Quarterly Analysis: Home-Based Care Market Experiences Slight Decline in M&A Activity During Q3

October 20, 2025

Home Care M&A Activity Cools in Q3 2025, But Optimism Remains

The Home-based care market experienced a slight deceleration in Mergers and acquisitions (M&A) during the third quarter of 2025, according to recent analysis.A dip in activity within the non-medical home care segment drove the overall slowdown.

Deals Decline Slightly From Previous Quarters

A total of 20 transactions were recorded across the home health, home care, and hospice sectors in Q3 2025. This represents a decrease compared to the first and second quarters of the year,though,transaction volumes remained consistent with those observed throughout 2024. the trend suggests a stabilization rather than a steep decline in deal-making.

Home Health Sector Faces Uncertainty

Currently, the home health industry is navigating a period of uncertainty due to proposed changes in Medicare payment rates. Officials are considering a significant 6.4% cut to home health payments for 2026, possibly reducing reimbursement by an estimated $1.135 billion compared to 2025 levels.Despite these potential cuts, strong demand persists for high-performing home health agencies.

“Although buyers are well-informed about the risks associated with potential reimbursement changes, premier assets continue to attract considerable interest,” stated industry expert cory Mertz. “Organizations building comprehensive, integrated care networks and seeking value-based payment arrangements are particularly focused on expanding their skilled home health capabilities.”

Key Transactions Highlight Market Trends

Seven home health transactions were completed in the third quarter of 2025,mirroring the volume seen in the previous quarter. The Pennant Group, a known acquirer in the space, completed two deals, acquiring both GrandCare Health Services and Healing hearts Home Health, continuing its strategy of investing in community-based care providers.

Notably, UnitedHealth Group finalized its acquisition of Amedisys after overcoming regulatory hurdles, marking a significant event in the quarter. Addus HomeCare Corporation also expanded its footprint, acquiring Helping Hands home for $21.2 million.

Company	Transaction Type	Target Company
The Pennant Group	Acquisition	GrandCare Health Services
The Pennant Group	Acquisition	Healing Hearts Home Health
Addus HomeCare Corporation	Acquisition	Helping Hands Home
UnitedHealth Group	Acquisition	Amedisys

Non-Medical Home Care Shows Resilience

While deal volume in non-medical home care experienced a slight dip, 11 transactions were completed during Q3 2025. Industry analysts expect continued interest in this segment, particularly from sponsor-backed companies looking to maximize returns before planned exits and strategic acquirers aiming to diversify their service offerings.

Did You Know? The personal care segment currently represents 76.5% of Addus homecare Corporation’s overall business.

Pro Tip: When evaluating potential acquisitions, buyers are increasingly prioritizing companies with strong local market ties and a demonstrated ability to provide high-quality care.

Looking Ahead: the Future of Home-Based Care M&A

The home-based care sector remains a dynamic and attractive market for investors, despite current challenges. The aging population and the growing preference for receiving care in the home are key drivers of long-term growth. As the industry adapts to evolving payment models and regulatory changes, strategic mergers and acquisitions will likely continue to shape its landscape.

Frequently Asked Questions About Home Care M&A

• What is driving the decline in home care M&A activity? The slight decline is largely attributed to a reduction in non-medical home care deals, alongside uncertainty surrounding Medicare payment rates.
• Is the home health sector still attractive to investors? Yes, despite proposed payment cuts, high-quality home health assets remain in strong demand due to the long-term growth potential of the industry.
• What role does The Pennant Group play in the home care M&A market? The Pennant Group is a prolific acquirer, focused on community-based care providers with strong local presence.
• How are Medicare payment cuts impacting M&A decisions? The proposed cuts are creating caution among buyers, but are not deterring investment in high-performing agencies.
• What is the outlook for non-medical home care M&A? Analysts anticipate continued interest in this segment,driven by sponsor-backed companies and strategic acquirers.

What impact do you foresee the proposed Medicare cuts having on the accessibility of home healthcare services? Share your thoughts in the comments below!

Do you believe consolidation in the home care market is ultimately beneficial for patients and providers? Let us know your opinion!

What impact will the proposed 2026 Medicare payment rule have on M&A valuations in the home healthcare sector?

