosed purchase prices only). Our commitment to our clients, compliance and quality is unmatched in the industry. McBee’s unwavering dedication backed by their industry knowledge has made them one of the largest, well-regarded healthcare consulting firms in the country. They are located in Wayne, Pennsylvania with additional offices around the country. For more information, please visit www.mcbeeassociates.com. About Mertz Taggart Mertz Taggart is an industry-leading mergers and acquisitions firm specializing in home health, home care, hospice, and behavioral health. This focus yields invaluable insight into the challenges and opportunities operators face. The depth of our industry knowledge is garnered by our relationships with industry leaders, knowledge of buyers’ acquisition strategies, and our hands-on experience owning and operating a healthcare company. Our competitive advantages translate to maximizing value for our clients, as proven by over 100 successfully completed healthcare transactions since 2006. www.MertzTaggart.com

On April 27th, shortly after we published this original post, CMS dropped a bombshell proposed rule, which stated, among several objectives, that "At least 80% of all Medicaid payments for specific HCBS — homemaker services, home health aide services, and personal care services — must be spent on compensation for direct care workers to help address the direct care workforce crisis." The intent, experts believe, was to send a message to the states that they need to address the workforce issues and access to care. The markets panicked. With nearly 60% of its revenue comprised of home and community-based services, Addus HomeCare's share price dropped almost 30% on the news. The company has since regained some of its initial losses, a sign that institutional investors believe things aren't quite as bad as they initially seemed. Most private equity-backed strategic acquirers have indicated it is business as usual. "We've spoken with several strategic acquirers since the news broke to gauge their general sentiment," Mertz Taggart Managing Partner Cory Mertz commented. "Most buyers with HCBS as central to their investment thesis continue to show strong interest. Valuations for add-ons in the $3M to $50M range remain robust. Several PE groups seeking platform opportunities at the higher end of the market continue to look for opportunities, although some have hit the pause button until more is known." Do these strategic buyers know something we don't? Or worse, are they so married to their theses that they're convinced they'll 'figure it out'? The consensus among those 'in the know' regarding policy is that the final rule, currently slated to take effect four years after it is finalized, will not be nearly as onerous as it reads now…if it gets finalized at all. CMS welcomes comments through July 3, 2023. "Industry advocates, including several of the big strategic acquirers, are actively feeding back to CMS and educating policymakers, so they're not ignoring the issue," added Mertz, "But they're not overreacting either. They still see the long-term value in HCBS for all stakeholders, including patients and payors. Companies with strong cash flow and a culture of compliance continue to draw strong interest in the marketplace.”

The final three months of 2023 were a relatively quiet period within the behavioral healthcare sector. Just 31 deals were completed—the fewest since the second quarter of 2020 and the onset of the COVID-19 pandemic. Though 2023 was down, all indications point to increased activity in 2024. "We've had the opportunity to speak with industry and financial buyers over the past few weeks," said Mertz Taggart Managing Partner Kevin Taggart. "The consensus today is that we'll have increased activity across the sector. Improved capital markets and quality deal flow will drive the activity, especially in the 2nd half of 2024." However, seed and venture funding accounted for more than a third of those transactions, with 12 such deals representing a total investment of $257.9 million. These investments could be a preview of behavioral healthcare organizations to watch, added Taggart. “Some of these venture back firms will end up being major players in the industry, but I also think that many of them won't make it for a variety of reasons”, he said. Combined, venture capital and private equity firms completed 24 of the 31 transactions in the quarter. One deal alone accounted for nearly half of the VC money that was invested in behavioral healthcare in Q4. In October, Headway, a healthcare tech startup that connects patients and in- network therapists, raised $125 million in Series C funding, according to a Reuters report. The round was led by Spark Capital Partners, with participation from existing investors