Second Quarter Sees Slight Slowdown in Health-Care Deals

Health-care transactions have been relatively active throughout the first half of 2022, though not as active when compared to the banner year of 2021. Specifically, deal volume for the first half of 2022 (1,112) is down approximately 23% from this time last year (1,444).

The slowdown in deal activity is a likely response to growing economic uncertainty and continuing headwinds with rising inflation and worldwide supply chain issues compounded by the war in Ukraine.

Despite the headwinds, when compared to 2018 through 2020, total transactions over the first half of 2022 are up over 25% from 2020 (830), 47% from 2019 (586), and 52% from 2018 (530). Life sciences continues to lead the way as the most active subsector, followed by health-care IT, medical device, and physician services.

Life Sciences

The life science and pharmaceutical subsector had its second strongest month of deal activity year-to-date, in line with the thesis that the subsector may be somewhat more immune to the economic headwinds, while also continuing to be a key player in Covid-19 response as the industry recovers from the pandemic and repositions for the future.

Health-Care IT

Although health-care IT and software has the second highest deal volume among subsectors through the first half of the year, volume is down from this time last year, which was extremely active due to accelerated changes in care delivery during the height of the pandemic. However, continued focus on telehealth after the pandemic, and growing patient interest in remote care options, could help to sustain longer-term interest in this sector.

Medical Device and Supplies

Compared to 2021, medical device and supplies deals have experienced a drop in deal volume due to continued supply chain issues and growing economic pressures on health system purchasing. However, the potential continuation of Covid-19 and the rise of new illnesses such as Monkeypox, could drive activity higher in this sector as these issues increase the demand for diagnostics and medical supplies.