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This is a Medicare-certified home health agency serving the Hampton Roads region of southeastern Virginia, including Virginia Beach, Norfolk, Chesapeake, Portsmouth, Newport News, and surrounding communities. The agency is accredited by both ACHC and the Joint Commission and delivers a full clinical menu: skilled nursing (RN/LPN, wound care, psychiatric care, medication and IV therapy), physical, occupational and speech therapy, medical social services, and home health aides. Payer mix is Medicare with managed care through Humana and Anthem.
The headline asset here is not just the operating book but the regulatory infrastructure. The transaction includes 2 home health PTANs plus one hospice first license, and the agency sits outside the 36-month window that would otherwise force a buyer to re-enroll as a new provider. That matters enormously because CMS imposed a six-month nationwide moratorium on new home health Medicare enrollments effective May 13, 2026, which can be extended in six-month increments. In that environment, an established provider agreement that can be assigned via CHOW is scarce and defensible.
On the numbers, 2025 restated revenue was $2.417M with reported net income of $268,582 and $341,443 of documented adjustments bridging to $610,025 of adjusted earnings, a 25.2% margin. The seller reports 2026 tracking consistently with 2025. At $3.25M the deal is priced at 5.33x cash flow, a premium to typical small home health multiples that is being justified by the license package and the moratorium-driven scarcity of new entry.
Why we like it
- Earnings quality is presented with unusual rigor for an SMB: a clean general ledger P&L with a separate line-by-line adjustment bridge, each item tied to its underlying account and backed by data room support. That means the $610,025 adjusted number can be tested rather than trusted, which is exactly what a disciplined buyer wants when paying 5.33x.
- The real moat is regulatory scarcity. With CMS freezing new home health Medicare enrollments as of May 13, 2026, an existing provider agreement plus 2 PTANs and a hospice first license becomes a hard-to-replicate asset, and buyers with operating experience effectively cannot recreate this footprint organically during the moratorium.
- Home health serves an aging Medicare population with services people cannot defer, so demand is durable through downturns. The Hampton Roads service area is dense and multi-city, giving room to grow census without chasing scattered geographies.
- For an experienced operator this is a plug-and-play platform: ACHC and Joint Commission accreditation, an established clinical staff, and Humana/Anthem managed care relationships are already in place. The owner is assisting with transition and staff retention, which de-risks the clinical labor continuity that makes or breaks home health.
How to improve it
- Activate the hospice first license. The transaction includes a hospice license that appears underutilized, and hospice carries strong Medicare per-diem economics; standing up a hospice line in the same Hampton Roads footprint could add a second high-margin revenue stream off existing referral relationships.
- Deepen referral pipelines with local hospital discharge planners and SNFs in Norfolk, Virginia Beach, and Newport News. Systematizing discharge-to-home-health referral capture directly grows census, which is the single biggest driver of margin leverage in this model.
- Optimize the Medicare managed care mix. With Humana and Anthem already contracted, negotiate rate and authorization terms and pursue additional MA plans to reduce single-payer concentration and cushion the projected 1.3% CY 2026 aggregate rate reduction.
- Invest in clinical productivity and PDGM coding accuracy. Given consecutive permanent PDGM rate cuts in CY 2023 through CY 2025, tightening OASIS documentation, coding, and visit utilization protects reimbursement per episode and lifts margin without adding patients.
- Build a formal staff retention and recruiting engine within the first 90 days. Home health lives and dies on RN/LPN and therapy staffing; lock in key clinicians with retention agreements and a referral-based hiring program to protect capacity as census grows.
- Explore a tuck-in acquisition of a nearby small agency under the same PTANs where permissible, or absorb displaced patients from agencies unable to enroll during the moratorium. The freeze creates a window to consolidate share cheaply.
Diligence notes
- Confirm the CHOW mechanics with counsel who specializes in Medicare provider agreements. The entire premium rests on the assumption that the agency is past the 36-month rule and can assign the existing provider agreement; get written confirmation of the enrollment dates and model the downside if CMS or the MAC treats it as a new enrollment during the moratorium.
- Test the adjustment bridge line by line. $341,443 of add-backs on $268,582 of reported net income is larger than the reported profit itself, so scrutinize each item, confirm which are truly non-recurring or owner-specific, and rebuild the normalized number before accepting the 25.2% margin.
- Verify census, episode volume, and revenue per episode against the $2.417M revenue figure. Home health revenue is a function of admissions and PDGM case mix, so confirm the patient panel size, referral source concentration, and whether 2026 is genuinely tracking to 2025 as claimed.
- Assess clinical staffing depth and turnover. Identify which RNs, LPNs, and therapists are key persons, review their compensation and contracts, and quantify agency/contract labor reliance, since staffing instability post-close would erode both capacity and accreditation standing.
- Model reimbursement headwinds explicitly. Factor the projected 1.3% CY 2026 cut and the pattern of permanent PDGM reductions into a conservative forward case, and stress test whether the 5.33x multiple holds if rates and case mix compress further.
Source
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