Gary W. Herschman, Yulian Shtern

Gary W. Herschman, Member of the Firm, and Yulian Shtern, Associate, in the Health Care and Life Sciences practice, in the firm’s Newark office, co-authored an article in Bloomberg Law, titled “INSIGHT: Long-Term Care Continues to Lead Health-Care M&A Activity.”

Following is an excerpt:

Building off last year’s M&A frenzy, the health-care industry continues to experience high levels of transaction activity as a result of readily available capital and shifting market dynamics.

Through June 2019, total announced/closed transactions reached over 586 deals, compared to 530 at this point last year. A combination of private investment firms with ample capital to deploy, supportive macroeconomic factors and evolving consumer trends have contributed to this high deal volume, with strong expectations for the remainder of the year.

Long-Term Care

The long-term care sector is representative of the most active health-care sector through YTD June, with 143 announced or closed transactions through June 2019. First-half transaction figures have increased 43% from the 100 long-term care transactions through the first six months of 2018.

The aging general population and recent health-care initiatives have expanded the pool of insurance coverage for those that require long-term care. According to the United States Census Bureau, the 65-plus age segment is expected to expand from 52 million in 2018 to 78 million by 2035, representing a nearly 50% increase.

Additionally, Baby Boomer Magazine reported the baby boomer generation is turning 65 at a rate of 3-4 million per year. These advanced age segments are driving service volume within the sector; however, they have had an unfavorable impact on the broader payor mix and reimbursement rates for providers following changes to the Medicare payment model.

Reacting to these unfavorable effects, long-term care organizations have shifted focus to improving operational efficiencies via economies of scale, resulting in further industry consolidation. In addition to strategic acquisitions, long-term care organizations have also attracted interest from financial sponsors such as private equity groups and real estate investment trusts (REITs) due to the sector’s relatively stable cash-flows and inherent value of the real estate that comes packaged with business operations.

With 19 of the YTD transactions coming in June, the rapid rate of consolidation within the long-term care sector shows no signs of slowing down in the foreseeable future.

Jump to Page

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.