Newly Published: 2017 Health Care Services M&A Market Equals 2016 Deal Volume, According To Irving Levin Associates, Inc.

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Merger and acquisition activity in the health care industry’s services sectors in 2017 remained equal to the deal volume the year before, according to the 2018 Health Care Services Acquisition Report, Twenty-Fourth Edition.

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Merger and acquisition activity in the health care industry’s services sectors in 2017 remained equal to the deal volume the year before, according to the 2018 Health Care Services Acquisition Report, Twenty-Fourth Edition. Deal volume for the health care services sectors reached 992 transactions, equal to the 992 in 2016.

The dollar value of those deals was significantly stronger, up 148% to $176 billion, compared with $71 billion in 2016. One factor behind the surge in spending was a single deal, the $77 billion acquisition of Aetna by CVS Health, announced in December 2017. That transaction accounts for approximately 50% of the year’s combined spending on healthcare services. Without it, spending would have totaled $77.1 billion, still an 8% increase compared with the previous year.

“With all the uncertainty surrounding the repeal-and-replace efforts on the Affordable Care Act, healthcare services proved to be a safe harbor for investors,” said Lisa E. Phillips, editor of the 2018 Health Care Services Acquisition Report. “The services side contributed 63% of 2017’s combined total of 1,565 deals, which include the technology sectors, Biotechnology, eHealth, Medical Devices and Pharmaceuticals.”

Some services sectors fared better than others in year-over-year deal totals. Merger and acquisition activity increased in Managed Care (+30%), Physician Medical Groups (+27%), Laboratories, MRI & Dialysis (+22%), Behavioral Health Care (+17%), Rehabilitation (+7%) and Other Services (+4%). Three sectors saw declines in activity, including Home Health & Hospice (-31%), Hospitals (-11%) and Long-Term Care (-11%). “The continued shift to value-based outcomes and reimbursements continued to benefit most post-acute sectors in 2017,” Phillips added. “The slow-down in the Long-Term Care sector is the result of changing market dynamics, with higher labor costs, higher-acuity patients, and looming higher interest rates.”

The 2018 Health Care Services Acquisition Report, Twenty-Fourth Edition, contains more than 300 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice, and rehabilitation mergers and acquisitions in 2017. The Long-Term Care sector is treated separately in The Senior Care Acquisition Report, Twenty-Third Edition. Irving Levin Associates is a Norwalk, Connecticut-based research and publishing firm specializing in health care investments. The Health Care Services Acquisition Report may be purchased for $595 by calling 800-248-1668.

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Maggie Mark
Irving Levin Associates
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