Financial buyers, which include real estate investment trusts (REITSs) and private equity firms, are not the dominant players in the health care M&A market, although REITs have been moving into the Hospital sector in recent years. Middle-market private equity firms have had a hard time getting into and then winning auctions for healthcare entities in recent years, as strategic buyers and even some global private equity firms have outspent or even pre-empted auctions.

Financial Buyers

Q2:17

Q3:17 Q4:17 Q1:18

Q2:18

Deals announced

77

82 79 84

110

Share of deal volume

20%

21% 20% 20%

24%

Dollars committed*

$31,021

$6,229 $2,276 $3,056

$25,821

Share of dollars spent

32%

14% 2% 3%

18%

* = in millions. Source: HealthCareMandA.com, July 2018

In the second quarter, financial buyers accounted for 24% of the deal volume, with 110 deals, which is higher with the previous four quarters.

Spending was some 745% higher than the previous quarter, reaching $25.8 billion, based on disclosed prices in 37 deals. Seven of those deals had prices higher than $1.0 billion, with the largest at $9.9 billion.

Of the 110 deals announced by financial buyers, 83 were made by private equity firms and 27 by real estate investment trusts. Twenty-five deals announced by REITs were in the Long-Term Care sector, with a stand-alone acute care hospital, and an inpatient rehabilitation hospital.

The targets were more varied for the private equity buyers and covered nearly every sector. They included Long-Term Care (22 deals), Other Services (12), eHealth (12), Physician Medical Groups (11) and Behavioral Health Care (10).

Six deals were announced in the Medical Device sector, and five in the Home Health & Hospice sector. The Pharmaceutical sector had two deals, and Biotechnology, Hospitals, Managed Care and Rehabilitation sectors each had one deal.