Hospice and Home Health in 2025: Industry Evolution and the M&A Landscape

Volume 12, Issue 8, April 22, 2025

By: Anna Elliott, CM&AA

As 2025 progresses, hospice and home health services are experiencing significant growth, driven by the likes of demographic shifts, technological advancements, and a dynamic mergers and acquisitions (M&A) environment. With an aging population increasingly favoring care at home, service providers within these sectors are expanding their capabilities, while M&A activity reflects a strategic push for scale and innovation.

This column dives into these topics, further examining the current state of hospice and home health and offers a professional analysis of the M&A trends shaping their future, enriched by insights from my attendance at the Home Care 100 conference earlier this year.

An Overview of Today's Hospice and Home Health Sectors

The demand for hospice and home health services is high, and perhaps at an all-time high. With approximately 60 million Americans aged 65 and older, the growing preference for aging in place is reshaping care delivery. To account for this demand, hospice providers are broadening their offerings, integrating palliative care to address chronic conditions earlier in the patient journey, supported by telehealth platforms and remote monitoring technologies designed to enhance end-of-life care and support.

Home health, meanwhile, is evolving to manage higher-acuity cases, exemplified by the expansion of hospital-at-home programs. The Centers for Medicare & Medicaid Services (CMS) has extended its Acute Hospital Care at Home waiver through September 2025, with over 300 participating hospitals, signaling a structural shift toward in-home acute care.

Technology is essential to enabling the growth of home care. Solutions like those powered by artificial intelligence (AI) and the aforementioned remote patient monitoring are helping optimize care delivery, reduce hospital readmissions, and alleviate pressure on staffing resources, which are greatly strained. Larger providers are leveraging their scale to secure more favorable reimbursement rates from Medicare Advantage plans, which often offer lower payments than traditional Medicare. Smaller agencies, however, face persistent challenges, including workforce shortages and financial strain, creating a competitive divide within the industry, and one that is likely to grow further.

M&A Outlook: A Strategic and Financial Perspective

Through a little more than the first quarter of 2025, it's apparent that the M&A landscape for hospice and home health is resurging, following a roughly 9% decline in health services deal volume through late 2024. We see several factors driving this momentum, including declining interest rates, a business-friendly regulatory climate under the new administration, and substantial capital reserves. Consider that private equity (PE) firms alone held $2.6 trillion globally by mid-2024.

Let's take a closer look at some of the most significant forces influencing the hospice and home health sectors.

Economic Tailwinds

The Federal Reserve's rate cuts in late 2024 have lowered borrowing costs, facilitating deal financing. Combined with significant unallocated capital, as noted in PwC's 2025 U.S. Deals Outlook, the environment is ripe for investment. Hospice and home health, with their stable cash flows and growing market, are particularly attractive targets for investors.

Key Players

Two buyer groups dominate these sectors. Strategic acquirers, like large home health operators, are pursuing acquisitions to expand geographic coverage and integrate advanced care models. PE firms, conversely, are generally targeting agencies with strong fundamentals or technological differentiation, often with an eye toward future exits.

While the blocked UnitedHealth-Amedisys merger in 2024, which will head to mediation in August, underscored regulatory risks, smaller transactions are proceeding with less friction.

A particularly noteworthy development in 2025 is the number of instances where we are seeing strategic buyers being outbid, often by PE firms or other aggressive acquirers. This shift marks a notable change from the typical dynamics seen in previous years.

Acquisition Priorities

Technology and scalability are top priorities. Agencies employing one or more of telehealth, AI-driven care coordination, and data analytics are highly sought after for their potential to enhance efficiency and outcomes while lowering costs. The fragmented nature of the hospice and home health markets — which are dominated by small operators — fuels consolidation, as buyers seek to build regional dominance or establish platforms for long-term growth.

Market Dynamics

Valuation negotiations remain a challenge, with sellers seeking premiums and buyers aiming to capitalize on market opportunities. However, the urgency to deploy capital and a robust pipeline of assets are aligning interests, according to PwC's analysis.

Additionally, EY's 2025 health outlook highlights a rise in vertical integration, with health systems acquiring home-based care providers in an effort to streamline patient care pathways. A potential relaxation of antitrust enforcement may further accelerate activity, though new Hart-Scott-Rodino Act filing requirements, effective February 2025, are increasing due diligence for larger deals.

Challenges and Resilience

Workforce shortages and reimbursement pressures from Medicare Advantage plans continue to strain smaller providers, which we are seeing as a motivating factor to push owners toward a sale. Regulatory oversight remains a consideration as well, but the sector's resilience is evident as deal volumes remain around 70% above pre-COVID levels, which we see as reflecting sustained investor confidence.

