Experts Predict No COVID-19 Impact on Hospice M&A

During the last several years, the hospice mergers and acquisitions market has luxuriated in an upsurge in volume and valuations. The market strength displayed throughout 2016-2018 continued through the boom quarters of 2019, and the M&A advisory firms’ outlook for 2020 was positive.

As 2019 closed, however, the firms’ partners could not have anticipated the rapid growth and potential impact of the COVID-19 pandemic. As firms now gear up, taking steps to protect their patients, staff, operations, and bottom lines, they must also face the question of how changing economic conditions may affect the still-flourishing M&A market.

Mark Kulik, managing director of The Braff Group, said the impact of COVID-19 on the hospice/home health M&A business depends on how long the emergency lasts. In the short term, he doesn’t foresee any adverse impact.


“In fact, all of my client and buyer conversations are progressing normally. I have a few clients in the market/due diligence stages and we are moving forward, schedule unimpeded,” Kulik told Hospice News. “I have spoken with many buyers and they currently remain focused on achieving their growth goals for this year. Further, their confidence is buoyed as lenders have been reaching out to assure them of continued liquidity and availability.”

Echoing part of Kulik’s point, Cory Mertz, managing partner at Mertz Taggart, said “The reality is it is very difficult at this stage to predict what impact the COVID-19 virus will have on home health, home care or hospice M&A. Lenders have assured us that they plan to continue to lend — at least for now … Overall, I think health care M&A won’t be affected as much as many other sectors, which could see more fundamental shifts.”

Stoneridge Partners’ Benjamin Bogan said that he can’t imagine any overall decrease in the demand for hospice businesses, either in the long or short terms. “We’re going through unprecedented times, so I’m not sure anyone can make a reliable prediction at this point,” he said. “Still, if I were to speculate based on what I’m seeing ‘in the trenches’ as we’re working on current deals and getting feedback from buyers and providers, I think the hospice M&A market will stay strong and active.”


Amid the optimistic forecasts, each of the experts also expressed a level of caution when predicting the crisis’ economic impact if it continues long term.

“If the term of the virus continues into late this year/early next year, then I think there will likely be a dramatic impact to M&A,” said Kulik. “Certainly, I would expect the EBITDA of agencies to experience some downward pressure and thus impact valuations.”

“How far will the public company stocks fall as a result of the decline of the overall market?” Mertz said. “This could certainly have downstream implications on valuations.”

According to Bogan, “The longer the crisis continues, the more difficult it [will be] to make predictions … I cannot discount the effect the Coronavirus has had on many aspects of life, particularly in the health care arena. Regardless, the hospice market is fragmented and ripe for consolidation. Deals may take longer, but the demand will not diminish.”

Written by Robert A. Porché, Jr.

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