Why 2025 Will Be a Great Year to Sell Your Home Health Agency

The stars are aligning for owners of home health agencies. After experiencing years of disruptions, uncertainty and more challenges than we want to list, 2025 is shaping up to be a banner year for home health operators—especially for owners that plan to sell their companies this coming year.

Here are just seven reasons why we are optimistic about 2025:

1. We are entering a sellers market.

Several factors point to why 2025 could be a strong seller’s market year for owners of home health agencies:

• Private equity firms are eager to buy. Private equity transaction volume essentially bottomed out over the last two years. Private equity firms are looking to make up for lost time and quantity of acquisitions.
• Private equity firms have a lot of money. Combine the reduced number of transactions with private equity firms continuing to fundraise and build up their cash reserves over the past few years and you get more money sitting on the sidelines than perhaps we’ve ever seen. This money needs to go somewhere, and home health is becoming a more attractive industry (for reasons we’ll highlight below).
• There will be more buyers than sellers. Given home health’s attractiveness, private equity firms’ and strategic buyers’ eagerness to make acquisitions and the significant money that’s available to purchase companies, more competition is likely to be created for home health agencies that come on the market. Increased competition translates to higher valuations and sales prices.
• More rate cuts are on the horizon. The U.S. Federal Reserve will make more interest rate cuts in 2025. It’s not a matter of if the Federal Reserve will cut rates, but how many cuts it will make and how large the cuts will be. Lower rates make borrowing money cheaper, which means buyers will feel comfortable accessing even more funding to pursue and complete transactions.

2. Years of turbulence are being put behind us.

The past several years have been chaotic, fueled largely by the COVID-19 pandemic and its substantial impact on all aspects of our lives and businesses. Everything from higher inflation contributing to higher interest rates to staffing shortages to rapidly evolving regulatory requirements created volatility, and unpredictability is not good for running a home health business or for completing transactions.

The positive news is that 2025 is finally looking like a year of normalization. While challenges in areas like staffing and the regulatory landscape will remain, they are not likely to be anywhere near as significant as they were in the past, and home health operators have largely adapted well to these obstacles and their effects. The end of the 2024 election will bring further stabilization. Buyers and sellers who have been waiting for a calmer and steadier market to pursue transactions should get their wish in the new year.

3. There’s an expansion of value-based care models.

With the Centers for Medicare & Medicaid Services and private payers increasingly focused on reducing health care costs and improving patient outcomes, home health agencies are stepping up to play a bigger role in the overall care landscape. We saw the nationwide rollout of home health value-based purchasing gain further traction in 2024 and build momentum heading into 2025. This model rewards participating home health agencies for delivering high-quality care and enhancing patient outcomes.

Many agencies are maximizing these reimbursement opportunities by leveraging new tools for measuring and improving outcomes. Thanks to advancements in data analytics and digital platforms, home health providers can more easily track patient progress and report essential metrics. These insights allow them to refine their care strategies and increase their chances of higher reimbursements. As home health agencies become even more integral to value-based care, buyers are eager to get involved early and capitalize on the sector’s growth.

Smaller agencies or those with fewer resources have faced challenges with the financial and operational investments required to meet new value-based reporting standards. This is creating an opening for investors and an opportunity for home health agencies. Agencies open to a financial or strategic partnership can gain access to the capital they need to make these investments and remain competitive.

4. Aging in place is receiving increased attention.

The desire for older adults to remain in their homes as they age is becoming a primary objective for families, policymakers and payers. Home health agencies are essential to achieving this goal—and the federal government and commercial payers are acknowledging this need. Medicare Advantage plans continue to grow in popularity, with many including expanded benefits for home-based services, such as in-home support, personal care aides and home modifications. With a larger percentage of seniors opting for these plans, home health agencies can expect increased demand for their services that support aging in place—further enhancing their appeal to prospective partners.

We are also seeing innovations in and further acceptance of remote patient monitoring (RPM) that supports homecare and aging in place. RPM tools, like blood pressure cuffs, glucometers, pulse oximeters, weight scales, smartwatches and smart rings, are becoming more sophisticated, allowing patients to be monitored continuously from their homes. The adoption of RPM technologies, which continued to grow in 2024, is likely to proliferate throughout the industry, enabling home health agencies to manage chronic conditions more efficiently and cost-effectively. Buyers will be attracted to this combination of increased services and revenue and decreased costs.

