After a sharp dip in home health and hospice acquisitions in the second quarter, U.S. deals rose 50 percent in the third quarter from the second quarter, according to a new report from Irving Levin Associates Inc. in Norwalk, which publishes The Health Care M&A report.
However, the nine acquisitions in the third quarter were down from 15 transactions in third quarter 2014.
“Things are a little slow,” Steve Monroe, a partner at Irving Levin Associates, told the Hartford Business Journal, noting 51 transactions over the last four quarters, including the fourth quarter 2014. There are typically 50 to 75 transactions a year, he said.
Most transactions continue to be small, with no acquisition price disclosed. For those with disclosed prices in the third quarter of 2015, the total value was $241.9 million, which was less than the year-ago quarter, when the total was $410 million.
No prices were disclosed in the second quarter of 2015.
Only one home healthcare provider made it into the top five acquisitions of the past four quarters: LHC Group’s acquisition of Halcyon Hospice.
The other four largest transactions were announced by various post-acute providers such as Kindred Healthcare, HealthSouth and Extendicare.
“More post-acute providers are beefing up their home health and hospice businesses in order to compete in the future of healthcare delivery and to get better control over post-acute outcomes, which is how they may be paid,” Monroe said.
“It will be increasingly difficult for small home health and hospice providers to compete in this market, which will drive them into acquisitions with consolidators,” Lisa Phillips, editor of the Health Care M&A Report, added in the release.
The hospice business has been growing quickly, as doctors and families become more comfortable with end-of-life care and all its implications, and hospice care will see more growth, the release said.