Thrive Capital, Accel, and Andreessen Horowitz, as well as the insurance company Health Care Service Corporation. While Mertz Taggart analysts don’t expect an immediate jump in dealmaking in 2024, we expect activity could see an increase if widely expected interest rate cuts by the Federal Reserve come to fruition in Q2. “We expect more companies to go to market in 2024, reverting to pre-pandemic levels,” Taggart said. “However, buyers will be more disciplined about the companies they choose to invest in or purchase. Much of that discipline is being imposed by higher interest rates and banks themselves.” To make their organizations more attractive to buyers and investors, Taggart said prospective sellers would be well served to take stock of the state of their operations. Performing some level of clinical, compliance, and quality-of-earnings audits prior to going to market can help mitigate deal risk, he said. Addiction Treatment M&A Although the final three months of 2023 marked the most active quarter of the year for the addiction treatment subsector, with 11 transactions announced, the year-to-date total of 28 deals involving addiction treatment providers solidified 2023 as the least active year in M&A for addiction treatment organizations since the onset of the pandemic. For comparison, 32 deals involving addiction treatment providers were announced in the fourth quarter alone in 2021. Addiction treatment transactions include the following: Abacus Investments acquired Louisiana-based Longbranch Retreat & Recovery Center in a platform deal. Borden Cottage, a luxury residential drug, alcohol, and co-occurring behavioral health treatment program in Camden, Maine, transitioned to independent ownership in October. New Jersey-based outpatient treatment providers BlueCrest Recovery Center, QuickSilver Counseling Center, and Assess With Guidance merged to form BlueCrest Health Group. Defining Wellness Centers, a Jackson, Mississippi-based SUD treatment organization, was acquired by Fulcrum Equity Partners. Also in Mississippi, Vertava Health, a provider of addiction treatment and mental health services in Southaven, was acquired by Bradford Health Services. The Handley Foundation acquired Origins Behavioral HealthCare and its locations across Texas and Florida. Among the transactions completed in the quarter, three providers announced they had secured significant investments: PursueCare, a Connecticut-based virtual substance use disorder (SUD) treatment organization, raised $20 million in a Series B funding round led by T.Rx Capital and Yamaha Motor Ventures, along with participation from Seyen Capital and OCA Ventures. Sunnyside, a digital health company that addresses alcohol addiction, secured $11.5 million in Series A funding, with Motley Fool Ventures leading the round and Will Ventures also participating. You Are Accountable, a New York-based SUD treatment platform, secured $2 million from an undisclosed investor. Mental Health M&A A total of 19 transactions involving mental healthcare providers were announced in Q4, marking the fifth straight quarter in which mental health-related deals declined after a record 39 transactions were announced in the third quarter of 2022. Private equity remains active, accounting for 16 deals, including the following: ARC Health, the Beachwood, Ohio-based mental healthcare practice operator backed by the Thurston Group, acquired three organizations: Exult Healthcare Solutions, Advanced Psychiatric Group, and Mindsoother Therapy Center. Mertz Taggart represented Mindsoother in the transaction. Comprehensive Rehab Consultants received a strategic growth investment from the private equity group of York Capital Management. Integrative Life Network and Integrative Health Centers announced a merger, forming a unified mental and behavioral healthcare company known as Peregrine Health. Partnered Health acquired New View Psychology in a private equity-backed deal. UpLift, a Tampa, Florida-based virtual behavioral healthcare provider, announced in November that it acquired Minded, a psychiatric telehealth organization that focuses on treatment of women. Private equity-backed Kidz Therapy Services acquired Complete Rehabilitation Consultants. Beckley Waves, a venture studio that invests in psychedelics to advance mental health, made a strategic acquisition of Nue Life, a ketamine-assisted therapy provider. The Grunt Style Foundation acquired Irreverent Warriors, uniting a pair of national not-for-profits that specialize in addressing mental health and suicide prevention in the military veteran community. In addition to the $125 million investment in Headway that was led by Spark Capital Partners, the following organizations announced funding rounds in the fourth quarter: Behavioral health urgent care provider