Beyond the Boom: What’s Next for Home Health M&A?

With its strong recurring revenue models, attractive EBITDA margins, and lower CapEx requirements compared to other parts of the healthcare ecosystem, the home-based care segment saw a flurry of investment—more than 100 M&A deals annually—between 2021 and 2023.

The market’s fundamentals still make home-based care attractive: aging populations, preference for at-home care, and generally stable funding from Medicare and Medicaid. But today’s investors are no longer chasing scale and instead are taking a more disciplined approach to acquisitions and post-close activities.

That’s because scale alone doesn’t guarantee success. At least, that’s what West Monroe’s healthcare M&A team has learned from successfully completing dozens of buy-side diligences and of post-close projects in the home-based care segment since 2018.

Fragmented regulations, labor shortages, and inconsistent payer relationships create challenges that require careful planning and execution. The question is no longer just what to acquire but also how to drive performance despite operational barriers, local payer variation, and workforce instability. These are the factors that lead to successful integration, industry performance, and ultimately new EBITDA creation.

Understanding the Home-Based Care Market

The home-based care market recorded over 100 M&A deals annually between 2021 and 2023. It includes both home health and home care services—two related, but distinctly different offering categories.

Evolving Home-Based Care M&A Strategy: From Aggressive Roll-Ups to Strategic Growth

The current home-based care M&A landscape is defined by investor caution and strategic restraint. After a peak of 183 deals in 2021, activity fell to just 72 in 2024—a sign that the volume-first roll-up model is fading away.

While add-ons to existing platforms continue, platform investments have slowed as investors weigh the realities of integration and value creation in this space:

• Integration across geographies is proving more complex than expected.
• Medicaid funding and regulatory frameworks vary not just by state, but often by county, making it difficult to cleanly scale operations.
• Shared services, once seen as a path to efficiency, are now seen as a heavier lift in a highly localized industry.

These obstacles are driving a shift in investor behavior. Buyers are scrutinizing where growth is achievable and what it will take to sustain it. Here are a few examples of M&A activity in this space that demonstrate the shifted behavior:

• Medalogix-Forcuraga Merger: Rather than a traditional roll-up, this tech-first merger brings together workflow automation and clinical decision support to improve coordination in post-acute care—highlighting a move toward integration-enabling infrastructure over pure scale.
• Bright Star Care expansion: BrightStar continues expanding nationally through franchising, but its model emphasizes centralized intake, consistent operations, and payer partnerships—reflecting a calculated approach to scaling without sacrificing local adaptability.
• Addus acquisition of Gentiva: Addus’ $350M acquisition of Gentiva’s personal care operations spans seven states, but the focus is targeted: building density in strategic markets like Texas and North Carolina, not chasing national volume for its own sake.

Why the Traditional Home-Based Care M&A Playbook is Failing

What looks scalable on paper can unravel in practice. Buyers expecting clean integrations from their roll-ups and add-on acquisitions in the home-based care space are confronting messy realities. Variation in regulations, care models, and payers across state lines create a patchwork of disconnected systems, staffing, and referrals.

Examples like these reveal just how underestimated these challenges can be, and why many integrations fall short of expectations.

Buyers require a smarter approach: Success in home-based care M&A depends on matching the deal thesis to operational reality —market by market, function by function. That means understanding how care is delivered, how referrals are won, and how payers behave in each market. It also means budgeting for the time and effort it takes to align systems, teams, and processes, something too many buyers still don’t account for before the deal closes.

What Today’s Home-Based Care Investors are Looking For

In today’s M&A environment, success—which is typically defined by increased EBITDA—favors precision. To achieve it, the most effective investors are looking beyond basic financial levers and looking to understand workforce resilience, technology performance, and presence in high-value markets.

Innovative Funding and Revenue Models in Home-Based Care

Reimbursement pressure isn’t new in healthcare, but it’s hitting home-based care particularly hard. Medicare rate cuts, ongoing claw-backs, and stagnant Medicaid funding have steadily eroded margins—especially since the 2020 rollout of the Patient-Driven Groupings Model (PDGM), which replaced volume-based payments with a system focused on patient characteristics.

While other parts of the healthcare system are also moving away from fee-for-service, home-based care providers are feeling the squeeze sooner and more sharply and are rethinking how they generate revenue.

The most forward-looking organizations are moving beyond fee-for-service to explore other payment models:

• National payer and partner relationships that drive consistent referral volume across multiple states
• Value-based arrangements, such as pay-for-performance and shared savings.

While the potential upside is clear, the infrastructure needed to support these models — data-sharing, outcome tracking, and care coordination — remains a work in progress for most organizations. Partnerships with payers, physician enterprises, and health systems are becoming the clearest path to secure steady referral volume outside of conventional reimbursement.

Medicare Advantage also remains a potential growth area, with markets forecasting continued MA market-share growth: 54% of the eligible Medicare population is enrolled in MA, but forecasts expect this share to increase to 60% by the end of the decade.

To realize these potential gains, however, providers must have the foundational data and analytics capabilities to effectively advocate for the value their services bring and negotiate for the corresponding reimbursement they should earn. Until a provider can demonstrate the measurable cost savings that home-based care brings, the MA rate squeeze will continue to make this a tough market to crack.

What’s Next: Investing in the Future of Home-Based Care

The home-based care space still offers compelling opportunities—but realizing them requires more than a strong investment thesis. Today’s environment rewards investors who understand the nuances of care delivery, the constraints of local markets, and the operational realities behind the numbers. This isn’t just a shift in strategy—it’s a necessary evolution. As the sector matures, so must the approach.

Authors: Kelsey Braak, Christian Kerr, Joe Widmar