LevinPro HC

“It’s unlikely deal volume will match the level we saw in 2023, but investors, from private equity firms to strategic buyers, are finding plenty of opportunities in the market. Demographic tailwinds and the shift to value-based care will keep the market healthy for years.”

NEW CANAAN, Conn. (PRWEB)
July 20, 2023

Health care merger and acquisition activity increased nearly 10% in the second quarter of 2023, hitting 696 deals, according to new acquisition data from LevinPro HC. Activity in the second quarter was 8% higher than in the first quarter, when 646 transactions were announced. However, it is a drop of 7% compared with activity in the second quarter of 2022, when 748 deals were announced.

Activity in sectors such as Physician Medical Groups and Other Services drove much of the volume, with 148 and 136 deals, respectively. Demand for healthcare real estate, such as medical office buildings and properties, has driven high deal volume in the Other Services for the past several years. Activity in the Home Health & Hospice and Behavioral Health Care sectors remained stable thanks to tailwinds in each market. More and more patients are seeking alternatives to facility-based care, turning toward home health services, and demand for substance use disorder treatment services have driven investment in that area.

Even the Hospital sector saw a slight increase, with 18 deal announcements in the second quarter. A significant number of the transactions this most recent quarter involved mergers between major health systems, highlighting the importance of scale and market penetration. The largest hospital deal of the quarter (and the year so far) was Kaiser Permanente’s acquisition of Geisinger Health, which comprises 10 hospitals, a health plan with more than half a million members, 25,000 employees, more than 1,700 physicians and 133 primary care and specialty clinic sites. Geisinger Health generated approximately $6.43 billion in revenue and $289.4 million in EBITDA in 2021.

Activity in the technology sectors remained healthy, rising by 13% compared with activity in the first quarter. M&A activity in the eHealth sector remained level, with 69 deal announcements. Although M&A demand for telehealth providers has softened compared with the past few years, we’re seeing increased activity for providers specializing in care coordination and patient engagement as the industry moves to a value-based care system.

Deal value in the second quarter totaled $60.3 billion, a decline of 19% compared with the $74.1 billion spent in the third quarter, based on disclosed prices. The spending in Q2:23 was 1% higher than the $59.7 billion disclosed in the second quarter of 2022. The largest deal by price was Merck & Co.’s $10.8 billion purchase of Prometheus Biosciences, a late-stage biotechnology company focused on novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases.

“Even with tough market conditions and headwinds, activity has remained stable the first half of 2023” said Dylan Sammut, Editor of Health Care at Irving Levin Associates, which publishes the data on its LevinPro HC platform. “It’s unlikely deal volume will match the level we saw in 2023, but investors, from private equity firms to strategic buyers, are finding plenty of opportunities in the market. Demographic tailwinds and the shift to value-based care will keep the market healthy for years.”

All quarterly results are published in The Health Care M&A Report, which is part of the Irving Levin Associates and LevinPro investment research source. For information, or to order the reports, call 800-248-1668. Irving Levin Associates is celebrating more than 70 years of delivering exclusive M&A intelligence to its sophisticated audience of seniors housing and healthcare investors. The company was established in 1948 and has offices in New Canaan, Connecticut and North Bethesda, Maryland. The company publishes research reports and newsletters and maintains databases on the healthcare and senior housing M&A markets.

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