If you only saw one story regarding Capital One Healthcare‘s (NYSE: COF) recent industry survey, then you only saw one view of where the respondents think the industry is heading.
Every year, Capital One surveys a group of healthcare services executives and private equity firms on their opinions regarding the industry’s business performance, likely merger and acquisition activity, emerging growth segments, etc. Last September, 123 CEOs, CFOs and other senior executives and PE investors responded, and the results were published as an infographic.
“Healthcare Industry Optimism Reaches New Heights” was the title, followed by a graphic showing that 72% of respondents expect their business to perform better in the next 12 months, and 28% expect their business to perform about the same. No one expects to do worse in 2019! Now that’s optimism, for sure.
Asked about M&A activity in the next 12 months compared with 2017, 42% said it would be higher. 48% it will stay the same, and 10% expect it will be lower.
OK, all good there. But then we began to read other outlets’ stories about the numbers and were struck by the differing editorial spins. Modern Healthcare (November 5, 2018 issue) led with “Healthcare M&A activity expected to be flat or down in 2019.” Their majority lumped the 48% of “same” with the 10% of “lower,” and voila! Glass half empty.
HealthExec, quoted by Beckers Hospital Review (November 6, 2018), led with “90% of health execs expect same or more M&A in next year.” That’s the 42% of respondents who said “higher” and the 48% who said “same.” Hooray! Glass half full!
Let’s look at the numbers. In 2017, our database shows 1,022 healthcare services deals were announced, out of a total of 1,606. That includes sectors from behavioral health care to hospitals and managed care to rehabilitation. In 2018, through November 12, we’ve already logged 1,003 services transactions (out of 1,591 total in that time). So the industry is definitely on track to surpass last year’s numbers in 2018.
And 2019? We expect this year’s M&A momentum to continue into the first quarter. Beyond that, it’s anyone’s guess. Pass the pitcher, please.
