Capstone Partners Homecare Report Shows Compelling Landscape for Investors

BOSTON—Capstone Partners, a middle market investment banking firm, released its April 2025 Home Care Sector Update, reporting that an aging U.S. population and consumer preference for receiving care at home and aging-in-place are expanding the homecare market. Key sector trends in 2025 include rising labor costs and ongoing labor shortages, accelerating adoption of technology, enhanced need for payer and service diversification and a significant uptick in quarter 1 2025 merger and acquisition (M&A) activity as investors target well-positioned businesses.

Valuation multiples reflect this enthusiasm, staying strong for quality assets even as the market normalizes from prior peaks. Investor interest has remained elevated because well-run homecare businesses can deliver steady cash flows, scalable growth and meaningful impact in their local communities.

While interest from both strategic and private equity buyers has remained strong, not all homecare agencies are viewed equally by suitors. Investors have been willing to pay premium valuations for “Blue-Chip” agencies with a low risk profile that checks all the boxes. This report depicts key attributes of the most sought-after homecare agencies along with actionable insights and best practices for boosting multiples and value.

One of the biggest risks facing the industry is the “stroke of the pen” risk, as shifts in legislation, reimbursement rates and policy changes can impact funding streams. Medicaid funds nearly 70% of home and community-based services (HCBS), according to the Kaiser Family Foundation (KKF). As dominant payers in homecare, any legislative threat to Medicaid or Medicare is closely scrutinized by investors. While it is premature to assess specific threats posed by the House’s 2025 budget resolution (passed on Feb. 25, 2025), the homecare sector has historically navigated regulatory uncertainty and continued to grow. By staying agile and adapting business models, business owners can mitigate risks. Given the fundamental demand for home-based care and the continued shift toward lower-cost care settings, the sector’s long-term opportunity has remained robust.

Even for owners not looking for a complete exit, partnerships can be a strategic and cost-effective way to grow. Homecare has increasingly become a scale business, and 2025 will likely see the “mom-and-pop” landscape continue to be professionalized and consolidated. 

The report also includes insight on following:

• Which five key attributes investors prioritize in an acquisition target.
• What best practices home care agencies can implement to both thrive independently and drive maximum value in an exit.
• How business owners can mitigate risk in the evolving regulatory environment.  

To access to full report, click here.