Connections Health Solutions announced its intention to expand with a $28 million Series B funding round led by Town Hall Ventures. Digital peer support marketplace startup Forum received $5.3 million in seed funding from NextView Ventures, along with participation from MBX Capital, Cue Ball Capital, Sahil Bloom of SRB Ventures, Romeen Sheth, Shaan Puri, and City Light Capital. BeMe Health, a Miami, Florida-based virtual pediatric care organization, received a $1.5 million investment from Blue Cross and Blue Shield of Kansas. Ciba Health raised just under $7.5 million in a funding round led by DigiTx Partners. Telehealth-based youth therapy startup Joon Care secured $6 million in investments from Pioneer Square Labs Ventures, Route 66 Ventures, and the company’s CEO, Emily Pesce. Clayful, an on-demand coaching company, netted $7 million in seed funding led by Reach Capital, and education technology investment firm. Nema Health, a virtual provider of post-traumatic stress disorder (PTSD) treatment services, secured $4.1 million in seed funding in a round led by Optum Ventures and .406 Ventures, along with participation from Graymatter Capital and other angel investors. Autism and Intellectual/Developmental Disabilities M&A Activity involving providers of autism therapy and intellectual/developmental disabilities treatment services remained light in the fourth quarter, with just 3 deals announced. The year-to-date total for the subsector was 17 transactions, the lowest of any year since the onset of the pandemic. Cortica extended its Series D funding round by $40 million, led by CVS Health Ventures, along with participation from LRVHealth, Ascension Investment Management, and the University of Wisconsin Foundation. Meanwhile, BlueSprig Pediatrics, an autism therapy provider backed by the private equity firm KKR, acquired Trumpet Behavioral Health in Lakewood, Colorado, and New Story, a provider of special education, therapeutic, and mental health services, acquired The Learning Spectrum in a private equity-backed strategic deal. If you are interested, you can also download the Q4 2023 Behavioral Health M&A Report via the following link:

The fourth quarter of 2023 closed with an uptick in home-based care transactions, and while the 25 total wasn’t a staggering number, it does represent a significant increase from the just 16 that took place in the third quarter. It is also more in line with pre-pandemic norms of 25-30 transactions/quarter. For the full year, there were 95 home-based care transactions. That represents a 14% downturn from 2022, and a much more significant dropoff from the frenzy that was 2021. “We are seeing signs of a thaw in dealmaking,” says Cory Mertz, managing partner at Mertz Taggart. “But the first and second quarter of 2024 will be better indicators.” There are various reasons behind the slowdown in 2023, but chief among them was the Federal Reserve’s war on inflation, causing interest rates to rise and debt markets to tighten. This spurred nearly every financial sponsor to re-evaluate their acquisition strategies. In most cases, this included taking a much more disciplined approach to investing and, in some cases, kept would-be buyers on the sidelines completely as they focused on shoring up their internal operations. But there was an increase in deals across home health, home care and hospice in the fourth quarter. And many of those deals were driven by private equity: 18 of the 25 transactions either involved a PE buyer or a PE-backed portfolio company. “Eventually, PE-driven activity will normalize across industries,” Mertz says. “Considering how in-demand quality home-based care agencies remain, the home-based care industry at large is primed to be a beneficiary of that normalization.” A huge jump in activity is not guaranteed in 2024, of course. Much will depend on not only what the Fed does next in terms of interest rates, but also consensus opinion of what the Fed will do in future meetings. “We expect more companies to go to market in 2024 — reverting back to pre-COVID levels — but it will continue to be a bit more of a challenge to get deals across the finish line as buyers will continue to chant the ‘discipline’ mantra,” Mertz says. “That is, of course, imposed on them by higher interest rates and bank covenants themselves. Prospective sellers would be well-served to perform some level of clinical and compliance audit along with some level of a quality of earnings (QoE) prior to going to market to help mitigate deal risk.” Home Health M&A Home health care dealmaking ended on an up-note, with 13 transactions completed, up from just four transactions in Q3. The biggest deal completed was Gentiva’s acquisition of ProMedica’s home health and hospice assets. Worth $710 million, this is Gentiva’s first major