Home Healthcare Market Insights PDF Free Download
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HYDE PARK CAPITAL
Investment Banking |Mergers & Acquisitions |Capital Raising
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Member FINRA/SIPC
Investment Banking |Mergers & Acquisitions |Capital Raising
Hyde Park Capital Advisors, LLC
701 N Franklin Street
Tampa, FL 33602
Tel: 813-383-0202
www.hydeparkcapital.com
Overview
Nationally recognized investment bank
founded in 2000
Over 300 transactions completed, totaling
more than $10 billion in transaction value
Extensive relationships with leading
institutional lenders, PE investors,
and strategic buyers
Proven ability to source quality buyers
and maximize deal value
Industry Expertise
Investment Banking Services
Mergers & acquisitions, recapitalizations,
and management buyouts
Capital raising of equity, mezzanine, and
senior debt capital
Financial advisory, analytical support,
and fairness opinions
Comprehensive and targeted sell-side
marketing efforts
•Technology•Healthcare
•Industrial Services•Business Services
•Consumer•Financial
Services
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Integrity |Expertise |Results
Home Healthcare
Market Insights
Summer 2023
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•The US home healthcare market is projected to be valued at
$136.2 billion in 2023 and grow at a CAGR of 5.7%, reaching
$179.7 billion by 2030.
Demographics, specifically population growth and aging,
continue to be the primary driver increasing the demand for
home healthcare services. By 2030, an estimated 20% of the US
population will be above 65 years of age, 90% of which are
expected to have one or more chronic diseases requiring long-
term care.
While demographic trends are encouraging, federal policy may
limit future reimbursements, challenging the viability of home
care providers. The Centers for Medicare and Medicaid Services
(CMS) issued a proposal in June 2023 to cut reimbursements to
home health providers by $375 million in 2024, a decrease of
2.2% from 2023 levels. However, there is proposed legislation
seeking to limit CMS payment setting power and seek to prevent
further payment cuts to home health providers, through the
Preserving Access to Home Health Act.
A long-term challenge for the industry is the national shortage
of skilled home healthcare workers. This issue deepened during
the pandemic and is expected to persist over the next five years
as skilled home health workers move to hospital-based jobs,
where wages have risen at a faster pace.
Home healthcare agencies continue to take advantage of the
opportunity to partner with private equity rollups and strategics
to add size and scale quickly in a consolidating sector.
Sources: Home Health Care News; Grand View Research; IBISWorld
Overview – Home Healthcare Market
US Home Healthcare Market Size
$136.2 $144.0 $152.2 $160.8 $170.0 $179.7
$0
$50
$100
$150
$200
2023 2024 2025 2026 2027 2028
$ in Billions
US Home Healthcare Market Segmentation
38.0%
34.7%
12.9%
10.7%
3.7%
0% 20% 40% 60% 80% 100%
Medicare
Medicaid
Private Insurance
Out-of-pocket
Other
Market Observations
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“Research suggests that roughly 15 to 40 percent of
additional Medicare FFS and MA spending for
primary care, outpatient consults, urgent care,
hospice, and outpatient services could be delivered
at home.”
“Failure to accelerate the transition of care to
value-based models achieving quality outcomes and
better experiences at lower costs and expanding
access to virtual and in-home care, could result in
competitive disadvantages and loss of market
share.”
•Major players in the healthcare industry have undertaken
acquisitions of home health companies to expand their domestic
presence, capitalize on scale, and provide effective treatment
over the entire continuum of care. CVS’s recent $8 billion
acquisition of Signify, along with UHG’s $3.3 billion acquisition of
Amedisys and $5.4 billion acquisition of LHC group, represent the
magnitude of this trend and the desire of the major operators to
provide services from insurance and preventative care through
the end-of-life care phase.
Public strategics in the space have bounced back in terms of
both stock performance and M&A activity thus far in 2023. The
HPC Home Health Index saw a 24.1% stock price increase over
the 12 months from July 2022 to July 2023. Deal activity has also
rebounded, exemplified by Addus and Pennant Group each
making multiple home health acquisitions since January.
Financial sponsors continue to be active in the home health
market, a trend that is likely to continue as an estimated 25% of
total care services is expected to shift from traditional facilities
to the home by 2025. Court Square’s acquisition of Team Select
Home Care (previously backed by Tenex Capital) shows a
positive sign for deals of size and scale.
Considering the above points, along with falling inflation rates
and capital that needs to be deployed in the PE-backed space,
the outlook is bright for the home health market in the second
half of 2023.
