Healthcare M&A trends: 5 insights for healthcare executives

Health services deals of varying sizes and structure types continue to receive ongoing investment interest by both corporate and private equity buyers regardless of external pressure (such as the examples noted below), and the second quarter of 2016 proved no exception.

Overall in the U.S., the health services market was active with 239 announced deals worth a total of $16.1 billion in deal value. Both deal volume and value in this sector increased by approximately 8% and 4% quarter-over-quarter compared to the first quarter of 2016, respectively.

As external pressures such as government regulations continue to mount and alter the approach to deal making, there are five insights health services executives need to know:

1. There is positive and steady interest within health services.

KreshoWhile we have witnessed a quarter over quarter increase in both value and volume, when compared to one year ago (the second quarter of 2015) there is a 39.4% decrease in deal value and a 15.5% increase in total volume. Overall though, the second quarter of 2016 is the seventh consecutive quarter of significant deal activity with more than 200 announced transactions. However, unlike the pharmaceuticals and life sciences sector, mega deals are not a major driving force of market activity in health services, with only two announced transactions exceeding $1 billion for a total of $8.9 billion in value.

2. Deals with physician medical groups continued to reign supreme in total deal value.

Mainly due to its largest announced mega deal of the quarter, worth $6.7 billion, the physician medical groups subsector accounted for 42% of all health services transactions in the second quarter in terms of value. However, the long-term care subsector led the market in activity with 87 deals, contributing to 36% of total deal volume.

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