deal following its formation out of the divested assets of Kindred at Home. Humana Inc. (NYSE: HUM) formed CenterWell Home Health out of Kindred, and did away with the home care and hospice service lines in the process. What Gentiva decides to do with the home health piece remains to be seen, though they’ve given us no indication they are interested in looking at future home health opportunities. In late December, Brookdale Senior Living (NYSE: BKD) sold the remaining 20% stake it had in its home health JV with HCA Healthcare (NYSE: HCA). In early 2021, during the tumultuous COVID-19 period, Brookdale offloaded 80% of its home health segment to HCA Healthcare for $400 million, implying an enterprise value of $500 million at the time. Later in 2021, some of those assets were then sold to LHC Group, for $197 million. It sold its remaining 20% stake for $27 million, which has an implied enterprise value of about $135 million. The proceeds were used to refinance Brookdale’s debt obligations. “Based on the transaction timeline for the original Brookdale assets, and taking into account the earlier LHC transaction, it’s probably safe to assume the JV didn’t create a lot of enterprise value for the agency,” Mertz says. Among the other notable home health deals in the fourth quarter: ● Blue Wolf Capital-backed Elara Carings’ acquisition of American Family Home Health Services, further increasing its Illinois presence. ● New Day Healthcare remained acquisitive, closing on Pathfinder Home Health, with four locations in south Texas. The deal was New Day’s eighth transaction since its inception in 2020. ● Two PE-funded private-duty nursing transactions: InTandem Capital’s Pediatric Home Respiratory Services’ acquisition of All About Pediatrics in Jacksonville, FL, and Care Options for Kids’ acquisition of Preferred Home Health Care, with 12 locations throughout New Jersey, Pennsylvania and Delaware. Home Care M&A Non-medical home care transactions were a major bright spot for dealmaking in the fourth quarter, with 13 transactions reported. The 80/20 rule — which has still not been finalized, and would force providers to direct 80% of all Medicaid dollars toward caregiver compensation — does not seem to be deterring investment in home- and community-based services. Of the 13 home care transactions that took place in the fourth quarter, nine involved HCBS sellers. Sodexo also completed its sale of Comfort Keepers — one of the nation’s largest home care franchises — to The Halifax Group. The transaction was part of Sodexo’s divestiture of its Worldwide Home Care Operations, with subsidiaries in Europe and South America. Searchlight Capital Partners-backed Care Advantage acquired Nova Home Health Care, based in Northern Virginia. The deal builds density in the northern Virginia Marketplace. “Northern Virginia is one of the more populated areas across the state,” Care Advantage CEO Tim Hanold told Home Health Care News. “We’ve done numerous acquisitions there over a period of time. We continue to build out our density, and also the diversity of both payer source and the communities that we serve within that area.” The deal was Care Advantage’s 18th since 2018. New England-based Best of Care acquired Barton’s Angels in November. Best in Western Massachusetts, Barton’s provides both state-funded and private pay services to clients in Western Massachusetts. Finally, Tygon Peak Capital pulled off a rare feat with its five-way merger of agencies in South Texas.  The deal included A Plus Family Care, Axiom Home Health, Bee First Primary Home Care, Elder Homecare and Starr Home Care. Hospice M&A Hospice saw an uptick to nine (9) total transactions in Q4. This followed a record low two transactions in Q3. The Pennant Group (Nasdaq: PNTG) led the way with hospice transactions in the fourth quarter. An aggressive acquirer, Pennant completed two deals in Q4. Acquiring Arizona-based Southwestern Palliative Care Associates and Guardian Hospice, with locations in Texas and Oklahoma. Other notable hospice deals in the quarter include: ● Trive Capital-backed Choice Health at Home’s acquisition of Lumicare Hospice in Colorado ● Graham Healthcare Group-owned Residential Healthcare Group’s acquisition of Safe Haven Hospice in Illinois ● The aforementioned Gentiva/Promedica deal, which included substantial hospice assets. Healthcare services M&A is hard to predict due to both economic and regulatory uncertainty, and 2024 presents its fair share of challenges on both fronts. Healthcare-savvy investors who are used to navigating these obstacles are chomping at the bit for quality opportunities. Finding and closing those deals will be the bottleneck for activity in 2024. If you are interested, you can also download the Q4 2023 Home-Based Care M&A Report via the following link: