Modern Healthcare
By Diane Eastabrook

The home care and home infusion segments “continue to grow in their allocation of Medicare payments and are highly desirable by acquirers for their growth potential and cost efficiencies,” said Andre Ulloa, a partner in the advisory firm M&A Healthcare Advisors.

The deal, announced Wednesday, echoes other major transactions involving home care companies in recent years. The largest such acquisition was Humana’s purchase of Kindred at Home for $8.1 billion, which it completed in 2021. The Louisville, Kentucky-based health insurance company folded Kindred into its CenterWell brand last year.

When the deal closed, Humana President and CEO Bruce Broussard said the home health company would help improve patient outcomes and reduce the total cost of care, especially for Medicare Advantage plan members. In the first quarter of 2023, the insurer reported its CenterWell home health segment had increased admissions 7.1% year over year to more than 96,000 patients.

In March, CVS Health, Aetna’s parent company, closed on its acquisition of tech-enabled home care platform Signify Health for $8 billion. The retailer outbid Amazon, UnitedHealth Group and Option Care Health for the platform, which provides home health risk assessments and other services.

One month earlier, UnitedHealth Group closed on its $5.4 billion purchase of Lafayette, Louisiana-based home health and hospice company LHC Group. UnitedHealth folded the business into its Optum health services division.

More potential deals

Interest in home health and hospice from corporate buyers and private equity firms began heating up before the COVID-19 pandemic due to aging demographics. Accelerating that trend, patients and healthcare providers increasingly preferred in-home treatment to avoid possible transmission of the coronavirus.

In 2019, the industry tallied 118 deals, according to mergers and acquisition advisory firm Mertz Taggart. The number increased to 154 deals in 2020 and 177 in 2021, before declining to 104 in 2022. Many of the acquisitions included smaller, regional agencies. Analysts mostly attribute the recent decline to private equity investors scaling back acquisitions amid rising asset valuations and interest rates.

Still, the nearly $300 billion home care industry is highly fragmented, offering plenty of potential deals. Ulloa estimates there are more than 11,000 Medicare-certified home health agencies and more than 4,000 hospice agencies.

A few national home health and hospice organizations could be acquisition targets or acquirers themselves. These companies include Frisco, Texas-based Addus HomeCare, valued at $1.28 billion; Eagle, Idaho-based Pennant Group, valued at $370 million; and Atlanta-based Aveanna Healthcare, valued at $201 million.

Addus HomeCare operates in 22 states, offering both home healthcare and personal care services. Chairman and CEO Dirk Allison said he believes his company’s personal care business sets it apart, helping Addus stay independent and possibly giving it the financial heft to be an acquirer.

“We believe that putting home health and personal care together is a real benefit when we start expanding into value-based care,” Allison said. “We are looking for ways to cut costs while improving quality, and we believe you need both.”

Growth in Medicare Advantage and the move to value-based care could lead home care organizations, and their acquirers, to broaden their offerings. As payers become more vertically integrated, they are seeking ways to keep patients healthy and control costs. To that end, the companies may look to add other services beyond home healthcare, such as behavioral health and physical therapy.

In announcing the Amedisys deal, Option Care Health President and CEO John Rademacher acknowledged that future acquisitions across the healthcare continuum may be on the horizon.

“Knowing that the model is going to evolve, we want to be a part … of that evolution,” Rademacher said.

Hospice News
By Jim Parker

“LHC Group’s history of high-quality home and community-based care, matched with Optum’s extensive value-based care experience and resources, will accelerate Optum’s ability to deliver compassionate, high-touch, integrated care,” LHC Group indicated in an SEC filing. “As demand for care in the home increases, this combination will help elevate the health care experience for the people Optum and LHC Group serve, prioritizing quality and seamless coordination that reduces fragmentation and complexity.”

LHC Group delivers hospice, home health, home- and community-based services, and facility-based care to seniors in 37 states and the District of Columbia.

The Summit transaction is the first sign that LHC Group is still in the M&A game following the Optum deal.

Historically a major buyer in the space, this could signal a resurgence in activity for the Louisiana-based provider, particularly as the volume of private equity deals starts to slump due to rising interest rates and other factors.

