The healthcare M&A market has been on a roll with a busy 2015.
Year-to-date, 2,017 deals have already closed or been announced publicly, according to middle-market investment bank SDR Ventures (an Axial member).
This healthy pipeline is spurred by various factors. The most prominent of these is the Affordable Care Act (ACA), the landmark legislation that has expanded health coverage to millions of Americans. The ACA has become a major feature in the healthcare dealmaking environment. “Whenever there is significant legislation, a large segment of smart players and money will always be looking around or chasing after growing areas,” says Chris Bouck, a principal at SDR. Like any regulation, the ACA “has created a jump ball.”
The quest for survival — on the part of insurance companies, payers, and healthcare providers — is also driving M&A within mid-market healthcare.
A lot of activity has been generated by health insurers, who have been putting together provider networks including health practices, physical therapy, and ancillary medical providers. In some cases, if reimbursements and capitation fees are too low, a percentage of the provider networks will not be available to the payer. In major metropolitan areas, where there are usually four major networks, a health insurance company may buy out one of those players to lessen the number of networks by one.
Within the larger healthcare M&A landscape, there are number of different “hot sectors” — attractive investment opportunities as companies try to compete by gaining scale and obtaining operational efficiencies. These include…
For more, download the full whitepaper: Wealth in Health: The Current State of Healthcare M&A.
In this whitepaper, you’ll learn:
- How 2015’s YTD M&A healthcare deal volume and invested capital compares to 2014
- How the ACA is affecting dealmaking
- Hot sectors in healthcare
- Why valuations in healthcare are so high
- What percentage of deals are being done by strategics vs. PE