Home Healthcare Acquisitions

It has been a very tough road over the past several years for Home Health business owners, especially the smaller businesses, with a steady diet of cuts and tightening compliance being handed to them. The uncertainty of the impact of Patient-Driven Groupings Model (PDGM) certainly didn’t help boost M&A activity in 2020 either.

Home Healthcare Business Opportunities

The good news is that CMS implemented a 1.3% increase in 2020 and has proposed a 2.6% increase in reimbursement for 2021. That coupled with COVID-19’s impact, generating permanent allowances for the use of telehealth and the increased desire of the patient to be served in the home, has already resulted in more home health buyers coming back to the market. Projected values point to a 4-7 multiple of adjusted EBITDA, which is better than the buyer’s market we’ve seen in previous years.

Home Health Business Valuation

Nonetheless, buyers will continue to scrutinize. Therefore, it is important that home health owners plan for the sale, tracking metrics that drive up value while maintaining growth and staying compliant. The trailing 12 months will always be a factor in value, but recent trends and a clear growth path will be the primary focus for most buyers. In other words, a troubled past can be overcome by a positive outlook. Agenda Health’s focus and experience in home healthcare acquisitions makes us uniquely qualified to help sellers make the necessary changes to show the trends buyers want to see.

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