Headwinds Slow Health Care M&A Volume in Q1:2023, According to Data from Irving Levin Associates, LLC

NEW CANAAN, CONN. (PRWEB) APRIL 17, 2023 – Health care merger and acquisition activity slowed in the first quarter of 2023 but remained very high, according to new acquisition data from Irving Levin Associates, LLC. There were 633 deals announced in the first quarter, a 6% drop from the fourth quarter of 2022 total of 611 deals. First quarter activity was also 20% lower than the opening quarter of 2022.

Activity in sectors such as Other Services and Physician Medical Groups drove much of the deal closings, with 136 and 132 deals, respectively. Private equity continued to dominate the physician market as buyers, and investors swarmed the healthcare real estate market, looking to capitalize on the rising demand of outpatient care and aging demographics.

“It seems like headwinds are finally catching up to the industry after a record-breaking year of health care M&A activity in 2022,” said Dylan Sammut, Editor of Health Care at Irving Levin Associates, LLC. “But with more than 600 deals in the first quarter, the market is still very much active.”

There was a healthy mix of deal announcements in sectors such as Behavioral Health Care, Home Health & Hospice and Rehabilitation. Increased demand for home health services and mental health services gave strategic buyers, especially private equity, enough incentive to close deals despite rising interest rates and labor costs. Gentiva, a home health provider backed by private equity firm Clayton, Dubilier & Rice, struck a $710 million deal for the home health assets of ProMedica, a not-for-profit health system. It was one of the largest deals in the first quarter, and highlights the surging demand for home-based healthcare services.

Certain technology sectors remained robust despite an overall slowdown in activity. M&A activity in eHealth rose by 50% in the first quarter compared with the fourth quarter, with several deals targeting remote patient monitoring providers or companies focused on electronic health record services. Demand in the Medical Devices sector rose by 12% quarter over quarter as well. The Biotech & Pharma market declined by only five deals to 57 transactions.

Deal value in the first quarter totaled $73.9 billion, a decrease of 6% compared with the $78.4 billion spent in the fourth quarter, based on disclosed prices. The spending in Q1:23 was virtually even with the $72.8 billion disclosed in the first quarter of 2022. Huge deals from companies such as Pfizer, Inc. played a significant role in the large transaction value total.

“Industry experts we’ve spoken with predict a slowdown in 2023 compared with last year,” said Sammut. “Inflation, rising interest rates and labor costs are hitting the entire industry, which could force dealmakers to hit pause for now, or at the very least, let their foot off the pedal.”

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.