The Physician Medical Group (PMG) sector experienced a decline in deal volume throughout the year. In 2024, 473 PMG deals were announced, a 12% decline from the 537 PMG deals announced in 2023 and a 24% decrease from the 622 deals reported in 2022. In the fourth quarter of 2024, there were 101 PMG deals, which is the slowest quarter for the year.
Some advisors that the LevinPro HC team has spoken to throughout the year have noted several significant factors contributing to the decline in PMG deal volume. Common themes that advisors cited were uncertainty surrounding the election, an unstable economy, higher interest rates and even heightened scrutiny surrounding private equity investments in the healthcare industry.
The most active buyer was MB2 Dental Solutions, which had 50 transactions. This is a slight decline from 2023 when MB2 Dental Solutions reported 59 acquisitions. In 2024, the company expanded its practice across 22 states and more than 80 physicians.
MB2 Dental Solutions partners with dentists and specialists to provide general dentistry services, orthodontics, cosmetic dentistry and oral surgery services. In November 2024, Warburg Pincus invested $525 million in the company.
The second most active buyer was Heartland Dental, a portfolio company of KKR & Co. Inc. since 2018, with 19 transactions. This is a significant increase from 2023 and 2022 when Heartland Dental announced three and two transactions, respectively.
Dental was the most active subsector, with 243 deals announced throughout 2024, representing a nearly 29% increase from 2023 when 180 dental deals were reported. Additionally, this represents the greatest increase of deal volume amongst the PMG specialties from 2023 to 2024. In addition to MB2 Dental Solutions and Heartland Dental, active buyers in the dental space include Imagen Dental Partners (18 deals), Specialized Dental Partners (16 deals) and Dental365 (12 deals).
Internal medicine was the second most active specialty, with 39 transactions. This represents a 15% decline from 2023, when 46 internal medicine deals were announced. The decrease in deal volume for internal medicine represents the largest drop in reported deals, per specialty, for the PMG space. However, it is on par with activity in 2022, when there were 41 internal medicine transactions.
Complete Health, a portfolio company of the private equity group Pharos Capital Group, was the most active buyer in the internal medicine space, with three transactions. Complete Health expanded its presence in Alabama, Florida and Virginia and by more than 15 physicians. In 2023, Complete Health announced one transaction: a 25-physician internal medicine practice based in Birmingham, Alabama.
Other active sectors include eye care (32 deals), oncology (23 deals), orthopaedic (20 deals), dermatology (19 deals) and OB/GYN (19 deals).
Private equity investment declined in 2024, but firms nonetheless remained dominant in the PMG market. In total, 59% of PMG transactions were completed by a private equity (including portfolio companies) buyer. This marks a notable decrease from 2023, when private equity represented 63% of the acquirers. Independent physician medical groups account for 150 PMG buyers, virtually on par with the 156 reported in 2023.
Health systems accounted for 7% of PMG acquirers throughout 2024, a 40% increase from 2023. In October, University of Iowa Health Care, an 811-bed public teaching hospital and level 1 trauma center affiliated with the University of Iowa, announced the acquisition of Mission Cancer + Blood, a physician-owned oncology practice. The purchase price was $280 million. This transaction is the largest, by purchase price, announced by a health system in 2024.No other buyer types made a notable contribution to PMG transactions.
Disclosed spending in 2024 in the PMG field totaled $12.8 billion across nine deals. This is a notable increase from disclosed spending in 2023, totaling more than $2.2 billion across seven transactions. The transaction with the largest price tag in 2024 was Cencora, Inc.’s acquisition of Retina Consultants of America (RCA) for $4.6 billion.
Cencora is a drug wholesale company and a contract research organization formed by the merger of Bergen Brunswig and AmeriSource in 2001. RCA is a specialty platform created by the merger of Retina Consultants of Houston, Retina Group of Florida, Long Island Vitreoretinal Consultants and Retinal Consultants (Northern California).
Cencora will pay up to $500 million in aggregate contingent consideration in fiscal year 2027 and fiscal year 2028, subject to the successful completion of certain predefined business objectives. Upon closing, the acquisition of RCA is expected to be approximately $0.35 accretive, net of estimated financing costs, to Cencora’s adjusted diluted EPS (a non-GAAP financial measure defined herein) for its first twelve months.
While 2024 presented economic uncertainty leading to an M&A decline, it is not all doom and gloom for 2025. Between potential changes that the Trump Administration may bring to healthcare M&A, such as a more “pro-business” agenda and fewer restrictions on private equity investments, the PMG market could see a rebound in activity.
