Gary W. Herschman and Anjana D. Patel, Health Care Mergers and Acquisitions attorneys, in the firm’s Newark office, contributed to the Modern Healthcare article, titled “Healthcare M&A Insights: Q3 2024 & End-of-Year Outlook.”
Following is an excerpt:
The volume of announced and closed healthcare industry deals in Q3 2024 (498) remain at the lower levels observed thus far throughout the year. Deal volume slowly declined throughout the quarter with 175 deals in July, 170 in August, and 153 in September.
As is customary each year, we expect that Q4 will have more robust “end of year” deal volume, with some carrying over to early 2025 for tax reasons. We also expect that deal volume in 2025 will outpace 2024 due to several factors, including decreasing inflation and other favorable macroeconomic conditions, as well as greater stability following a presidential election year.
Despite the overall lower volume, there are still major deals happening in the market with hospital systems and rehabilitation & long-term care groups standing out, rewarded by public markets due to their essential services, good margins, and steady growth. As with earlier this year, a number of targeted strategic mega-deals occurred in the hospital/health system sub-sector in Q2 and Q3, including Risant’s acquisition of Cone and the Jefferson and Lehigh Valley merger.
Overall, there remains significant disparity in margins and cash on hand between stronger and weaker health systems, which market conditions make hospital systems well suited to potential greater M&A activity going forward, mainly including smaller systems merging into larger better-capitalized regional and national health systems.
Recent deal activity is also highlighted by two notable IPOs: Ardent Health, a hospital operator, and Guardian Pharmacy Services, a long-term care specialty pharmacy. These public listings may spur further private equity interest, especially as strategic and financial buyers for large health care delivery assets remain limited.
