January 31, 2018

Healthcare deal volume down 2%

Healthcare merger and acquisition activity held steady in the fourth quarter of 2017, with 377 transactions marking a 1 percent increase over the third quarter, but down 3 percent from fourth quarter 2016, according to new acquisition data from Norwalk-based HealthCareMandA.com.

For all of 2017, there were 1,566 transactions among healthcare services and technology sectors, down 2 percent from 1,593 deals announced in 2016. The deal value of deals, however, rose 23 percent over 2016 to $315.3 billion, with a 197 percent surge in the fourth quarter.

Healthcare services dollar volume made up 87 percent of the fourth quarter's dollar volume of $99.4 billion, HealthCareMandA.com said. The spending surge was driven by the $77 billion CVS Health/Aetna deal announced in December in the managed care sector of healthcare services.

"M&A in the fourth quarter of 2017 saw a new focus on consumerism in health care," said Lisa E. Phillips, editor of HealthCareMandA.com. "The CVS Health/Aetna deal is supposed to create community health hubs. We expect to see a few more atypical match-ups like that in 2018, where acquirers look for targets in a different sector."

HealthCareMandA.com categorizes healthcare services as behavioral health; home health and hospice; hospitals; laboratories, MRI and dialysis; long-term care; managed care; physician medical groups; rehabilitation; and other. The sector had 236 total deals last quarter, down 5 percent from the third quarter and 4 percent from fourth quarter 2016.

Total deals in technology services – which includes biotechnology, e-health, medical devices and pharmaceuticals – numbered 141 last quarter, up 14 percent from the third quarter, but down 1 percent from fourth quarter 2016.

Long-term care remained the most active of all sectors, with 70 total deals in the fourth quarter, although deal volume slipped 5 percent from the third quarter. The technology sectors showed some improvement versus fourth quarter 2016, except biotech, which dipped 13 percent. Compared with the previous quarter, all showed higher deal volume, except e-health, which fell 29 percent.

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