PITTSBURGH--HME mergers and acquisitions declined in 2006 because of reimbursement uncertainties, according to a report from The Braff Group, an M&A firm that specializes in the home care sector.
Based on preliminary year-end numbers, the report listed a 44 percent decline in overall HME transactions, with 53 deals in 2006 versus 95 in 2005. For the fourth quarter, the drop was even sharper with only 8 transactions completed compared to 21 for the same period in 2005, a 62 percent decline.
The report covers transaction trends in the home health, hospice, staffing, HME, infusion therapy and specialty pharmacy markets. Over all of these markets in 2006, there were 207 deals compared to 265 transactions in 2005, a decline of 22 percent.
"Not unexpectedly, in a year of substantial unknowns regarding potential further cuts to oxygen reimbursement, the greatest decline came from the home medical equipment sector," said company President Dexter Braff. "While Medicare legislation passed at year end did not include these cuts, an atmosphere of heightened risk remains which will likely make 2007 another challenging year for M&A in the HME arena."
While deal volume in infusion therapy and specialty pharmacy remains strong, the report said, the brightest spot in 2006 was the home health care sector, which set a transaction record of 86 deals, up 6 percent over the previous year's record of 81. This marks the first time that home health has led all the other sectors in transaction activity, the report said, attributing the volume to a combination of high demand from buyers, stable reimbursement and a favorable industry outlook.
For comments from Braff and others on the state of HME, see
"Will a New Congress Reshuffle the Deck?" in
the January issue of HomeCare magazine.
