Home-Based Care M&A Activity Remains Steady in Q2, Non-Medical Sector Leads the Way

PHILADELPHIA, PA – July 10, 2024 – Mergers and acquisitions (M&A) in the home-based care industry demonstrated resilience in the second quarter of 2024, with 26 deals completed, according to a new report from Mertz Taggart. While a slight dip from the 30 deals recorded in the first quarter, the sector continues to attract investment, particularly within the non-medical home care segment.

Non-medical home care dominated deal flow,accounting for 15 of the total transactions,with nine involving companies backed by sponsors. this surge is fueled by increased clarity surrounding the occupational Business and Benefits Act (OBBBA) and a perceived lessening of it’s potential impact on the non-medical space. The anticipated reinstatement of the companionship exemption by the department of Labor, coupled with several portfolio companies preparing for exit, are further bolstering activity.

“Non-medical home care M&A is experiencing a significant period of growth,” stated Cory Mertz, managing partner at Mertz taggart. “The regulatory landscape is becoming clearer, and we’re seeing a strong pipeline of companies ready to transact.”

Key players Drive Q2 Activity

Active Day, based in Feasterville-Trevose, Pennsylvania, and Help at Home, headquartered in chicago, were particularly active acquirers during the quarter, each completing three deals. Active Day expanded its footprint in South Carolina through the acquisition of AllCaregivers, New Generations Home care of Florence, and Goldencare. Help at Home broadened its reach with the purchase of Home Care Now of Central Florida, among other businesses.Home Health Sector Faces Headwinds

While seven home health deals were announced in Q2 – a slight decrease from the eight completed in Q1 – the sector faces potential challenges. The proposed Medicare home health payment cuts are creating uncertainty and could jeopardize deals currently in progress.

Mertz described the proposed cuts as “very disappointing, but not a huge surprise,” suggesting they may lead to a more cautious approach from buyers.Despite this, demand for high-quality, skilled home health assets remains strong, with buyers demonstrating a more disciplined investment strategy. Assets that have recently come to market have commanded robust valuations, a trend Mertz anticipates will continue.

Notable Q2 Transactions:

LiveWell Partners acquired Empower Home Health Services.
Aveanna Healthcare Holdings (NASDAQ: AVAH) completed its $75 million acquisition of Thrive Skilled Pediatric Care.

Looking Ahead: Navigating a Changing Landscape

The home-based care M&A market is at a pivotal moment.While non-medical care is thriving, the home health sector is bracing for potential disruption.

Evergreen Insights for Investors & Providers:

Regulatory Awareness is Crucial: Staying abreast of evolving regulations like OBBBA and Medicare reimbursement policies is paramount for successful M&A activity.
Quality Drives Value: High-quality home health agencies with strong reputations and proven outcomes will continue to attract premium valuations.
Strategic Discipline is Key: Buyers are increasingly focused on strategic fit and long-term value creation, demanding thorough due diligence and careful planning.
Non-Medical Care Presents chance: The non-medical home care segment offers a compelling growth opportunity, particularly for investors seeking to capitalize on the aging population and increasing demand for in-home support services.

The home-based care industry is poised for continued evolution,and understanding these dynamics will be essential for navigating the opportunities and challenges that lie ahead.

What percentage did home care costs rise in Q2 2025 compared to the same period last year?

Home Care Spending Rises in Q2, Home health Discounts Decline

The Shifting Landscape of In-Home Healthcare Costs

Recent data indicates a significant trend in the home healthcare market: spending on home care services increased in the second quarter of 2025, while together, available home health discounts and financial assistance programs are becoming less prevalent. This creates a complex situation for families seeking elder care, post-surgery care, or assistance for individuals wiht chronic illnesses. Understanding these changes is crucial for navigating the costs and ensuring access to quality in-home care.

Q2 Spending: A Deeper Dive into the Numbers

Across the US, home care costs rose by an average of 7.8% in Q2 2025 compared to the same period last year. This increase is driven by several factors:

Increased demand: The aging population continues to grow, leading to a higher demand for senior care and assisted living alternatives.

Labor Shortages: A nationwide shortage of home health aides and caregivers is driving up wages. Agencies are forced to offer higher compensation to attract and retain qualified personnel.

inflationary Pressures: General economic inflation impacts all sectors, including the cost of supplies, transportation, and administrative expenses for home care agencies.

Specialized Care needs: A growing number of individuals require specialized skilled nursing care at home, which commands higher hourly rates. This includes services like wound care, medication management, and physical therapy.

These factors combined are creating a challenging financial surroundings for families relying on home healthcare services.

The Decline in Home Health Discounts & Financial Aid

While spending increases, the availability of financial assistance is shrinking. Several key trends are contributing to this:

Reduced Government Funding: State and federal funding for home and community-based services (HCBS) has remained stagnant or even decreased in some areas.

Changes to Medicare & Medicaid Policies: Modifications to eligibility requirements and coverage limitations within Medicare and Medicaid are restricting access to financial aid for home health care.

Agency Discount Programs Limited: Many home care agencies are scaling back or eliminating discount programs due to rising operational costs. Previously offered discounts for long-term care or bundled services are becoming less common.

Increased Competition for Limited Funds: as more individuals become eligible for assistance, competition for available funds intensifies, making it harder to secure financial support.

Understanding Different Types of Home Care & Associated Costs

Its vital to differentiate between various types of home care to understand the cost implications:

1. Homemaker Services: (Non-medical) – Light housekeeping, meal readiness, errands. Average hourly rate: $25 – $35
2. Home Health Aide Services: (Basic medical) – Assistance with bathing, dressing, medication reminders. Average hourly rate: $30 – $45
3. Skilled Nursing Care: (Medical) – Wound care, injections, monitoring vital signs, administered by a Registered Nurse (RN) or Licensed Practical Nurse (LPN). Average hourly rate: $60 – $100+
4. Specialized Care: (Medical) – Dementia care, Parkinson’s care, post-stroke rehabilitation. Average hourly rate: $40 – $75+ (depending on specialization)

These are national averages, and rates can vary significantly based on location, agency, and the specific needs of the individual.

Navigating Rising Costs: Practical Tips for Families

Families facing increasing home care costs can explore several strategies to manage expenses:

Explore All Financial Assistance Options: Thoroughly investigate Medicare, Medicaid, veteran’s benefits, and state-specific programs. Utilize resources like the Eldercare Locator (https://eldercare.acl.gov/) to find local assistance.

Consider a Family Caregiver: If possible, involve family members in providing care. This can reduce the need for paid home health aides and lower overall costs.

Negotiate with Agencies: Don’t hesitate to discuss pricing and potential discounts with home care agencies. Some agencies may be willing to negotiate rates or offer bundled service packages.

Utilize Technology: Explore assistive technologies, such as medication dispensers and remote monitoring systems, to reduce the need for constant in-person care.

Review Insurance Coverage: Carefully review your long-term care insurance policy (if applicable) to understand what services are covered and what limitations apply.

Tax Deductions: Investigate potential tax deductions for home care expenses. Consult with a tax professional for personalized advice.

The Impact of the Labor Shortage on Home Care Quality