2020 was truly a banner year for post-acute care M&A with over 130 completed transactions (the highest in the past five years). Although implementation of the Patient-Driven Groupings Model (PDGM), phase-out of Request for Anticipated Payments (RAPs), and the return of CMS’ Review Choice Demonstration (RCD) pilot were all anticipated by the home health industry in 2020 … the COVID-19 pandemic was not. Amidst the chaos and uncertain market conditions, Edgemont successfully closed seven post-acute care M&A transaction in 2020.

Today, we count over 70 PE-backed platform investments across the “asset-light” post-acute sector spanning home health, hospice, and personal care with 12 of these new platforms created by private equity in 2020 and 3 more thus far in 2021 (not all have been announced). The post-acute care market is growing in the mid-to-high single digit range and consolidating at an accelerating rate, driving private equity investment and M&A activity to record levels and increasing the scarcity of “platform” companies available for acquisition.

Key sector trends and themes fueling the post-acute care market include:

• Large and growing market opportunity as the provision of anticipated care continues to move into lower cost settings
• Fragmented market with a handful of platforms-of-scale creates robust consolidation opportunity
• Increasing cost and complexity of operations, along with increasing MCO participation, favors large providers
• Increasing Medicare Advantage penetration / utilization to accelerate shift from fee-for-service to fee-for-value / capitated payment models

Explore our insights and more by downloading our whitepaper: 20/20 on 2020 Post-Acute Care M&A – Bigger Deals and More of Them, Transaction Velocity to Continue in 2021