Healthcare mergers & acquisitions (M&A) deal activity declined in August 2024, according to data captured in the LevinPro HC database. Totaling 161 transactions throughout the month, this is an approximately 9% decrease from July 2024, when 177 healthcare transactions were reported. The deal volume of the entirety of August 2024 accounts for nearly 12% of the 1,352 healthcare transactions announced since the start of the year.
While most sectors reported similar numbers between July and August, markets such as Other Services and Biotechnology & Pharmaceuticals (Biopharma) saw a steep decline. The Biopharma space declined from 18 transactions in July 2024 to 14 in August 2024.
In July 2024, 55 Other Services acquisitions were announced, and only 46 deals were reported in August. However, while there was a decline in M&A activity in the sector, Other Services was still the most active sector throughout the month. Other Services is a catch-all/miscellaneous sector that encompasses a plethora of specialties from medical outpatient buildings (MOBs) to clinical trials.
The most active company in the Other Services sector was Montecito Medical Real Estate, a real estate investment firm based in Nashville, Tennessee. The company acquired one MOB in Paducah, Kentucky, comprising 61,956 square feet. Montecito also acquired one ambulatory surgery center (ASC) in Chesterton, Indiana, and even sold one ASC in San Antonio, Texas. None of the prices were disclosed. Throughout July 2024, Montecito completed one transaction, purchasing a 27,000-square-foot MOB in Panama City, Florida.
Private equity, as predicted, held a significant presence in the healthcare M&A deal volume in August. Of the 161 transactions announced, 53 were completed by private equity buyers or their portfolio companies.
The private equity firms that completed more than one transaction in August are CVC Credit Partners (two deals), InTandem Capital Partners (two deals), Iron Path Capital (three deals), Platinum Equity (two deals), The Carlyle Group (three deals) and Webster Equity Partners (three deals).
Disclosed spending totaled more than $22.6 billion across 39 transactions. This is a notable increase compared to July 2024, which totaled more than $13.69 billion across 41 deals.
The transaction with the largest disclosed purchase price was TowerBrook Capital Partners and Clayton, Dubilier & Rice’s (CD&R) acquisition of R1 RCM for $8.9 billion. The purchase price represents a price of $14.3 per share.
R1 RCM Inc. is a leading provider of technology-driven solutions that transform the patient experience and financial performance of healthcare providers. The revenue cycle management company operates models seamlessly to complement a healthcare organization’s infrastructure, quickly driving sustainable improvements to net patient revenue and cash while driving revenue yield, reducing operating costs and enhancing the patient experience.
Physician Medical Groups (PMG) was one of the most active sectors in August, with 35 transactions. August investment activity is on par with volume in July 2024, in which 38 transactions were announced. However, there has been a notable decline since August 2023, in which 52 PMG acquisitions were reported. The most active specialty was dental, with 24 transactions, and the second most active specialty was eye care, with three acquisitions.
Active buyers in the PMG space include Imagen Dental Partners (eight transactions) and Silver Creek Dental Partners (two deals). These two companies are the only acquirers to have made more than one acquisition in the physician market.
With the eight transactions, Imagen Dental Partners, a dental service organization (DSO) based in Scottsdale, Arizona, expanded its presence throughout California, Arizona, Florida, Wisconsin, Ohio and Oregon. The DSO also strengthened its network by 14 providers.
Silver Creek Dental Partners is a DSO based out of Dana Point, California. Its two acquisitions in August are Delicate Dental Arts and Los Coches Dentistry. Both practices are based in Carlsbad, California, and each is run by one provider. In June, the DSO purchased the practice of Dr. Barry Slipock, which operates in Chula Vista, California.
The PMG transaction with the largest disclosed purchase price was McKesson Corporation’s acquisition of Community Oncology Revitalization Enterprise Ventures, LLC (Core Ventures) for $2.49 billion. Core Ventures is a management service organization based in Florida. The seller was Florida Cancer Specialists & Research Institute, LLC.
This deal marks McKesson’s second acquisition of the year. In January, the company purchased Compile, a healthcare data platform that aggregates and integrates data from across the U.S. healthcare system to characterize providers and their patient panels, for an undisclosed price.
With 20 transactions throughout August, eHealth experienced a slight increase in M&A deal volume from July 2024, which saw 19 deals. The deal volume in August matched year-over-year levels when 20 acquisitions were reported in August 2023.
Active eHealth subsectors include medical practice management software (five deals), RCM (nine deals), electronic health record (two deals) and care coordination (two deals).
In addition to TowerBrook Capital Partners and CD&R’s $8.9 billion acquisition, the eHealth space saw only one other transaction with a disclosed purchase price. The second deal was CorroHealth’s purchase of Navient (doing business as Xtend Healthcare) for $365 million.
Xtend Healthcare is one of the fastest-growing RCM companies in the industry. The company provides technology-enabled education finance and business processing solutions that simplify complex programs and help millions of people achieve success.
CorroHealth was formed in October 2020 when TrustHCS, Visionary RCM, T-System and RevCycle+ merged to provide a greater breadth of reimbursement cycle, risk adjustment and quality solutions to health systems and payers. CorroHealth is backed by private equity firm The Carlyle Group.
As part of the agreement, CorroHealth will continue to operate Xtend from its Hendersonville offices. Approximately 950 Xtend employees are joining CorroHealth.
While the Biopharma industry decreased in deal activity from the previous month, the sectors are still worth looking at for how many deals disclosed purchase prices. Disclosed spending in August 2024 for the space totaled $3.079 billion across six transactions.
The largest disclosed price in the Biopharma sector was CVS Capital Partners, a private equity firm based in Luxembourg, acquiring the pharmaceutical company Therakos for $925 million. The seller was Mallinckrodt plc, a global manufacturer of specialty pharmaceuticals, generic drugs and imaging agents.
Therakos is a fully integrated extracorporeal photopheresis delivery system for autologous immunomodulatory therapy. With approvals for use in the United States, Canada, Europe, Japan, Australia and Latin America, it is the platform of choice among healthcare providers and patients to treat various immune-related diseases.
While August 2024 saw a notable decline in healthcare M&A activity, particularly in the Biopharma and Other Services sectors, the overall market remains dynamic with significant deal-making. The presence of private equity continues to be a driving force, contributing substantially to the transaction volume and disclosed spending.
For more information on notable deals in August 2024, click below:
- Rural Healthcare Group purchases Stewardship Health for $245 million
- Birla Fertility & IVF acquires 12 BabyScience IVF clinics
- University of Colorado Health purchases 11 healthcare facilities for $86 million
- National Dental Healthcare REIT acquires 13-property portfolio for $234 million
- Audax Private Equity purchases Avantor’s clinical services business
