Posted on Thursday, January 26, 2017 1:43 PM
According to data in a newly released PricewaterhouseCoopers (PwC) report, out of all health care sectors, home health posted the highest trading multiples for mergers and acquisitions in 2016.
The data shows that out of the seven health care sectors considered, home health and hospice had the highest mean enterprise value to EBITDA multiple last year, at 15.2. Additionally, home health and hospice had the largest increase in multiple value compared with 2015, of 2.5x.
There were 55 home health deals in 2016, according to Irving Levin Associates data included in the PwC report. For the year of 2016, the total deal value was $1.16 billion.
As for why home health volume and valuations increased last year, look to the continued acceleration of value-based care models, says Jim Moskal, leader of the global health care practice for Chicago-based M&A and debt advisory firm Livingstone Partners.
These initiatives—such as the Comprehensive Care for Joint Replacement (CJR) program that launched last April—are designed to increase home health volume by diverting patients from more expensive but sometimes unnecessary in-patient post-acute facilities, he notes.
“As a result of CJR and other bundled payment models, home health agencies are becoming an even more important factor in reducing costs and improving patient outcomes in the post-acute care continuum,” Moskal tells Home Health Care News.
“These factors are one of the reasons valuations in the sector increased from 2015 to 2016—buyers are seeking home health assets with the size and scale to satisfy this additional demand.”
The long-term care sector also had a strong year, leading at 337, with a deal value of $14.4 billion.
According to PwC, fewer managed care deals played a large role in keeping M&A activity from matching 2015 levels.
Health care M&A has momentum heading into 2017 but Trump administration policies and governmental review of certain large mergers could be complicating factors, PwC U.S. Health Services Deal Leader Thad Kresho said in the report.
For the full article, click here.
Corridor is the nation’s preferred partner and trusted business advisor to home health and hospice providers, providing quality services and impactful results for 30 years. Focusing on key operational, regulatory and financial challenges, Corridor delivering industry-unique solutions and deep expertise in coding, clinical documentation review, compliance, billing and collections , consulting and provider staff education . At Corridor, we make the business of caring for people Better! For the most important industry updates and news that impacts home health and hospice, please make sure to sign up for our weekly newsletter to receive the latest up-to-date industry information direct to your inbox!
For additional information, please contact Corridor at 1-866-263-3795.