Pennsylvania Perspective

Activity in Pennsylvania, where I am from and represent many clients, offers a compelling lens into broader trends in hospice and home health, which are shaped by the state's demographics and healthcare dynamics. With over 20% of its 13 million residents aged 65 or older, Pennsylvania mirrors national aging trends but adds a rural-urban divide that complicates care delivery. We see providers like UPMC and Geisinger leading the charge in hospital-at-home adoption. Organizations such as BAYADA Home Health Care, which has a significant presence in Pennsylvania despite its New Jersey (Pennsauken Township) headquarters, are expanding services to meet demand. As in other states, rural areas, however, struggle with caregiver shortages, making technology a critical bridge.

A notable trend in Pennsylvania is providers working to narrow networks and raise barriers to entry for managed care organizations (MCOs). With MCOs dominating the state's Medicaid and Medicare Advantage markets — think Highmark Wholecare or UPMC Health Plan — home health and hospice agencies are tightening referral networks to favor longstanding partners. This strategy aims to protect revenue streams by limiting MCOs' ability to dictate terms or onboard new entrants, but it also restricts patient access to care options. This tension is a defining feature of Pennsylvania's 2025 landscape, and we expect to continue to see efforts around balancing provider autonomy with market pressures.

Insights from Home Care 100 2025

I had the privilege of attending January's Home Care 100 conference in Florida. This event is largely a gathering of C-level leaders in home-based care. The meeting, themed around optimizing financial performance and exploring M&A opportunities, offered a front-row seat to the industry's pulse. While in attendance, I connected with CEOs and innovators during sessions that drilled into leveraging technology, such as AI for predictive care, and navigating payer relationships amid consolidation.

One standout moment for me was a panel on workforce strategies, where leaders shared how tech-enabled solutions are easing staffing woes. The meeting offered many opportunities for networking, and through these I gained insights on how hospice and home health providers are allocating more resources toward aligning operations with value-based care. Conversations with peers also confirmed that the hospice and home health M&A buzz I had been tracking was part of a broader nationwide trend. My experience at Home Care 100 underscored the home health sector's momentum and the critical role of strategic partnerships in driving growth.

Implications for Hospice and Home Health in 2025

The hospice and home health sectors are at a pivotal juncture, with organizations working to balance unprecedented demand with operational challenges. Providers are adopting innovative technologies and care models to meet patient needs, while larger organizations are seeking to gain a competitive edge through scale and payer negotiations. From a mergers and acquisitions perspective, I expect to see heightened activity through the end of the year as strategic and financial buyers work to capitalize on favorable conditions to acquire assets that offer growth potential and operational synergies.

For industry stakeholders, it is clear that success will largely hinge on adaptability, including the ability to effectively leverage technology, navigate reimbursement complexities, and position organizations for consolidation. Through the first several months of 2025, I view the hospice and home health sectors as not only meeting the moment but also serving as a focal point for investment and transformation in the broader healthcare landscape — a reality brought into sharp focus through my time at Home Care 100.

If you are an owner of a hospice or home health organization and are interested in discussing how you can capitalize on these trends through the sale of your business, please reach out to VERTESS. We are a team of expert advisors on healthcare mergers and acquisitions and would welcome the opportunity to speak with you about your company and help you begin to formulate and execute a successful exit strategy business plan.

Anna Elliott, CM&AA

With over 15 years of experience in healthcare technology, post-acute care, hospice, and urgent care, I am a highly experienced healthcare executive. I have successfully supported numerous private equity roll-ups and exits in the home healthcare sector. My extensive knowledge of the healthcare industry and my leadership in the M&A community, as a certified M&A Advisor (CM&AA) and member of the Executive Committee of the Chapter of the Association for Mergers & Acquisitions Advisors (AM&AA), distinguish me from others in the field.

Throughout my career, I have specialized in healthcare and have excelled in attracting healthcare technology firms and industries that are growing through Mergers + Acquisitions. I have a strong ability to target specific needs and opportunities in the business supply and demand process, resulting in over $150 million in value delivered to organizations.

As a co-founder of M&A Finders, a boutique Merger and Acquisition advisory firm in Pittsburgh, I have been able to pursue my passion for advocating on behalf of buyers and sellers in achieving their M&A goals. I am excited to bring my skills and network to VERTESS, where I have access to the necessary resources to further expand my impact in the healthcare industry.

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Email Anna Elliott or Call: (724) 900-1377.