2018 Health Care Services M&A Market Surpasses 2017 Deal Volume, According to Irving Levin Associates, Inc.

NORWALK, CT – April 9, 2019 – Merger and acquisition activity in the health care industry’s services sectors in 2018 surged past deal volume posted the year before, according to the 2019 Health Care Services Acquisition Report, Twenty-Fifth Edition. Deal volume for the health care services sectors reached 1,227 transactions, 19% higher than the 1,033 in 2017.

The dollar value of those deals was significantly lower, however, down 31% to $123 billion, compared with $177 billion in 2017. One factor behind 2017’s record-making spending level was a single deal, the $77 billion acquisition of Aetna by CVS Health, announced in December 2017. Without it, 2017’s combined spending would have totaled $100 billion, and 2018’s total would be 23% higher.

“The uncertainty surrounding the repeal-and-replace efforts on the Affordable Care Act was lifted for most of 2018, and investors piled into healthcare services,” said Lisa E. Phillips, editor of the 2019 Health Care Services Acquisition Report. “Private equity firms and their portfolio companies made up 46% of all healthcare services deals, particularly in the Behavioral Health Care, Home Health & Hospice and Physician Medical Group sectors.”

Some services sectors fared better than others in year-over-year deal totals. Merger and acquisition activity increased in Long-Term Care (+39%), Behavioral Health Care (+54%), Home, Health & Hospice (+32%) and Physician Medical Groups (+22%). Five sectors saw declines in activity, including Hospitals (-31%), Laboratories, MRI & Dialysis (-14%), Rehabilitation (-12%), Managed Care (-4%) and Other Services (-1%). “The rush into certain sectors has pushed valuations to record levels,” Phillips added. “We expect to see some softness in 2019, as deal makers reassess their platforms and the market.”

The 2019 Health Care Services Acquisition Report, Twenty-Fifth Edition, contains more than 480 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice, and rehabilitation mergers and acquisitions in 2018. The Long-Term Care sector is treated separately in The Seniors Housing Acquisition & Investment Report and The Skilled Nursing Acquisition & Investment Report. Irving Levin Associates is a Norwalk, Connecticut-based research and publishing firm specializing in health care investments. The Health Care Services Acquisition Report may be purchased for $695 by calling 800-248-1668.