“Although deal volume slowed compared with the fourth quarter of 2021, the healthcare M&A market is still very strong and healthy. Private equity remains a dominant force in the industry, but health systems are on the acquisition trail, expanding their presence across the continuum of care.”
NEW CANAAN, Conn. (PRWEB)
April 20, 2022
Health care merger and acquisition activity remained strong in the first quarter of 2022, hitting a near-record 712 deals, according to new acquisition data from Irving Levin Associates as captured on its LevinPro HC platform. Activity in the first quarter was 5% lower than the fourth quarter of 2021, when 750 transactions were announced, a historic record. However, activity in the first quarter of 2022 was still higher than Q1:21, when 635 transactions were announced.
Activity in sectors such as Physician Medical Groups and Long-Term Care drove much of the volume, with 129 and 127 deals, respectively. Other Services, however, continues to remain the most active sector, with 143 deals announced, a small decrease of 5% compared with Q4:21. Demand for healthcare real estate, such as medical office buildings and life science properties, helped drive the increase especially. 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 anxiety caused by the effects of the COVID-19 pandemic has caused a surge in individuals seeking mental health treatment and services,” stated Dylan Sammut, Editor of Health Care at Irving Levin Associates, which publishes the data on its LevinPro HC platform.
Hospital transactions, however, fell dramatically, with only one merger closed, compared with 17 in the fourth quarter of 2021. Hospital mergers take significant time to negotiate and process, and there were several letters of intents announced in the first quarter, so we expect that number to rise in the second quarter.
Activity in the technology sectors remained healthy, increasing by 15% compared with the volume in Q4:21. Deals in the eHealth sector also soared, with 111 deal announcements in Q1:22 compared with 87 in Q4:21. Although M&A demand for telehealth providers has softened compared with 2020, activity has increased for providers specializing in care coordination and patient engagement as the industry moves to a value-based care system.
Deal value in the first quarter of 2022 totaled $68.4 billion, a 43% decline compared with the $120.9 billion spent in the fourth quarter, based on disclosed prices. However, the spending in Q1:22 was 24% lower than the $89.8 billion disclosed in the first quarter of 2021. The quarter’s largest deal was Healthcare Realty Trust’s acquisition of Healthcare Trust of America, Inc., the largest dedicated owner and operator of medical office buildings in the United States, for $18 billion.
“Although deal volume slowed compared with the fourth quarter of 2021, the healthcare M&A market is still very strong and healthy,” said Mr. Sammut. “Private equity remains a dominant force in the industry, but health systems are on the acquisition trail, expanding their presence across the continuum of care.”
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