The second quarter of 2021 was another healthy period for dealmakers. Sure, there was technically a decline in deal volume compared with the first quarter, but the first three months of 2021 broke records. Dealmakers struck 542 transactions in the second quarter, an 11% decrease from the 611 announced in the first quarter. Not bad at all, especially when we remind ourselves that only 344 deals were announced in the second quarter of 2020. It seems like investors are trying to make up for the lost time.
Transaction value, on the other hand, soared, hitting $126.1 billion in the second quarter, a 38% increase compared with the $91.3 billion disclosed in the first quarter and a staggering increase over the $12.9 billion announced in Q2:20. Huge sales in the Long-Term Care, Hospital and eHealth sectors played a significant role in the total spending the last three months, and none of those sectors seem to be slowing down.
Speaking of Long-Term Care, deal volume picked up significantly in the second quarter with 108 deals on the books compared with 82 in the first quarter and 61 in the year-ago quarter. We can thank the institutional buyers in the sector for the high deal volume. First, Welltower (NYSE: WELL) acquired 22 Pathway to Living communities for $97 million, then came Harrison Street’s $1.2 billion purchase of 24 Oakmont communities, then Atria Senior Living acquired Holiday Retirement and Welltower jumped back in again, acquiring Holiday’s owned portfolio of 86 properties for $1.58 billion. Next, we had the Griffin American REITs 3 and 4 merging, and finally, Ventas (NYSE: VTR) will pay $2.3 billion to purchase New Senior Investment Group (NYSE: SNR). Whew.
With the flurry of deals in Long-Term Care, announced transaction volume hit $6.7 billion in Q2, a big increase over the $2.1 billion in Q1.
Private equity remained unrelenting in the Physician Medical Group sector, accounting for approximately 63% of transactions in the sector. Most of the deals were small add-ons for their respective platform companies, gaining ground in various markets around the country. Ophthalmology and dental practices were in high demand (as per usual), but we also saw PE firms gravitate toward specialties such as fertility and OBGYN practices.
June was so jam packed with huge deal announcements, we almost forgot all of the news out of May and April. Contract research organizations were popular targets, highlighted by Thermo Fisher Scientific Inc.’s (NYSE: TMO) $20.9 billion acquisition of PPD, Inc. (NASDAQ: PPD) in April, the quarter’s largest deal by disclosed price. That was just days after the purchase of Nuance Communications, Inc. (NASDAQ: NUAN) for $19.7 billion by Microsoft (NASDAQ: MSFT), underscoring the growing influence of big tech in healthcare and the demand for healthcare cloud and A.I. solutions.
Arguably the biggest trend we saw this quarter was the growing consolidation across markets in healthcare. Humana Inc. (NYSE: HUM) paid $5.7 billion to take full ownership of Kindred at Home, a clear example of managed care companies looking to become both provider and insurer. LifePoint Health, one of the country’s largest health systems, acquired Kindred Healthcare, LLC, creating a dominant player in the acute and post-acute healthcare market.
After a rough year in 2020 for healthcare M&A, we think it’s safe to say the market has returned in full force. And to think we’re only halfway through the year.
