Private equity continues to increase the number of transactions in the health care sector, according to a report from PwC. While megadeals and overall value have been affected by interest rate hikes and fears of a downturn, deal volume has been on the rise thanks to private equity firms interest in health care.
The report also identified payer-provider convergence and investments from nontraditional players helping to drive more value-based care throughout the health care system, Medical Economics reports.
As a result of these factors, plus large levels of corporate and private equity cash, 2023 has a strong outlook for deal volumes in health care.
According to the report, health services deal volumes increased further from levels seen in 2021, but have softened thus far in the fourth quarter this year. Year-over-year deal volumes increased in each quarter through the third quarter, though some pullback has been seen in Q4 through November 15. While deal volumes have continued to increase, deal values have declined from the peak set in 2021, a function of smaller value roll-up and platform add-on transactions representing a greater portion of activity in the current year.
Home health & hospice continues to be a sub-sector driving transaction value in 2022, according to the report. This was one of only two sub-sectors that saw growth in announced deal value from 2021 levels, as pandemic-driven interest in alternative and patient accessible care models continued to be a key theme. There were 114 home health and hospice deals in the 12 months ending November 15, contributing to a 74% increase in deal value from 2021. This growth in deal value was driven by two megadeals – CVS’ acquisition of Signify Health for $8.0B and UnitedHealth / Optum’s acquisition of LHC Group for $6.0B.
Megadeals made up nearly half of deal value over the last 12 months, according to the report. Read more.
