Contrary to last year’s industry predictions, the cardiology space within the Physician Medical Group (PMG) sector has not seen a high deal volume and most likely will not exceed the volume of prior years. Between January 1, 2024, and September 13, 2024, there have been 10 cardiology transactions reported. Compared to the same time frame of 2023, where 24 cardiology acquisitions were announced, 2024 is on a downward trajectory. Cardiology accounts for less than 3% of the 357 PMG transactions announced through September 13, 2024.
Yet, while this decline may seem concerning, cardiology’s M&A volume for 2024 mirrors historical trends, with the high volume in 2023 (30 deals in total) being an outlier due to an increase in roll-up acquisitions. In 2022, 16 cardiology transactions were announced; in 2021, there were four acquisitions; 2020 saw only two deals; and in 2019 there were four transactions.
So far, in 2024, there have been no cardiology transactions with a disclosed purchase price. This is not out of the norm. The PMG sector rarely sees acquisitions with disclosed spending, and cardiology sees even fewer because so many transactions are completed between private parties. Out of the 158 cardiology deals in the entire LevinPro HC database, 27 of them have a purchase price and only two of them are from 2018 onward.
There were two transactions where the target had more than 10 physicians on staff. In February, Heart & Vascular Partners, backed by Assured Healthcare Partners, acquired St. Louis Heart & Vascular, a 14-physician practice in St. Charles, Missouri. In May, Cardiovascular Associates of America, a portfolio company of Webster Equity Partners, purchased Scottsdale, Arizona-based Atria Heart, which is run by 14 physicians. These two acquisitions stand out from the other cardiology deals of 2024 as the other practices average two physicians on staff.
In comparison to the PMG deals announced through September 13, cardiology has a low average of physicians on staff. The other PMG specialties averaged 13 providers per practice across 344 deals, but it should be noted that the number is skewed by an internal medicine transaction that had 1,700 physicians. There were 39 transactions that had 10 or more physicians on staff.
In late 2023, we analyzed the number of physicians on staff at acquired cardiologist practices. Across 26 deals, the average number of physicians on staff was 19 (this was later modified to 26 physicians over 30 deals by the end of the year). In 2024, the average number of physicians at each acquired practice with five.
While the number of physicians at each practice is not a ‘be-all-end-all’ characteristic of a growing or even healthy market, it is important to note because it addresses consolidation.
It seems that cardiology is continuing to become a more consolidated and condensed industry as time goes on. This is fortified by a 2020 article published by the Journal of the American College of Cardiology that stated “there were increases in the proportion of cardiologists in practices with 25 to 49 cardiologists” between 2013 and 2017, and was anticipated that this trend would continue.
In addition to Cardiovascular Associates of America’s May acquisition of Atria Heart, the company also added four cardiology physicians to its network. The physicians were Drs. Ken Zelnick and Kathir Subramanian are based in Fort Lauderdale, Florida and supported by two additional, unnamed physicians.
With these two acquisitions, Cardiovascular Associates of America is the most active acquirer in the cardiology space for 2024. Additionally, Cardiovascular Associates of America acquired Novolink Health, a palliative home health care provider in July.
Further pushing the notion that cardiology activity has declined in 2024, Cardiovascular Associates of America was much more active in previous years. In 2023, the company announced 10 acquisitions in the cardiology subsector and 2022, it completed six transactions.
US Heart & Vascular, backed by Ares Management L.P., is another company that has experienced a notable decrease in deal activity. In 2023, the company acquired four practices, expanding their network by more than 100 cardiologists. The company has yet to announce an acquisition in 2024.
Private equity, as it does in all PMG fields, played a significant role in the cardiology market. In 2024, private equity (and their portfolio companies) accounted for 50% of the cardiology transactions. Compared to private equity’s presence in the cardiology field between January 1, 2023, and September 13, 2023, which accounted for 95% of the buyers, this is a notable decrease.
In 2024, Webster Equity Partner’s Cardiovascular Associates of America accounted for two of the deals; Assured Healthcare Partners’ Heart & Vascular Partners accounted for one transaction.
The third private equity group transaction was First Coast Cardiovascular Institute’s purchase of CardioHealth, in Jacksonville, Florida. First Coast Cardiovascular Institute is part of Cardiovascular Logistics’ umbrella, which, in turn, is backed by Lee Equity Partners.
The most recent private equity firm acquisition was Cortec Group’s Center for Vein Restoration purchase of Vein Specialists of the Carolinas. The practice has two locations in North Carolina, Charlotte and Gastonia, and is run by two physicians. The transaction was announced in August.
A June 2024 article by Cardiacwire addressed the decrease in deal volume, particularly from a private equity perspective. The article noted “many cardiology practices have already consolidated into hospital or corporate-owned groups, leaving just 10k of the US’ 33k cardiologists within independent practices (80% of them working in practices with under 10 physicians).”
Consolidation may play a large role as to why deal volume throughout 2024 simply couldn’t live up to the high deal volume of 2023. While the cardiology M&A activity in 2024 has not matched the elevated levels of 2023, the current trends appear more aligned with the historical norms of the sector. The high deal volume witnessed last year now stands as an outlier, with the market in 2024 reflecting a more typical level of consolidation and acquisition activity.
