Healthcare merger and acquisition activity held steady in the fourth quarter of 2017. Compared with the third quarter, deal volume increased 1%, to 377 transactions. Deal volume was lower than the same quarter in 2016, down 3%. Combined spending reached $114.4 billion, up 166% compared with the $43.1 billion spent in the previous quarter, according to HealthCareMandA.com. Fourth quarter deal value was 197% higher than the $38.6 billion spent in Q4:16.
Health Care M&A Market – Deal Volume by Sector
|Behavioral Health Care||12||14||-14%||10||20%|
|Home Health & Hospice||13||12||8%||24||-46%|
|Laboratories, MRI & Dialysis||16||15||7%||9||78%|
|Physician Medical Groups||32||43||-26%||28||14%|
Source: HealthCareMandA.com, January 2018
Deal volume for the full year 2017 reached 1,566 transactions, down 2% compared with 1,593 transactions in 2016. Dollar volume was more robust, up 23% compared with 2016, to $315.3 billion.
Healthcare services transactions made up 63% of the quarter’s deal volume, and an unusually strong 87% of the quarter’s dollar volume ($99.4 billion). The spending surge is the result of the $77 billion CVS Health/Aetna announced in early December, in the Managed Care sector. That deal alone accounted for 67% of the quarter’s total spending.
Long-Term Care remained the most active of all the sectors, although quarterly deal volume continued to slip. The 70 deals announced in the recent fourth quarter are 5% lower than the previous quarter (74 transactions). Among the services sectors, Hospitals, Laboratories/MRI/Dialysis, Rehabilitation and Other Services were the only sectors to equal or increase deal volume levels above the previous quarter.
The technology sectors showed some improvement versus the year-ago quarter, except for Biotechnology, which dipped 13%. Compared with the previous quarter, all showed higher deal volume, with the exception of eHealth (-29%).
“M&A in the fourth quarter of 2017 saw a new focus on consumerism in healthcare,” said Lisa E. Phillips, editor of HealthCareMandA.com. “The CVS Health/Aetna deal is supposed to create community health hubs. We expect to see a few more atypical match-ups like that in 2018, where acquirers look for targets in a different sector.”