The home-care industry continues to experience record levels of consolidation activity, according to Irving Levin Associates.
In its latest Home Health Care Acquisition Report, the New Canaan, Conn.-based research firm found there were 139 publicly announced mergers or acquisitions of home-care companies in the year ended June 30. That represents an increase of 24% over the previous year, which saw 112 transactions, the firm said.
The acquisition market was dominated by Brentwood, Tenn.-based American HomePatient, which announced 27 mergers and acquisitions during the 12 months, the firm reported. Other active buyers included Bannockburn, Ill.-based Option Care with 10 deals; King of Prussia, Pa.-based Home Health Corporation of America with nine deals; Owings Mills, Md.-based Integrated Health Services, eight deals; and Dallas, Texas-based HealthCor Holdings, eight deals.
Stephen M. Monroe, a partner at Irving Levin, said the home-care market continues to be fragmented. More than 50% of the companies sold had revenues of less than $5 million, he said, while only five of the targeted companies had revenues of $25 million or more.
While the emergence of more publicly traded home-care companies has been the primary catalyst for the consolidation, Monroe said, "The current investigations into Medicare billing practices could result in a new round of acquisitions as some fast-growing companies decide to shed their operations."
Monroe noted Nashville-based Columbia/HCA Healthcare Corp.'s recent announcement that it plans to sell its $1.2 billion home-care business as an example of an opportunity spurring further activity in the home-care market (Aug. 18, p. 28).