PE firms tend to finance their acquisitions by taking on debt, meaning that the flow of dollars may slow as borrowing gets more expensive. Q4 2022, for example, saw the slowest volume of PE acquisitions since late 2017, the M&A advisory firm Mertz Taggart reported.

Beyond inflation, one contributing factor is the limited number of large platforms that are ripe and ready for sale. This likely means that smaller and mid-size deals, like LHC Group’s Summit purchase, will likely be the most prevalent type of transaction in 2023.

Headquartered in Delaware, Summit Home Care provides a range of home-based services, including skilled nursing, physical, speech and occupational therapies, as well as medical social services. M&A Healthcare Advisors represented Summit in the deal.

UnitedHealth Group is positioning Optum as a cornerstone of its growing home-based care infrastructure and expansion of value-based service delivery.

The Minnesota-based insurance colossus has deployed billions in capital to fortify Optum’s capabilities through a number of high-profile acquisitions, including LHC Group and the health care tech firm Change Healthcare.

“We know that at-home care settings — especially for people with mobility challenges and highly complex health needs — can improve outcomes, elevate patient experience and result in better care,” UnitedHealth Group CEO Andrew Witty said in an earnings call. “So we bring together teams with medical, behavioral, and palliative experience in addition to our home infusion capabilities of OptumRx. By doing so, we help patients and their families keep multiple chronic conditions in check while significantly reducing the need for care in acute and post-acute settings — really positive for them.”

Home Health Care News | Andrew Donlan.

In the U.S. Centers for Medicare & Medicaid Services’ (CMS) proposed payment rule for 2022, the attention-grabber was the expansion of the Home Health Value-Based Purchasing (HHVBP) Model, the details of which excited some providers and left others concerned.

While the specifics of the expansion plan were being discussed during the public comment period, however, one aspect of HHVBP went under the radar: the effect it may have on the M&A landscape.

After nearly 8 years in healthcare mergers and acquisitions, Mike Moran found himself in the unique and exciting position to start his own M&A advisory firm with two fantastic and equally talented partners.

Prior to forming M&A Healthcare Advisors (MAHA), Mike and his two partners had executed more than 50 successful transactions over the previous four years, and officially formed MAHA in July 2021. Their company is located in Los Angeles, CA, but Mike and his team represent healthcare businesses nationwide. MAHA specifically focuses on the lower middle-market which includes healthcare businesses generating between $5M and $100M of annual revenue.

“We’re unique because our experience offers clients in the lower-middle market access to institutional level transactional support that is typically only provided to clients with much larger businesses. It’s a surprisingly underserved market, full of advisory firms who simply make introductions to buyers, but don’t have the process or transactional experience which is critical to achieving a successful outcome,” Mike says.

By Bailey Bryant.

Amid ‘extraordinary’ deal flow, yet another merger and acquisition advisory firm has entered the behavioral health industry.

Called M&A Healthcare Advisors (MAHA), the new boutique M&A firm will focus on sell-side representation, M&A consulting and valuation services for lower-middle market health care clients. Behavioral health will be one of the firm’s main areas of focus, according to Mike Moran, partner and executive advisor at MAHA.

“There’s a large opportunity there,” Moran told Behavioral Health Business. “There’s just a surge of financial buyers — private equity, independent investors and even search funds — that are looking to get their feet wet and acquire a platform within the space.”

“Being able to do important work, do it well, and receive the confidence from clients that we’ve represented in selling their life’s work is what drives me and my partners every day.”

Mike Moran, M&A Healthcare Advisors

After nearly 8 years in healthcare mergers and acquisitions, Mike Moran found himself in the unique and exciting position to start his own M&A advisory firm with two fantastic and equally talented partners.

Prior to forming M&A Healthcare Advisors (MAHA), Mike and his two partners had executed more than 50 successful transactions over the previous four years, and officially formed MAHA in July 2021. Their company is located in Los Angeles, CA, but Mike and his team represent healthcare businesses nationwide. MAHA specifically focuses on the lower middle-market which includes healthcare businesses generating between $5M and $100M of annual revenue.

“We’re unique because our experience offers clients in the lower-middle market access to institutional level transactional support that is typically only provided to clients with much larger businesses. It’s a surprisingly underserved market, full of advisory firms who simply make introductions to buyers, but don’t have the process or transactional experience which is critical to achieving a successful outcome,” Mike says.