Healthcare M&A Volume Falls in Q3:23, According to Acquisition Data from LevinPro HC

NEW CANAAN, Conn., Oct. 12, 2023 /PRNewswire-PRWeb/ — Health care merger and acquisition activity declined in the third quarter of 2023, dropping to 497 deals, according to new acquisition data from LevinPro HC. Activity in the third quarter was 16% lower than in the second quarter, when 598 transactions were announced. Compared with the third quarter of 2022, activity fell 19% in the third quarter of 2023.

The slowdown was felt across each healthcare vertical. Activity in sectors such as Physician Medical Groups saw significant declines in M&A volume, with 120 deals, a 20% decrease compared to the previous quarter. Demand for healthcare real estate, such as medical office buildings and properties, has driven high deal volume in the Other Services sector for the past several years, and demand for substance use disorder treatment services has driven investment in that area.

However, 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 demand for substance use disorder treatment services have driven investment in that area.

The Hospital sector saw a slight increase, with 22 deal announcements in the third quarter. Nearly all of the activity in the sector was driven by acquisitions from health systems, with REITs and other investors stepping away in the third quarter.

The largest hospital deal of the third quarter was PureHealth’s acquisition of Circle Health Limited for $1.2 billion, or 1.0x Circle’s 2021 full-year revenue. Circle Health has approximately 2,000 beds and 53 hospitals around the United Kingdom. The U.K.-based health system was sold by Centene Corporation, which invested in Circle Health in 2019 and acquired the remaining equity interests in the company in July 2021.

In the healthcare technology markets, deal volume took a hit across the spectrum: Medical Device, eHealth and BioPharma M&A activity all dropped by an average of 30% compared with the previous quarter, with Medical Devices seeing the worst slowdown at a 45% decrease. Companies like Biogen Inc and Eli Lilly had some headline-worthy transactions, with the former announcing a $7.3 billion takeover of Reata Pharmaceuticals, Inc.

Deal value in the third quarter totaled $36.8 billion, a decline of 41% compared with the $62.6 billion spent in the second quarter, based on disclosed prices. Other notable deals include Danaher Corporation’s purchase of Abcam Plc, a global life science company that distributes antibodies and associated protein research tools, for $5.7 billion.

“It seems like the macro headwinds have finally caught up to the healthcare M&A market,” said Dylan Sammut, Editor of Health Care at Irving Levin Associates, which publishes M&A data on its LevinPro HC platform. “Although interest rates will eventually fall, the labor challenges could have a long-lasting impact on the industry. Some analysts have suggested that things will pick up again in 2025, but the next 12 months are going to be tough for investors and providers alike.”

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.