2022 should be strong for healthcare M&A with a surge of buyers from big tech and retail giants following an aggressive 2021 for the buyouts, Irving Levin Associates, publisher of the LevinPro HC platform predicted.
“It has been a historic year for healthcare M&A, with more than 2,500 deal announcements, largely driven by private equity activity across a variety of sectors,” said Dylan Sammut, Editor of Health iCare at Irving Levin.
Health care merger and acquisition activity soared in the fourth quarter of 2021, hitting a record 733 deals with activity in sectors such as Physician Medical Groups and Long-Term Care drove much of the volume, with 138 and 122 deals, respectively, the firm noted.
Demand for healthcare real estate, such as medical office buildings and properties, helped drive the increase in healthcare M&A. While the number of deals were up, their average size was down.
Deal value in the fourth quarter totaled $120.6 billion, a decline of 11% compared with the $135.5 billion spent in the third quarter, based on disclosed prices. The spending in the fourth quarter of 2021 was 2% lower than the $123.6 billion disclosed in the fourth quarter of 2020.
“Activity in the Home Health & Hospice and Behavioral Health Care sectors remained stable thanks to 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 is causing a surge in individuals seeking mental health treatment and services,” the Irving Levin report said.
The technology sectors saw a 5% drop in the third quarter with M&A activity in the eHealth sector remaining level, with 86 deal announcements.
“Although M&A demand for telehealth providers has softened compared with 2020, we’re seeing increased activity for providers specializing in care coordination and patient engagement as the industry moves to a value-based care system,” the report said.