Sources: Home Health Care News; McKinsey & Company, United Health Group 10-K
HPC Insights
“The underpinning demand, the forces for that
demand haven’t changed... There are sound reasons
to anticipate an increase in M&A activity toward the
back end of the third quarter through the fourth
quarter.”
Market Observations
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Market Observations
6/26/2023 - Home health and hospice provider Amedisys has agreed to be acquired by UnitedHealth’s
Optum for $101 per share in cash, effectively terminating a previous merger agreement with Option
Care Health. Amedisys brings healthcare to the home through the provision of home healthcare services,
hospice services, high acuity care, and personal care services. The acquisition will expand
UnitedHealth’s massive presence in home healthcare. The deal will be subject to shareholder and
regulatory approval and is likely to face antitrust scrutiny despite minimal geographic overlap between
Amedisys and UHG’s existing home health business LHC Group.
UHG Acquiring Amedisys for $3.3B
Market Moving Deal Announcements
3/29/2023 – CVS acquired Signify for $30.5 per share in cash. Signify Health is a provider of in-home,
technology-enabled healthcare services intended to create and power value-based payment programs to
healthcare organizations. The retail pharmacy giant’s acquisition will add 10,000 clinicians along with
new technology to help providers and employers coordinate in-home care. CVS projects upwards of
$500M in synergy potential between the organizations, enhancing long-term operating growth. The
acquisition has been subject to regulatory scrutiny and both parties received a second request in late
2022, giving regulators more time to review the transaction.
2/22/2023 - United Health, one of the largest private health insurers, acquired home health business
LHC Group for $170 per share. LHC Group provides post-acute health care services to patients through
its home nursing agencies, community-based services agencies, hospice agencies, and long-term acute
care hospitals. LHC manages a large share of the home health market, with more than 960 locations in
37 states and revenue of $2.2B in 2021. LHC will join UnitedHealth’s health services division Optum,
further bolstering their footprint in the home health and hospice business. Reports suggest regulators
are unlikely to challenge the transaction.
UHG Acquires LHC Group for $5.4B
CVS Acquires Signify Health for $8B
Sources: Pitchbook, Healthcare Dive, Fierce Healthcare
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Deal TypeTarget Business DescriptionBuyer/Acquirer(s)TargetDeal Date
Public Strategic
Provider of elderly care services, offering wound care, disease
management and education, psychiatric nursing, catheter and
colostomy care, pain management, and physical therapy.
06/29/23
Public Strategic
Provider of home healthcare services, hospice services, high acuity
care, and personal care services.
06/26/23
(Pending)
Public Strategic
Provider of home health and hospice services, offering ambulation,
bathing, dressing, nursing, and home care case management.
06/16/23
Private Equity
Provider of in-home patient care services, offering home health service,
long-term care, pediatric therapy, personal care, mobile physician
service and mobile physician service.
05/08/23
Public Strategic
Provider of nursing and therapy home healthcare services, offering
nursing, personal care, homemaking, companionship, medical social
work, and speech pathology therapy.
05/04/23
Private Equity
Provider of home care services, offering non-skilled, non-medical
services to clients in the comfort of their own homes.
05/03/23
Public Strategic
Provider of home healthcare services, specializing in psychiatric care,
post-operative care, infusion therapy, wound care, transplant care, and
occupational therapy.
05/01/23
Public Strategic
Provider of hospital and healthcare services, offering orthopedic home
care, specialized clinical care, neurologic home care, and infusion and
hospice service.
04/19/23
Market Observations
Select Home Healthcare M&A Transactions
Sources: PitchBook; CapitalIQ
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Deal TypeTarget Business DescriptionBuyer/Acquirer(s)TargetDeal Date
Private Equity
Provider of health and personal care services focused on household
chores and respite care.
03/31/23
Public StrategicProvider of in-home, technology-enabled healthcare services.
03/29/23
Public Strategic
Provider of home health care services intended for elderly and senior
adults.
03/07/23
Private StrategicProvider of home care services with individualized support. 03/06/23
Private Equity
Operator of hospice and home health center intended to provide
specialized care that focuses on advanced illness.
02/27/23
Public Strategic
Provider of post-acute health care services, offering skilled nursing,
medically-oriented social services, and physical, occupational, and
speech therapy.
02/22/23
Private StrategicProvider of home care services intended for elderly people.01/04/23
Public Strategic
Provider of home healthcare services, offering personal, transitional,
and skilled nursing care solutions.
