Deal volume in health services continues to remain strong, albeit there may be slight variations between activities within certain subsectors, according to a new report.
PwC’s Health Research Institute’s Q2 2019 Deals Insights reports for the US Health Services and Global Pharma & Life Sciences industries reveal that deal volume increased while deal values decreased in both sectors.
As the healthcare industry is facing macroeconomic challenges, both industries are still intensely focused on decreasing pricing (through consumer-centric care and R&D initiatives), which is driving deal activity, according to the report.
“Additionally, when excluding mega-deals from the comparison, Q2 2019 related value grew when compared to the first quarter, further demonstrating the high level of activity with multiples remaining strong,” says Nick Donkar, PwC US Health Services Deals Leader, in relation to the Health Services report.
PwC releases quarterly deals reports that look at the M&A landscape across many sectors.
“The payer and provider landscapes continue to see consolidation both via mega-deals and on a geographical basis,” Donkar says. “We anticipate this trend, both in the provider and the payer subsectors, should continue based on the evolving healthcare landscape in the United States.
“While the ACA’s future, plus macroeconomic factors such as interest rates and tariffs, continue to dominate headlines, industry fundamentals remain favorable to deals,” Donkar adds. “Regulation, policy and tax reform impact, evolving technologies, high costs, cross-industry deals and vertical integration are among the factors driving deal activity.”
It’s important to note, according to Donkar, that the numbers represented in the report are announced deals that have happened in the marketplace.
“However, those numbers do not reflect the amount of activity that's currently happening but has not yet been announced,” he says. “Many parties across all subsectors continue to have conversations that will drive deal activity, so the notion that when deal volume drops something is wrong, is not fully correct. There’s a lot of activity that isn’t in the announcement stage yet, but we know that there’s active conversations happening all the time.”