The first quarter of 2020 has borne out the expectation that the COVID_19 pandemic would have little impact on hospice mergers and acquisitions, at least in the short term. Close to 15 M&A transactions occurred during Q1.

This slightly exceeds the 14 transactions that occurred during the fourth quarter of 2019 and beats the total of eight transactions that took place during the first quarter of 2019, according to a new report from the post-acute M&A advisory firm Mertz Taggart. 

“There are some very real challenges on the horizon right now, but there’s still ample interest in quality home health, hospice and home care assets,” Mertz Taggart Managing Partner Cory Mertz said. “Continued support, though possibly more cautious than usual, from the banking industry bodes well for M&A for the balance of 2020.”

The engine driving the hospice M&A market is fueled by demographic tailwinds and the availability of capital. The market has been particularly hot during the past several years. More than 10 transactions of $250 million or more in total enterprise value occurred between 2016 and 2018, according to the investment firm Cain Brothers and Company, LLC.

The robust activity did not abate during 2019; market activity actually accelerated, and hospice multiples hit record highs, reaching 22.7x in the second quarter of 2019, according to the auditing and consulting firm PwC.

Significant transactions during the fourth quarter included three separate transactions completed by Salt Lake City-based Bristol Hospice, which include the purchase of the Utah and California locations of Sojourn Hospice & Palliative Care, a Healthy Living Network company, for an undisclosed amount, and individual partnerships with Colorado-based Front Range Hospice and Palliative Care and New Dawn Hospice in Texas. Bristol is a portfolio company of investment firm Webster Equity Partners.

In addition, Charter Health Care Group, and its parent company, private equity firm Pharos Capital Group LLC, made deals to acquire St. Luke’s Home Hospice LLC and Arizona Select Hospice LLC, both of which were part of the VeraCare Hospice system. Financial terms of these transactions were not disclosed. 

Missouri Home Hospice, LLC, earlier this month purchased Moberly, Mo.-based hospice and home health provider HomeCare of Mid Missouri for an undisclosed sum. In another recent deal, Minnesota-based St. Croix Hospice acquired Serenity Care Hospice in Harrison, Mo., for an undisclosed amount. St. Croix is a portfolio company of the Chicago-based private equity firm Vistria Group. 

“The first quarter of 2020 saw more hospice M&A activity than any other quarter we’ve ever tracked,” Mertz said.