Health care merger and acquisition activity surged to a record high in the first quarter of 2021, highlighting renewed investor confidence in the healthcare market. There were 605 deals announced in the first quarter, a new record quarterly total, according to Irving Levin Associates, which has been tracking healthcare M&A for more than 30 years.
The services sectors saw a strong uptick in deal volume, rising 20% to 422 deals compared with the fourth quarter. The Long-Term Care sector, which includes seniors housing and care, frequently reports most of the deals, but experienced a steep decline in 2020 due to social distancing and safety measures needed to keep residents safe from infection. There was a surge of deal activity in the fourth quarter, but Long-Term Care deal volume declined in the first quarter by 38% percent to 79 deals. Despite the decline, deal volume remains healthy compared to the height of the pandemic in the Long-Term Care sector. Activity in the Physician Medical Group sector hit a record high, soaring to 112 deals, an 87% increase over activity in the fourth quarter.
Activity in the technology sectors was equally robust, posting a 17% increase compared with the previous quarter and a 55% increase year over year. Activity in the eHealth sector was particularly strong; strategic buyers and investors announced 103 deals in the first quarter, a 34% increase over activity in the fourth quarter.
Spending on all healthcare deals was a healthy $89.3 billion, but it didn’t quite reach the total announced in the fourth quarter of $123 billion. The first quarter’s spending total was a staggering 281.6% higher than spending in the same quarter in 2020, with only $23.4 billion.
“The momentum of deal activity in the fourth quarter has accelerated in 2021, and there are no signs of it slowing down,” said Dylan Sammut, editor of HealthCareMandA.com. “After a relatively slow year of deal making due to the pandemic, investors and strategic buyers have plenty of unspent capital they want to use to expand.”
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