Hospital M&A activity slowed in Q4:2022, according to acquisition data from LevinPro HC. There were 19 deal announcements, a 10% decline compared with the third quarter of 2022.
NEW CANAAN, Conn., Jan. 12, 2023 /PRNewswire-PRWeb/ -- Headwinds and market challenges took a toll on Hospital M&A activity in the fourth quarter of 2022. According to new acquisition data captured in the LevinPro HC platform, there were 19 transactions announced in the Hospital sector in Q4:22, a 10% decline from activity in Q3:22 when 21 deals were announced. Fourth quarter activity was virtually level with Q4:21 transaction volume when 18 deals were announced.
Announced spending reached $821 million in Q4:22, a decline of 89% compared with the third quarter of 2022. In Q3, Mediclinic International Ltd., a diversified international private healthcare services group founded in South Africa, was purchased for $7.42 billion by Remgro Limited and MSC Mediterranean Shipping Company, one of the largest hospital deals on record.
Although deal volume was slow, there were still several notable deal announcements, especially from large health systems. In the fourth quarter, Yale New Haven Health System, the most extensive healthcare system in Connecticut, purchased the operations and outpatient clinic services of three hospitals from Prospect Medical Holdings to expand its network in the state. In a separate deal, Prospect Medical Holdings purchased the real estate of the three hospitals from Medical Properties Trust, Inc. for $457 million, the largest deal of the fourth quarter based on disclosed price.
In December, OhioHealth closed negotiations with both Guernsey Health Systems and Van Wert Health, adding two hospitals, more than 100 beds and a collection of physician groups, outpatient clinics and home health operations to its network.
Two major health systems in Michigan, University of Michigan Health System and Sparrow Health System, merged in early December, creating a $7 billion organization and one of the largest healthcare providers in the state.
Most fourth-quarter transactions targeted systems and organizations with more than 100 beds and several facilities. Very few deals focused on critical access hospitals or community hospitals. In the 19 deals announced in Q4:22, more than 5,000 beds and 45 hospitals were acquired or involved in a merger.
"Transaction volume may have slowed, but mergers between large health systems revealed an active market nonetheless," said Dylan Sammut, Editor of Health Care at Irving Levin Associates, which publishes the data on its LevinPro HC platform. "The industry faces major headwinds, such as rising labor and operation costs, staffing issues, and increased pressure from companies like CVS and Walgreens moving into outpatient care. Health system mergers highlight that scale and market penetration is the best way to compete in a tough market."
All quarterly results are published in The Health Care M&A Report, which is part of the Irving Levin Associates and LevinPro investment research source. For information, or to order the reports, call 800-248-1668. Irving Levin Associates is celebrating more than 70 years of delivering exclusive M&A intelligence to its sophisticated audience of seniors housing and healthcare investors. The company was established in 1948 and has offices in New Canaan, Connecticut, and North Bethesda, Maryland. The company publishes research reports and newsletters and maintains healthcare and senior housing M&A markets databases.
Media Contact
Dylan Sammut, Irving Levin Associates, 203-846-6800, [email protected]
SOURCE Irving Levin Associates
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