Hospital M&A Activity Fell Sharply in Q3:2020

NEW CANAAN, CT – OCTOBER 13, 2020 – Hospital merger and acquisition activity fell sharply in the third quarter of 2020, according to new acquisition data from Only 10 transactions were reported in the third quarter, a 55% drop compared with the previous quarter’s 22 deals. Deal volume was down 66% compared with Q3:19, when 29 transactions were announced. Only one deal disclosed a price in the third quarter, totaling $207 million. That figure is 66% lower than the previous quarter’s $601.8 million reported deal value and 96% below the $5.3 billion recorded in Q3:19.

“The Covid-19 epidemic really tightened the hospital market in the third quarter,” said Lisa E. Phillips, editor of the Health Care M&A Report, which publishes the data. “The 10 deals that made it to the definitive agreement stage in the third quarter involved only 11 hospitals. A year earlier, we saw 79 hospitals trade hands in 29 deals.”

All but one transaction in the third quarter targeted a single-hospital system. Dignity Health, now part of CommonSpirit Health, acquired Yavapai Regional Medical Center, a two-campus system with 206 beds in Prescott, Arizona. The only deal to disclose a price was Banner Health’s $207 million acquisition of Wyoming Medical Center, a 212-bed general hospital in Casper, Wyoming that will be Banner’s flagship hospital in Wyoming and a regional referral center for its three other rural hospitals in the state.

“Every acquirer and target in the third quarter was a not-for-profit organization,” Phillips added. “The acquirers were all established systems and most of the targets were sizable, financially stable hospitals with their own networks of physicians and outpatient services. Even in a pandemic, there are opportunities for growth.”

Hospital deals have begun to pick up in the fourth quarter, with the recent merger of Atrium Health and Wake Forest Baptist Health, and the acquisition of New Hanover Regional Medical Center by Novant Health, all in North Carolina.

All quarterly results are published in The Health Care M&A Report, which is part of the investment research source. For sector-specific research and analysis, please see The 2020 Health Care Services Acquisition Report. For more information, or to order the reports, call 800-248-1668.  Irving Levin Associates, Inc. was established in 1948 and has headquarters in New Canaan, Connecticut. The company publishes research reports and newsletters and maintains databases on the health care and senior housing M&A markets.