Merger and acquisition activity in the healthcare industry's services sectors (and eHealth, which is now included in this report) declined 13% in 2023 compared with the year before, according to The 2024 Health Care Services Acquisition Report, 30th Edition.
NEW CANAAN, Conn., March 4th, 2024 /PRNewswire-PRWeb/ -- Merger and acquisition activity in the healthcare industry's services sectors (and eHealth, which is now included in this report) declined 13% in 2023 compared with the year before, according to The 2024 Health Care Services Acquisition Report, 30th Edition. Deal volume for the healthcare services sectors reached 1,811 transactions versus a record high of 2,093 in 2022. Still, 2023 deal volume was 67% higher than it was in 2019 (1,083 deals), five years earlier.
Disclosed spending declined significantly, hitting approximately $72 billion, compared with $125 billion in 2022. Announced spending totals in 2023 suffered because most deals were private transactions, and most of the dollar investments were concentrated on large biotechnology and pharmaceutical companies, which are not included in this report. The largest services deal of the year was the $10.6 billion acquisition of Oak Street Health by CVS Health. The deal, which closed on May 2, 2023, marked the retail giant's third-largest deal in the last decade.
"Although there's still plenty of interest in the healthcare M&A market, investors could not navigate the high interest rates of the past year" said Dylan Sammut, editor of the 2024 Health Care Services Acquisition Report. "The elevated cost of capital forced many buyers to slow down their M&A strategies, especially private equity investors."
Although none of the declines were sharp, deal activity dropped across nearly every sector. Activity in the Physician Medical Group sector decreased by 14% to 535 deals after reaching an historic high of 619 in 2022, an annual record for any individual sector tracked by LevinPro, including Long-Term Care. For most markets, there was an historic volume of activity in 2022, and in 2023, it seemed to be a "cooling-off" period rather than a lack of interest. Not to mention troubles with headwinds and high interest rates. The only market to see an increase in M&A activity was the Hospital sector.
"Other headwinds, such as staffing issues and increased regulatory challenges, most likely took a hit on the M&A market," Sammut added. "There were several health system mergers called off throughout the year. And none of these tailwinds are unique to 2023. We expect more of the same throughout 2024."
For more granular statistics and analysis, access the Report by subscribing to LevinPro HC.
The 2024 Health Care Services Acquisition Report, 30th Edition, contains more than 70 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice, rehabilitation, eHealth and other services mergers and acquisitions in 2023. The Long-Term Care sector is treated separately in The 2024 Senior Care Acquisition Report. The Report may be accessed through a subscription with LevinPro HC. To learn more, call (203) 846-6800 or email [email protected].
Irving Levin Associates is a New Canaan, Connecticut-based research and publishing firm specializing in the health care and senior care M&A markets.
SOURCE Irving Levin Associates
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