Home Care Sector Update – April 2025

Home Care Sector Offers Compelling Landscape for Investors

Capstone Partners’ Home Care Sector Update reports that an aging U.S. population and consumer preference for receiving care at home and aging-in-place are expanding the Home Care market. Key sector trends in 2025 include rising labor costs and ongoing labor shortages, accelerating adoption of technology, enhanced need for payor and service diversification, and a significant uptick in Q1 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 home care 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 home care agencies are viewed equally by suitors. Investors have been willing to pay premium valuations for “Blue-Chip” agencies with a low risk-profile that check all the boxes. This report depicts key attributes of the most sought-after home care agencies along with actionable insights and best practices for boosting multiples and value.

One of the biggest risks facing the industry is “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 (KFF). As dominant payers in home care, 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 February 25, 2025), the Home Care 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. Home care has increasingly become a scale business, and 2025 will likely see the “mom-and-pop” landscape continue to be professionalized and consolidated. Capstone Partners specializes in helping home care agency owners navigate growth strategies, M&A opportunities, and valuation optimization.

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.

Capstone Partners’ Healthcare Investment Banking Team provides M&A, capital formation, and financial advisory services to the owners of middle market businesses in the healthcare industries. Our team partners with leading mid-to-large sized Home Care businesses that serve growing end-markets. For more information on the Home Care market trends featured in this report or to speak with one of our Healthcare Investment Banking Team members about how to grow, value, and/or sell your company, contact us today to start a conversation.