Q. How has the M&A environment for HME providers shifted over time?
A. Following the introduction of competitive bidding in the early 2010s, M&A activity in the HME sector grounded to a halt, as reimbursement was cut drastically. However, as the marginal impact of each subsequent round of competitive bidding lessened and the reimbursement environment stabilized, investors demonstrated a renewed interest in HME providers, driven by market tailwinds that have positioned the sector for growth.
A growing preference across the health care ecosystem for home-based care, coupled with an increasing geriatric population with a high prevalence of chronic conditions and a fragmented market landscape, has led to an uptick in institutional capital entering the sector. This increase in private equity-backed platforms creates a broader, more diverse buyer universe for HME providers exploring M&A and an increasingly seller-friendly environment.
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