01/01/23
Market Observations
Select Home Healthcare M&A Transactions (cont.)
Sources: PitchBook; CapitalIQ
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Representative Sponsor-Backed Rollups
State(s): 6 States
Market Observations
State(s): CA, SD, FL State(s): IN, UT State(s): MI, PA, TX State(s): 13 States State(s): NY State(s): VA, MD, DE
State(s): 30 States State(s): 35 States
State(s): FL
State(s): 31 States State(s): TX, FL State(s): 18 States State(s): TX, OK, KS State(s): FLState(s): 16 States
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Representative Strategic Home Health Companies
Market Observations
State(s): 14 States
State(s): 22 States
State(s): 35 States
State(s): 30 States
State(s): 34 StatesState(s): CO, CA, NM, PA,
VA
State(s): 15 States State(s): 38 States
State(s): TX, MO, NY, CT,
OK, SD State(s): 37 States
(Pending)
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Home Healthcare Enterprise Value /
($ in millions, except per share) Closing Price % of 52 Enterprise LTM LTM Margins LTM
Company Ticker 07/10/23 Week High Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA
Encompass Health Corporation EHC $65.73 97% $10,079 $4,450 $1,809 $906 40.6% 20.4% 2.3x 11.1x
Aveanna Healthcare Holdings Inc. AVAH 1.55 58% 1,758 1,804 553 74 30.7% 4.1% 1.0x 23.7x
ModivCare Inc. MODV 50.05 41% 1,731 2,592 469 163 18.1% 6.3% 0.7x 10.6x
Addus HomeCare Corporation ADUS 86.45 75% 1,493 976 307 92 31.4% 9.4% 1.5x 16.3x
InnovAge Holding Corp. INNV 6.68 82% 869 684 475 (36) 69.4% NM 1.3x NM
Extendicare Inc. EXE 5.38 93% 688 917 67 24 7.3% 2.6% 0.8x 29.1x
The Pennant Group, Inc. PNTG 11.27 63% 666 486 104 28 21.3% 5.8% 1.4x 23.6x
Average 31.3% 8.1% 1.3x 19.1x
Median 30.7% 6.0% 1.3x 19.9x
Sector Commentary
oMedian EBITDA multiple: 19.9x
oMedian gross margin: 30.7%
oMedian EBITDA margin: 6.0%
oHigh trader: Extendicare (29.1x)
oHigh performer: Encompass Health (97%
of 52-week high)
Public Companies Analysis
24.1%
Market Observations
($ in millions, except per share)
(10%)
(5%)
0%
5%
10%
15%
20%
25%
30%
Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23
S&P 500 HPC Home Healthcare Index
15.0%
Sources: PitchBook; CapitalIQ
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HPC Overview
Offices In:
Tampa, FL (Headquarters)
Nashville, TN
Pharmaceuticals
Biotechnology
Life Science Tools / Diagnostics
Digital Health
Pharma Services
Medical Devices
Physician Practice Management
Healthcare Services
•M&A Atlas Awards
Boutique Investment
Bank of the Year and
Deal of the Year Winner
(Business Services)
•21st Annual M&A
Advisors Awards Finalist
•Global Finance World’s
Best Investment Bank
(Southeast Region)
Founded in 2000 – by the two prior heads of the Technology and Healthcare Investment Banking
Groups at Raymond James
Advised on 300+ transactions and has been a consistent leader in providing independent and
unbiased strategic counsel and advisory services to global sellers and buyers of middle-market
firms
Diverse team with extensive execution experience across all areas of Healthcare
Bulge bracket capabilities with a boutique touch
Industry Leading. . . Healthcare Coverage. . . With a Focus on Healthcare Services
Hospice Testing
Services
Lab
Services
Home
Health
Healthcare
Consulting
Healthcare
Distributors
Outpatient
Services
Managed
Care
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Recent Healthcare Transactions
Senior Banker Committed to Home Healthcare Sector Coverage
HPC Overview
Josh Paul
Vice President
701 N. Franklin St.
Tampa, FL 33602
(321) 394-5824
jpaul@hydeparkcapital.com
Experience:
5+ years investment banking experience
Advised on 10+ strategic M&A and financing transactions
Sector Experience: Home Health, Healthcare Services,
Physician Practice Management
Education:
B.S. in Finance from the University of Central Florida
Experienced M&A Banker
has been acquired by
has been acquired by
has been acquired by
has been acquired by
has been acquired by
a portfolio company of
has been acquired by
a portfolio company of
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