Deal volume in the Physician Medical Groups (PMG) sector climbed in the third quarter of 2022, up 16% with 170 publicly announced transactions, compared with 147 acquisitions in the second quarter of 2022, according to data captured by LevinPro HC. Compared to the third quarter of 2021, which saw 104 deals, PMG M&A activity increased by 63%. Q3:22 represents 38% of all the 453 PMG deals announced during the year, so far.
Few transactions in the PMG sector have an attached price tag. Still, announced spending increased to $786.2 million across two deals in the third quarter, from $386 million in disclosed prices in Q2:22. The deal that accounted for most of the disclosed spending in Q3:22 was Apollo Global Management, LLC purchasing GI Alliance for $785 million. GI Alliance’s gastroenterology practice management company provides services to nearly 700 independent gastroenterologists operating in 14 states.
Private equity and their portfolio companies, such as Charlesbank Capital Partners and its portfolio company MB2 Dental Solutions, continue to dominate the sector, representing 72% of the PMG deals in the third quarter. Charlesbank Capital Partners’ main portfolio company had the most activity this quarter with 19 deals. Quad-C Management made the second-most acquisitions in the quarter with 11 transactions through its portfolio companies Prism Vision Group and US Endo Partners.
“The push from private equity into the physician market has been relentless these past few years, especially in dental and ophthalmology, two specialties that can yield a high return on investment,” stated Dylan Sammut, Healthcare Editor at LevinPro HC. “But with an increase in interest rates on the horizon, we expect even PE firms will have to hit pause on some deals.”
Dental was the most active subsector, with 76 deals (not including the seven dental services organization deals), accounting for 45% of the PMG deals in the quarter. This is a 204% increase from Q3:21, which saw 25 dental acquisitions. MB2 Dental Solutions, backed by Charlesbank Capital Partners, reported 19 dental deals, acquiring 21 clinics in Q3:22. The second most active subsector is ophthalmology/optometry reporting 22 deals. Read more.
