Multiple Compression and Market Corrections
The post-acute care sector has experienced valuation adjustments reflecting broader market conditions. More stable subsectors like hospitals weathered the storm remarkably well, experiencing an ~7% reduction in EBITDA multiples, from 8.5x to 7.9x, while post-acute care segments have shown similar resilience compared to more volatile healthcare specialties.
Skilled Nursing and Senior Living Valuations
Skilled nursing facilities saw higher EBITDA and revenue multiples than any other subsector within assisted living, however the specialization of the work makes it a riskier investment. The sector’s valuation methodology reflects unique characteristics: senior care facilities are typically valued using a multiple of EBITDA, however, acquirers often adjust EBITDA for the purposes of showing how a facility would run under normal conditions.
Home Health and Hospice Market Dynamics
The home health and hospice sectors face distinct financial pressures that influence M&A activity. The Centers for Medicare & Medicaid Services proposed a 1.7% aggregate cut to 2025 payments, or about $280 million for home health, while proposing a 2.6% increase to hospice per diems for 2025. These payment dynamics create both challenges and opportunities for consolidation.