Health-care deal-making was off to a hot start in January, with 274 reported deals announced or closed, but momentum could be affected by the outbreak of war in Ukraine.
The January number got a boost from tax considerations that pushed the closing date of some deals from December into the new year, according to Gary Herschman of Epstein, Becker & Green in Newark, N.J.
The top sectors last month were those that have been the focus of health-care investment and consolidation for the past two years: life sciences (46 deals), physician services (44), health-care IT (39), medical devices (39), behavioral health (15), cannabis (13), and home health (11).
Expectations are high that mergers and acquisitions in 2022 could match or exceed last year's record pace, which saw over 3,000 transactions, Herschman said. The number of deals in December 2021 was 303, up from 236 in November.
"Larger organizations, with experienced executives and greater capital, are more effective than smaller organizations at navigating through industry and regulatory changes, including the ongoing transformation to value-based care and direct contracting," he said. They're also better positioned to "benefit via economies of scale and bulk purchasing."
But international unrest from the events unfolding in the Ukraine, along with continuing supply chain issues, labor shortages, inflation, and possible interest rate increases, are creating headwinds that could slow the trend, he said. ...
The number of behavioral health deals continued its upward trend in January as investors of all types looked to expand their footprint in this space, said Anjana Patel of Epstein Becker & Green. Examples include AtlantiCare Health Services Inc., a New Jersey-based health system, which agreed to acquire John Brooks Recovery Center, a treatment provider for those with substance use disorders, in Pleasantville, N.J.
Other notable deals were Behavioral Health Group Inc.'s acquisition of the Center for Behavioral Health Idaho Inc., an operator of substance use disorder treatment centers, and The Stepping Stones Group LLC's acquisition of The Southcoast Autism Center, a provider of behavioral therapy to autism patients, based in Fairhaven, Mass.
The cannabis sector saw 13 transactions in January, the 13th consecutive month of double-digit deal volume, said Timothy McHale of Epstein Becker & Green.
"The continued activity highlights the value of the industry, as sales of both medicinal and recreational cannabis continued to surge," he said.
Total sales volume for the industry was over $37 billion in 2021, he said.