Healthcare Services | Second Quarter 2024

July 2024 – Healthcare M&A Slows in Q2 2024

Healthcare mergers and acquisitions (M&A) experienced a slight downturn in the second quarter of 2024. While deal volume remained relatively high, the total value of announced transactions decreased compared to the previous quarter and the same period last year.

Physician medical groups (PMGs) continued to be a hotbed of activity, although deal numbers declined year-over-year. Dental care dominated the PMG sector, driven largely by private equity-backed platforms.

The hospital and health systems sector saw a mix of activity. While overall deal volume was flat, there were several significant strategic partnerships and acquisitions among academic medical centers and nonprofit organizations. Notably absent were for-profit health system acquirers.

The long-term care sector experienced a surge in M&A, with senior housing and care deal volume increasing by 21% compared to the previous quarter. This growth is fueled by several factors: an aging population, increasing occupancy rates approaching pre-pandemic levels, and a favorable investment climate. The industry is witnessing a consolidation trend as larger operators seek to expand their geographic footprint and achieve economies of scale.

The home health and hospice sector also saw a significant uptick in M&A activity, driven by a growing preference for home-based care. However, increased regulatory scrutiny has tempered investor enthusiasm in the hospice segment.

Finally, the behavioral health market remained relatively stable, with private equity continuing to be a major force in the sector. The increasing prevalence of mental health conditions coupled with a shortage of providers has made behavioral health an attractive investment area. However, challenges such as reimbursement rates and access to care continue to impact the sector.

Overall, the healthcare M&A landscape is evolving. While certain segments, like long-term care and home health, are experiencing growth, other areas, such as hospitals and physician groups, are showing signs of consolidation. The ongoing shift towards value-based care and the increasing role of technology are likely to shape the industry’s M&A trajectory in the coming quarters.

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