With the first quarter of 2023 winding down, it is clear that healthcare M&A deal volume will continue to shrink.
According to data captured in the LevinPro HC database on March 30, there were 502 deals recorded since the start of the year. This compares with 553 transactions posted in the fourth quarter of 2022, representing a 9% decline. This compares with totals of 612 and 598 in the third and second quarters of 2022, respectively. The current 2023 amount represents a 22% drop from the 647 posted in the first quarter of 2022.
The eHealth sector has shown dramatic declines in deal volume from the 120 recorded in the first quarter of 2022. Transactions plummeted to 48 in the fourth quarter of 2022. They have rebounded to 70 so far in 2023.
The Physician Medical Groups sector showed sharp deal volume declines in the current 2023 deal total of 124. There has been a 20% drop from the 155 transactions posted in the fourth quarter of 2022 and an 11% decline compared to the 140 deals recorded in the first quarter of 2022.
Pharmaceuticals deals have also declined compared to the 16 posted so far this year. There were 22 transactions posted in the fourth quarter of 2022 and 27 in the first quarter of 2022.
The Home Health & Hospice sector experienced a 25% fall in deals during the first quarter of 2023 with 18 transactions compared with 24 in the final quarter of 2022. There was a 44% drop from the 32 deals recorded in the first quarter of 2022.
The Behavioral Health sector has also taken a hit to its M&A activity. The 19 transactions this year represent a 30% decline from the 27 deals recorded in the fourth quarter of 2022 and a 41% drop compared with the 32 recorded in the first quarter of 2022.
Managed Care, with five transactions in 2023, has seen slight drops in deal activity from eight in the fourth quarter of 2022 and nine in the first quarter of 2022.
The Other Services sector, which includes subsectors such as Infusion Services, Home Equipment, Urgent Care and Ambulatory Surgery Centers, also experienced deal total declines. After achieving a deal total of 157 in the first quarter of 2022, the number fell to 138 in the fourth quarter of 2022. So far this year the amount stands at 124.
However within the Other Services category, Medical Office Building (MOB) transaction volume has been consistent. Deal volume totaled 55 in the first quarter of 2022. After amounting to 51 in the fourth quarter of 2022, the number is at 54 this year.
The Medical Devices sector has also shown resilience with deal totals of 27 (first quarter of 2022), 25 (fourth quarter of 2022) and 28 (first quarter of 2023).
Displaying strength has been the Biotechnology sector, moving from 26 transactions in the first quarter of 2022 to 40 in the final quarter of last year. So far this year there have been 39 deals posted.