5. Artificial intelligence is poised to power increased efficiencies.

Technological innovation continues to reshape the home health industry. Artificial Intelligence (AI) and machine learning are playing larger roles in optimizing care plans, managing workforce resources and improving outcomes. While AI-driven technologies are still being refined, and using them can bring risks (e.g., bias, hallucinations), there is every indication that AI-driven platforms will become instrumental in care coordination. This should translate to better communication between home health providers, hospitals and other health care entities.

Meanwhile, predictive analytics will help identify patients at higher risk of hospitalization or adverse events, empowering more timely interventions. AI will assist home health agencies in more efficiently scheduling staff and managing staff workloads, helping reduce the negative impacts of lingering staff shortages. AI should also help streamline documentation and participation in the Outcome and Assessment Information Set.

Home health agencies that are carefully introducing AI into their workflows are achieving efficiencies and other improvements that buyers are eager to see in acquisition targets.

As with meeting new or expanded reporting requirements, the implementation of AI and advanced technologies tends to require substantial upfront investments in infrastructure and staff training, which can pose challenges for smaller or rural home health providers. Taking on a partner can be one of the best ways—and sometimes the only way—to navigate such a financial barrier and reap the rewards of new digital solutions.

6. We expect further integration of telehealth & virtual care.

Telehealth has seen massive adoption, and the signs point to 2025 being the year when this technology is fully integrated into home health. Telehealth platforms are becoming more user-friendly, allowing patients to have regular virtual check-ins with clinicians, specialists and even family caregivers. This technology will complement in-person care by providing real-time consultations and follow-ups without the need for travel, which can reduce costs and improve access to services and support.

The growing acceptance of telehealth, combined with regulatory changes that are making telehealth reimbursements permanent for certain services, will make it easier for home health agencies to deliver care more efficiently and to more people in need of their services.

7. Workforce challenges should continue to subside.

The workforce instability we have experienced has undoubtedly caused buyers to reduce their transaction activity and push pause on some prospective transactions. Technological advancements are helping introduce more efficiencies and automation while reducing the need for as much staffing as was required in the past. However, staff will always be needed, and more staff will be required for home health agencies striving for the kinds of growth that attract more buyers.

The good news is that 2025 is likely to be a turning point in addressing the workforce shortages that have plagued home health (and essentially all other health care industries). Federal and state governments are expected to continue investing in programs that support workforce development, like funding for health care apprenticeships, caregiver certification programs and initiatives aimed at retaining and growing the number of health care workers.

These investments should translate to a more stable and well-trained workforce in 2025, leading to improved patient care and employee retention. Home health agencies that can demonstrate high levels of staff retention will enhance their appeal to buyers. Even agencies that have struggled with recruitment and retention but are performing well in other aspects of their operations should prove attractive, especially to buyers with in-house or in-portfolio capabilities to strengthen recruitment and retention.

Buyers are looking to buy. Are you prepared to sell?

If you’re considering selling your home health agency, there’s a good chance you’ll be able to find interested buyers in 2025. How much interest you can generate depends on your current operations and what you do to boost them in the time leading up to listing your agency.

One of the best ways to position your agency for a successful, higher-value sale is to work with a home health mergers and acquisitions (M&A) advisor. An advisor can help by assessing your agency’s strengths and weaknesses, as well as identifying opportunities for improvement to attract more of the right buyers willing to pay top dollar. They’ll also help establish a valuation range and offer guidance on strategic changes to secure a sale at the higher end of that range, helping ensure you receive the maximum value for your agency.

Your advisor will guide you through the steps required to properly prepare your agency for the market, highlighting specific areas where you can increase efficiency, optimize operations and further appeal to high-value buyers with deep pockets.

You might find a buyer without doing a lot of preparation work—the 2025 market should be that strong for sellers. By working with an M&A advisor to strengthen operations and your agency’s appeal to prospective partners, you’ll likely see an increase in buyer interest—and ultimately a better payout.