Healthcare deals are down in 2022, but volume remains elevated
Healthcare deals have fallen during the first few months of 2022, but deal volume remains elevated from pre-pandemic levels overall.
That’s according to the latest insights from pwc, which found health services deal volume was down 9% in the first quarter of 2022 compared to the fourth quarter of 2021. However, compared to the same period last year, deal volume is still strong.
Across all health services, deal volume was up 5% in the year ending May 15 compared to the 12 months prior. While deal volume grew, deal values actually fell 17% over that time period, to about $176 billion.
“The increased deal volume is driven by roll-up transactions, an effort by the industry to consolidate still fragmented subsectors of the healthcare ecosystem,” pwc reported. “These transactions are meant to create health systems that can deliver higher quality, patient-centric care anchored in digital capabilities.”
The findings underscore that private equity funds are still investing in the healthcare industry, and are expected to rebound in the coming quarters. Long-term care is one area that has more deals, with 498 deals in the year ending May 15 versus 446 during the 12 months ending May 15, 2021. Over that time, deal volume rose 2%, to $19.6 billion. Despite staffing shortages and vaccine mandate issues, long-term care continues to remain durable.
Additionally, physician groups are of interest to investors, with 482 physician medical group deals through May 15, with a total value of $5.7 billion. Dealmaking in the space nearly doubled in the first quarter of 2021 and has remained elevated. Additionally, home health is having a moment after the pandemic shone a spotlight on the sector. There were 142 home health and hospice deals in the 12 months ending May 15, increasing 19% in value from 2021, according to pwc. The home health sector was driven by a megadeal, UnitedHealthcare’s acquisition of Louisiana-based home health group LHC Group, for $170 per share, or about $5.4 billion in cash, plus debt.
“Labor challenges continue to persist across the sector and are having disproportionate impacts across various geographies and sub-sectors,” Nick Donkar, U.S. health services deals leader, said in a statement. “M&A processes continue to be ultra-competitive and, coupled with rising interest rates and other macroeconomic headwinds, increase the need for post-deal value capture from enhanced capabilities and operating leverage.”
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."