Blog | Strategic Partnerships Mergers and Acquisitions

Healthcare M&A activity gained steam in Q4 2020

Blog | Strategic Partnerships Mergers and Acquisitions

Healthcare M&A activity gained steam in Q4 2020

The fourth quarter of 2020 showed a marked increase in merger-and-acquisition (M&A) activity across healthcare, according to an advisory firm’s tracker. The proliferation of transactions suggests stakeholders’ interest in pursuing strategic opportunities even amid the financial downturn brought on by the COVID-19 pandemic.

Hammond Hanlon Camp LLC  (H2C) recorded 177 transactions in its healthcare M&A database in Q4 2020, a 21% increase over Q4 2019. There were 642 transactions for the year, exceeding the 2019 total by 10.

Of the Q4 2020 transactions, 22 involved hospitals — the same number as in Q4 2019.

As highlighted by H2C, notable hospital deals in 2020 included:

  • WVU Health System's affiliation with Princeton Community Hospital and acquisition of Wheeling Hospital, which would be the system's 13th hospital
  • The announcement that Sentara Healthcare and Cone Health will merge, creating a 17-hospital system with more than 2,400 physicians and advanced practice clinicians in Virginia and North Carolina

"Despite the pandemic, 2020 healthcare transaction volume surprised many, with a significant number of announced transactions in the second half of the calendar year,” Michael J. Tierney, director of H2C, said in a release.

“As the healthcare industry adjusts to the new normal, operators and investors are refocusing strategic initiatives and analyzing opportunities. Asset prices remain elevated, which has proven beneficial to sellers divesting non-core assets or owners looking for exit opportunities. We expect 2021 to remain active as service providers encounter new challenges and opportunities.”

Other sectors see spikes in activity

The big increases year-over-year were in the healthcare IT and post-acute care sectors.

Reflecting the impact of the pandemic, healthcare IT transactions increased from 32 in Q4 2019 to 46 in Q4 2020 and from 133 to 192 for the year.  One especially noteworthy deal was finalized in October, when Teladoc completed its $18.5 billion acquisition of Livongo.

“Stakeholders hope combining two of the largest publicly traded virtual care companies will help capitalize on increasing digital health demand,” the H2C release states.

Post-acute care deals rose from 65 in Q4 2019 to 79 in Q4 2020, although volume still finished 2020 down 6% year-over-year.

About the Author

Nick Hut

is a senior editor with HFMA, Westchester, Ill. (nhut@hfma.org).

Advertisements

Related Articles | Strategic Partnerships Mergers and Acquisitions

Blog | Price Transparency

Prospective HHS secretary: ‘We will do robust enforcement to make sure that price transparency is there for all Americans’

Xavier Becerra, the nominee to be secretary of Health and Human Services in the Biden administration, said transparency is a vital step in addressing the issue of healthcare prices.

Column | Leadership

The evolution of integrated health system leader roles

Leadership of an integrated health system has become an increasingly complex undertaking today because of the many roles a leader must assume.

Blog | Pricing

RAND report finds regulating hospital prices would be the most effective way to reduce healthcare spending, but are the proposals viable?

The American Hospital Association had a negative reaction to study findings showing that regulation of hospital prices would be the most effective way to reduce prices paid by commercial insurers.

News | Financial Leadership

Healthcare finance leaders emphasize efficiency and consider partnerships in response to ongoing trends

To address the challenges brought on by the COVID-19 pandemic, healthcare finance leaders are considering both internal and external solutions, according to recently issued reports.