Healthcare M&A Volume Falls in Q4:23, According to Acquisition Data from LevinPro HC

NEW CANAAN, Conn., Jan. 22, 2024 – Healthcare merger and acquisition activity declined in the fourth quarter of 2023, dropping to 493 deals, according to new acquisition data from LevinPro HC. Activity in the fourth quarter was 4% lower than in the third quarter of 2023 when 511 transactions were announced. Compared with the fourth quarter of 2022, activity fell 13% in the fourth quarter.

The slowdown was felt across each healthcare vertical. Activity in sectors such as Physician Medical Groups saw significant declines in M&A volume, with 103 deals, an 18% 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 for the past several years, but even that market took a hit in Q4, reaching only 32 deals, down from 44 in the third quarter.

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 decrease, with 18 deal announcements in the fourth quarter, down 18% from 22 deals announced during Q3. Nearly all the activity in the sector was driven by acquisitions by large health systems.

The largest hospital deal of the fourth quarter by purchase price was Novant Health’s acquisition of three hospitals in South Carolina from Tenet Healthcare Corporation for approximately $2.4 billion. The transaction includes Hilton Head Hospital in Beaufort County, Coastal Carolina Hospital in Jasper County and East Cooper Medical Center in Charleston County. Together, the three hospitals encompass 264 beds. The transaction is expected to close this year.

In the healthcare technology markets, deal volume rose across the spectrum: Medical Devices, eHealth and Pharmaceutical and Biotechnology M&A activity increased by 37%, 10% and 7% over the third quarter, respectively. Companies like Bristol Myers Squibb and AbbVie Inc. had some headline-worthy transactions, with the former announcing a $14 billion takeover of Karuna Therapeutics.

Disclosed spending in the fourth quarter totaled approximately $78.3 billion, an increase of 48% compared with the $40.5 billion spent in the third quarter, based on disclosed prices. Other notable deals include Healthpeak Properties, Inc.’s all-stock merger with Physicians Realty Trust valued at approximately $21 billion. A more in-depth look at the healthcare M&A market during Q4 and 2023 will be released in the upcoming Health Care Acquisition Report, published by LevinPro HC.

“Fourth quarterly activity perfectly encapsulated the state of the healthcare M&A market in 2023,” said Dylan Sammut, Editor of Health Care at Irving Levin Associates, which publishes the data on its LevinPro HC platform. “Although some investors, such as private equity firms, remain bullish and keep deal activity sustained, headwinds have forced many strategic buyers to rethink their M&A strategies, or pause dealmaking until interest rates cool.”

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.