The Evolving Priorities of Home Healthcare Buyers

For years, the home healthcare market saw a surge in acquisitions driven by a desire for rapid expansion. Buyers focused heavily on scale and speed, often overlooking crucial details about underlying business health. However, that era is fading. Experts at recent industry events, including the Capital+Strategy event, indicate a more sophisticated buyer is now dominating the market.

“Two to three years ago, we were seeing a lot more focus on scale and speed,” says Jen Lentz, CEO of Avid Health at Home. “Now, buyers are deeply analyzing billable hours, demonstrable growth trajectories, workforce retention rates, and key performance indicators related to caregiver performance. This has fundamentally altered the conversation around valuation, demanding a more comprehensive assessment of a business’s true worth.”

Avid Health at Home, backed by Havencrest Capital Management, provides care to individuals across North Carolina, Illinois, and Michigan, serving a diverse range of needs. Havencrest Capital Management, a Dallas-based private equity firm with over $600 million in assets under management, exemplifies the growing trend of financially astute investors entering the space.

Beyond Scale: Key Valuation Drivers

Mike Trigilio, CEO of HouseWorks, highlights additional critical factors influencing buyer decisions. State-by-state variations in Medicaid programs, the complexities of compliance, and the ease of integrating an acquisition into an existing platform are now paramount considerations. “Understanding where the markets are going is the biggest challenge,” Trigilio explains. “The variability across states necessitates a diversified approach, avoiding over-reliance on any single market.”

HouseWorks, operating in eight states and serving 30,000 clients with a workforce of 20,000 caregivers, recently acquired A Caring Experience in Rhode Island, demonstrating a commitment to strategic expansion. The company offers a comprehensive suite of services, including home care, meal delivery, adult day care, and laundry services.

Reimbursement pressures are also contributing to a trend towards smaller deals, as providers seek more manageable acquisitions. David Kerns, CEO of the LTM Group, notes that more smaller transactions are reaching completion recently.

However, growth through mergers and acquisitions isn’t without risk. A poorly executed acquisition can severely damage, or even destroy, a company. “A bad acquisition is like a dog getting fleas,” Kerns warns. “It can ruin the entire organization. Thorough due diligence, particularly regarding personnel and processes, is essential.”

The LTM Group, serving approximately 25,000 patients annually across Michigan, Ohio, Indiana, and Florida, prioritizes simplification and friction reduction in its acquisition strategy. They’ve even developed an internal AI model to accelerate the evaluation of potential partners.

What role does a seller’s existing technology infrastructure play in attracting buyers? And how can providers best prepare for a successful M&A transaction in this evolving market?

The Transformative Power of Technology and AI

Technology, particularly the integration of artificial intelligence (AI), is emerging as a key differentiator in the home-based care sector. Implementation is no longer just about efficiency; it’s about unlocking new levels of operational simplification and cost savings.

HouseWorks has experienced significant results from its technology investments, rebuilding its infrastructure across eight states and achieving a 20% reduction in personnel and operating costs in the latter half of 2025. “What’s amazing is how rapidly the AI landscape has changed,” says Trigilio. “The possibilities we envisioned just last year seem almost laughable now. We’re constantly iterating and adjusting our AI priorities.”

While Avid Health at Home hasn’t seen the same level of cost reduction, Lentz emphasizes the positive impact on employee satisfaction, as technology has reduced the burden of manual tasks.

The LTM Group is leveraging AI internally to evaluate potential acquisitions, streamlining the process and enabling them to assess more opportunities. Sellers who demonstrate innovative technology adoption are particularly attractive to potential buyers.

“That gets us pretty fired up when they’re using it differently than we would have thought,” Lentz adds.

Frequently Asked Questions About Home Healthcare M&A

1. What is driving the shift in buyer priorities in home healthcare M&A?
   Buyers are now prioritizing sustainable growth, workforce retention, and operational efficiency over simply acquiring scale.
2. How important is technology in current home healthcare acquisition deals?
   Technology, especially AI, is becoming a critical differentiator, influencing both valuation and the attractiveness of a potential acquisition.
3. What are the biggest risks associated with home healthcare M&A?
   A poorly executed acquisition can lead to revenue loss, cultural disruption, and ultimately, the failure of the combined entity.
4. What role does Medicaid play in home healthcare M&A valuations?
   State-by-state variations in Medicaid programs and compliance risks are significant factors buyers consider during valuation.
5. How can home healthcare providers prepare for a potential acquisition?
   Focus on streamlining processes, improving workforce retention, and demonstrating a commitment to technology innovation.
6. What is the current trend in the size of home healthcare deals?
   There’s a trend towards more smaller deals closing, driven by reimbursement pressures and a focus on strategic fit.
7. How can AI help with the M&A process?
   AI can be used to evaluate potential acquisition opportunities, accelerate due diligence, and identify areas for operational improvement.