Healthcare M&A drops in 2020
Healthcare mergers and acquisition activity fell 13% in 2020, reflecting a significantly subdued economy due to the Covid-19 pandemic.
Deal volume, which fell to 1,116 transactions in 2020 from a record high of 1,282 in 2019, was actually still 11% higher than it was in 2016, according to Irving Levin Associates’ 2021 Health Care Services Acquisition Report.
“Deal making in the healthcare services sectors was definitely impacted by Covid-19, but survived in the end,” Lisa E. Phillips, editor of the report, said in a statement. “Even with all the pressures on the market, a drop of only 13% in deal volume is more of a relief than a reason to panic.”
In addition, the value of transactions in 2020 was lower, down 33% to $60.8 billion. In 2019, deal values reached $91 billion. The record high dollar value was in 2017, when $178 billion in deals were posted. A big chunk of that transaction value came from CVS Health’s acquisition of health insurance giant Aetna, for $78 billion. By comparison, the biggest deal in 2020 was worth $11 billion, an acquisition of MultiPlan by Hellman & Friedman.
While the pandemic dampened M&A in most healthcare subsectors, two services saw gains in 2020 from the previous year. “Other services,” which included urgent care clinics, ambulatory surgery centers and medical office buildings, saw a 17% rise in deal volume, according to the report. Deal volume for laboratories, MRI and dialysis rose 21% in 2020, and the diagnostic laboratory segment had the most M&A activity for the year.
“The healthcare services sectors were hit hard in the second quarter of 2020, but we began to see a rebound in activity in late summer,” Phillips added. “By the fourth quarter, buyers and sellers were back in the market, releasing some of the demand delayed by the coronavirus and some of the worries over the new Biden administration’s agenda. While the fourth quarter saw record volume, it was not enough to make up for the middle quarters of the year.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."