Investors continued to show confidence in the home-based care industry during the first quarter of 2025, with the sector securing more deals than any other health care category, even as broader market hesitation slowed overall investment activity.
The home-based care industry saw 18 completed transactions in Q1, according to a new PitchBook analysis. Private equity investor interest in home-based care is likely to continue, according to Aaron DeGagne, senior research analyst at PitchBook, though economic headwinds, including tariff uncertainties, stubborn interest rates and inflation concerns, cloud investment forecasts.
“In an environment with rising demand for home-based care, it just makes a lot of sense for investors to keep looking at the space,” DeGagne said. “I would expect home-based care to remain in the top funding category among investors.”
Valuations for home-based care have also now aligned with those of other healthcare sectors, according to the report, making for a more balanced entry point for investors.
There is “no question” that home-based care is a significant market opportunity for investors, DeGagne said, prompting continued deal-making. Investor interest in home-based care is driven by long-term dynamics, including an aging population that prefers to age in place, which continues to drive demand.
It was a strong quarter for home-based care deals, according to DeGagne, although overall health care dealmaking in Q1 fell short of expectations.
While demand for in-home care remains a continued tailwind for the home-based care industry, negative economic factors, including inflation, could cause consumers to reduce their utilization of certain health care services.
“Whether it’s home-based care, whether it’s specialty providers, med spa, for example, dental, these types of areas, consumers can pull back on the nonpreventive spending,” DeGagne said. “So there are some second-order effects there.”
Inflation could also exacerbate a workforce landscape that has only recently begun to show signs of improvement.
“If we get to the point where inflation starts to pick up, then we would see labor pushing for wage increases as well,” DeGagne said. “The healthcare services sector as a whole really recently got through a very high labor inflation. … When you operate at such thin margins, any tilt toward inflation, labor, or capital is going to certainly hit the bottom line.”
The potential for inflation is likely to prevent decreases in interest rates, DeGagne said, which could otherwise boost dealmaking.
Macroeconomic considerations that do not directly impact the home-based care industry could still have downstream effects. Tariffs on their own are unlikely to impact dealmaking or market conditions directly, DeGagne said, but general economic uncertainty could dampen deal activity.
“Even if tariffs went away tomorrow, some of these impacts are going to be felt for the next several quarters,” DeGagne said. “To me, that indicates that this year’s deal-making is likely to be below last year’s, which was still not a super strong year.”
