Healthcare Real Estate M&A Volume at Booming Levels
Emerging companies, such as specialty pharmacies and chronic care management platforms, could be the next big wave, according to an Irving Levin report.
Notable demand growth in specialty pharmacy providers, increased activity in the healthcare real estate market for medical office buildings and upbeat, stable activity in the home health and hospice and behavioral health care sectors powered M&A volume in Q3 2021, according to Irving Levin Associates.
More and more patients are seeking alternatives to facility-based care, turning toward home health services, and anxiety caused by the effects of the COVID-19 pandemic is causing a surge in individuals seeking mental health treatment and services.
“The healthcare M&A market is booming right now, largely driven by private equity activity across a variety of sectors,” said Dylan Sammut, editor of Health Care at Irving Levin Associates. “We’re seeing the usual interest for physician groups and behavioral health providers, but investors should keep an eye out for deals involving emerging companies, such as specialty pharmacies and chronic care management platforms. Dealmakers tell us that’s the next big wave.”
Q3 Volume 3% Higher Than Q2
Health care merger and acquisition activity overall increased in Q3 2021, hitting nearly 600 deals. There were 597 deals announced in the second quarter, a 3% jump from the second-quarter total of 581 deals. Activity in Q2 2021 was 58% higher than the same quarter in 2020.
Activity in sectors such as long-term care and physician medical groups drove much of the deal closings, with 107 and 96 deals, respectively. The other services sector was up 28%.
Activity in the technology sectors remained robust, increasing by 13% compared with the second quarter. M&A activity in the eHealth sector dropped by seven deals, but activity remains strong in the market. Although M&A demand for telehealth providers has softened compared with 2020, we’re seeing increased activity for providers specializing in patient analytics and electronic health record services.
Spending in Q3 Was 18% Higher Than Year Ago
Deal value in the third quarter totaled $133.3 billion, an increase of 4% compared with the $128.8 billion spent in the second quarter, based on disclosed prices. The spending in Q3:21 was 18% higher than the $112.9 billion disclosed in the third quarter of 2020.
The largest transaction of the quarter was MSP Recovery, LLC merging with Lionheart Acquisition Corp. II in a deal valued at $32.6 billion.