Q3 2025 M&A Landscape: A Cooling Trend?

Mergers and Acquisitions (M&A) activity within the home-based care market experienced a modest downturn in the third quarter of 2025, following a robust frist half of the year.While deal volume remains historically elevated, the slight decrease signals a potential shift in market dynamics. This analysis delves into the key factors contributing to this trend, examining the impact on home health agencies, personal care services, and the broader healthcare M&A sector. We’ll also explore implications for investors and strategic buyers.

Key Drivers Behind the Slowdown in Home Care M&A

Several converging factors contributed to the Q3 slowdown. These aren’t necessarily indicative of a long-term collapse, but rather a recalibration after a period of intense activity.

* Increased Interest Rates: Rising interest rates have increased the cost of capital, making financing for acquisitions more expensive and impacting deal valuations. This is a meaningful factor across all healthcare private equity deals.

* Valuation Gaps: A persistent gap between buyer and seller expectations regarding valuation remains a hurdle. Sellers, buoyed by previous high multiples, are frequently enough reluctant to accept lower offers reflecting the current economic climate.

* Regulatory Uncertainty: Ongoing scrutiny and potential changes to Medicare reimbursement policies for home healthcare create uncertainty, making buyers more cautious. The impact of the proposed payment rule for 2026 is a key concern.

* Economic Slowdown Concerns: Broader macroeconomic concerns, including potential recessionary pressures, are prompting some investors to adopt a wait-and-see approach.

* Deal Fatigue: After a flurry of activity in H1 2025, some potential buyers may be experiencing “deal fatigue” and prioritizing integration of recent acquisitions.

Sector-specific Trends in Home-Based Care M&A

The slowdown wasn’t uniform across all segments of the home-based care market.

Home Health Agencies (HHAs)

Home health agency acquisitions saw the most pronounced decline in Q3. this is largely attributed to the aforementioned regulatory uncertainty surrounding Medicare reimbursement. Buyers are carefully assessing the potential impact of payment changes on HHA profitability. The focus is shifting towards agencies with strong value-based care contracts.

Personal Care Services

Personal care services, including non-medical assistance, demonstrated more resilience. Demand for these services continues to grow, driven by the aging population and a preference for aging in place. However, even this segment experienced a slight moderation in deal volume compared to the first half of the year.

Specialized Home Health & Hospice

Hospice care and specialized home health services (e.g., pediatric care, wound care) remained attractive targets.These segments often command higher valuations due to their specialized nature and relatively stable revenue streams. Private equity firms continue to show strong interest in these niches.

Notable Deals & Transaction Multiples (Q3 2025)

While overall volume decreased,several significant transactions still occurred in Q3.

* BrightSpring Health Services acquired a regional provider of pediatric home health, demonstrating continued consolidation in specialized care. (Source: Healthcare Finance News, October 15, 2025)

* Amedisys expanded its footprint in the Southeast with the acquisition of a smaller home health agency. (Source: Home Health Care News, September 28, 2025)

Transaction multiples for HHAs generally ranged from 8-12x EBITDA, down from the 12-15x range seen in early 2025. Personal care services continued to trade at slightly lower multiples, typically between 7-10x EBITDA. Specialized home health and hospice agencies consistently achieved the highest multiples, often exceeding 15x EBITDA.

Implications for Investors and Strategic Buyers

The Q3 slowdown presents both challenges and opportunities.

* Due Diligence is Paramount: Thorough due diligence, notably regarding reimbursement risk and regulatory compliance, is more critical than ever.

* Focus on Quality & Value-Based Care: Agencies with a strong focus on quality of care and participation in value-based care models are likely to be more attractive targets.

* Strategic Consolidation: Expect continued consolidation, particularly among larger players seeking to expand their geographic reach and service offerings.

* Patience May Be Rewarded: Buyers who are patient and willing to negotiate may be able to secure more favorable deals in the coming quarters.

* Explore Add-on Acquisitions: Private equity backed platforms are increasingly looking for add-on acquisitions to accelerate growth and improve operational efficiencies.

The Role of Technology in Future M&A

The integration of technology is becoming increasingly vital in the home care industry. Agencies that have invested in telehealth, remote patient