New Day Healthcare is an active acquirer of home health, personal care and hospice organizations – but the company’s top executive is pumping the breaks on more home health deals.
The proposed Medicare home health rate cut will impact “everything” for the multi-service line provider, CEO G. Scott Herman told Home Health Care News’ sister publication, Hospice News. New Day has therefore worked to mitigate the full 6.4% rate cut.
Texas-based New Day Healthcare offers home health, hospice, pediatric, clinical decision support and personal care services in Texas, Missouri, Kansas, Illinois, Indiana and New Mexico. The company’s 10,000 team members help service nearly 180,000 patients annually. The family office Kaltroco North America owns New Day.
While it is now slowing home health its M&A strategy, New Day will still continue its trend of being acquisitive. It has acquired several home-based care providers in 2025, including Heritage Home Healthcare, Patient Recovery Home Healthcare Services and Christian Senior Care Services.
Herman shared his strategy for the company’s growth, how New Day is preparing for the Medicare home health final rule and upcoming shifts in its C-Suite.
The conversation below has been edited for length and clarity.
Has the current regulatory and economic environment affected how you approach M&A or growth in general?
Herman: We slowed skilled home health acquisitions until we get clarity on the final rule. Doesn’t mean we stopped them. We just slowed them down.
Market multiples that exploded in hospice during covid and a little after, they settled back down now and we’re back in the hospice acquisition market, which has strong near and midterm outlooks. We did not get involved in the frenzy. We just stayed clear. We never let up on personal care acquisition, as we believe that’s core for continuum development.
Because our balance sheet is healthy and our access to capital is pretty robust and we’re disciplined, we continue to look for strong assets. Our desired ability to acquire is not inhibited. The availability of assets that meet our criteria has dwindled. That’s not to say there’s no assets to buy. There are a plethora of good companies out there doing business, but there are less and less of those companies willing to sell because of the market.
What I mean by that is, those providers that might have been acquired in 2000 and might have a five-year shelf life with a private equity fund, they were likely purchased at a higher than desirable multiple and they carry some debt. That makes a reasonable transaction in today’s values somewhat difficult. There’s a lot of companies holding for market improvement. Smaller companies might have pricing expectations based on previous history, and that’s getting adjusted. Brokers and investment banks are doing a good job resetting the bar for those guys, but some of them are just going to wait.
Interest rates mostly impacted highly leveraged organizations, where in some cases, debt obligations more than doubled. Those pose a difficult environment to manage, always. It’s just more difficult to transact to buy a company at a value that makes sense for owners when they’ve got a high debt obligation. Some of those companies were purchased at higher than perceived market prices
We are seeing some larger roll-ups begin to break apart and sell parts. We engage in those processes, as long as the divested parts meet our strategic initiatives, and we’re not seeing much impact from tariffs, we negotiated agreements that are a little more far-reaching than many of our competitors. Those rates are pretty hedged through some responsible deal-making, so we’re not seeing a lot of tariff issues.
What does an ideal acquisition target look like for you?
We have a unique strategy, and we’re very disciplined in adhering to this strategy, but the first thing we must have is strategic fit. How does the organization fit into our multi-state, multi-service-line, value-creation model?
So at a macro level, we’re not buying something on the West Coast just because it looks like a really good deal. If it doesn’t fit into where we’re at, our footprint, our geography, we don’t even entertain it. But when we do find something that fits into our strategic model, geography, continuum model, our very first assessment, before compliance, before finance, before anything else, is culture.
We believe culture trumps strategy every time. If our culture does not align, if the organization has a mission statement that does not align with our purpose statement, and they’re not living that statement, then we just walk away.
We then check compliance. If the organization doesn’t have a clean compliance record or a very clear path to clean compliance, we walk away. It’s too hard to deal with compliance issues during integration, so we just don’t do it.
We then start a financial assessment. An organization must just have a solid base with sustainable performance paired with strong clinical processes and controls. We’re not looking for the best-in-class earnings, and we’re not looking for turnarounds. We like good, solid businesses built on core principles with morals and mission alignment. If they’re working to do the right thing, we want to be their partner.
Can you talk a little bit about New Day’s top goals for 2025?
So far in 2025, we closed on four acquisitions. By all industry accounts, 2025 has been a pretty lean acquisition year. So we’re one of the leading acquirers for the year. In 2026, we will target four to five acquisitions within our current geographic footprint. We’ll add service lines to complete continuums.
We’re looking to fill a couple of geographic gaps, most notably, to fill Oklahoma with a continuum. It’s kind of a blank space right now for us. We’ll also expand into contiguous states as the opportunity arises. In 2025, we expanded into New Mexico and Indiana, contiguously and strategically, but it also illustrates our platform’s ability to expand and scale as we remain committed to those states that are neighbors. We’ve taken material strides in our Caralytics software as we look at a 2026 goal, and of course, we tie all the loose ends together from these acquisitions.
When you grow an organization, it gets to a level, and then you need to move the organization and the team to the next level. An example is our CFO, Jeff Aspacher. He’s retiring this year. He’s done a great job of getting us to our current size. Together, he and I recognized that in the best interest of the organization and the next phase of our development, he could serve best on our advisory board, and we needed a more systematic, large-scale CFO. So we’ve been transitioning over the past few months into this new phase with a longer-term industry expert with significant experience in scale transformations. That CFO will be Jeff Bonham.
What are some of the major headwinds you’ll have to work through to achieve these goals?
As a diversified platform with six service lines and integrated paralytic system, which ties everything together in the macro, we find ourselves in the enviable position of being able to mitigate much of the reimbursement pitfalls, because we’re not overly exposed in one any one particular area.
Having said that, the uncertainties that are out there, the macros, are Medicaid and Medicare. Medicaid uncertainty, we think, is well navigated as it impacts our state service lines, and we have full state-level efforts that are ongoing to understand state impacts, preserve our position, and be in a position to influence lawmakers so that they know our story. So that’s been effective for us.
Of course, front of mind at the moment, as a multi-service line provider, is the proposed 6.4% rate cuts for Medicare home health. Look, when you’re an integrated system, whether you’re six service lines like us, or your two service lines, home health and hospice, you get a 6.4% rate cut in any arena, it’s going to impact everything. But we’re active in multiple efforts within our organization to lessen that, but prior to the final rule publication, so we’re mitigating it.
Historically, preliminary rate cuts and finals are usually softened, but given the information in hand, 6.4%, our teams have worked to mitigate a full cut.
As you think about Medicare Advantage market penetration for home health and hospice soon to be, we’ve developed plans that Medicare Advantage operating plans that are a challenge for the business, but we developed MA plans and virtual systems that mitigate those challenges. So we actually welcome that business.
Hospice News Senior Editor Jim Parker contributed reporting to this story.
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