- Deals in the health services sector for the first half of this year were down from the previous year and volume reached the lowest point since 2015, according to a new report from PwC.
- The report found two subsectors did see year-over-year growth: labs, MRI and dialysis and an other services category that includes medical office buildings.
- The subsector with the most deals in terms of volume was long-term care, continuing a trend since 2014, followed by other services, physician medical groups, hospitals and home health, according to the analysis.
The roiling uncertainty created by the COVID-19 pandemic has numerous implications for M&A activity in the healthcare industry. Areas such as telehealth and home care are seeing particular interest as people stay at home to avoid exposure to the novel coronavirus.
Also, growing unemployment from the ravaged economic performance is shifting more people to enroll in Medicaid, a potential boost of interest for managed care companies.
"Solutions that ease social determinants of health remain a key focus, as food insecurity grows and social distancing complicates daily activities. On the flipside, current real estate footprints may be rethought due [to] growth in remote care and work," the PwC report notes.
In the first half of this year, hospitals had 39 deals totaling $800 million in value, both year over year increases. For medical groups, the 66 deals represented 37% growth in volume from the year prior.
Looking to the second half of this year, deal volumes could be sustained but are likely to be uneven given the continued uncertain landscape, PwC said. Activity is likely to be affected by the presidential election and the Affordable Care Act arguments in front of the U.S. Supreme Court, which likely won't be held until after ballots are cast.
Other recent analyses have found the pandemic hasn't caused M&A to dry up. Hospital deals were down slightly year over year in the second quarter, but a significant uptick is likely for the back half of this year, according to a report earlier this month from Kaufman Hall.