INSIGHT: Health-Care Deals Up in Q2, but Long-Term Covid Impacts Unclear

Bloomberg Health Law & Business News

Gary W. Herschman and Anjana D. Patel, Members of the Firm, co-authored an article in Bloomberg Health Law & Business News, titled “INSIGHT: Health-Care Deals Up in Q2, but Long-Term Covid Impacts Unclear.” The piece was also co-authored by Hector M. Torres, Managing Director at FocalPoint LLC, and Larry Kocot, Principal at KPMG LLP, and Carole Streicher, Partner at KPMG LLP.  Zachary Taylor, Associate in the Health Care & Life Sciences practice, also contributed to the article.

Following is an excerpt:

Despite the resurgence of Covid-19 cases in a growing number of states and continuing uncertainty for businesses, the number of health-care deals announced or closed in June (144) trended upward to end Q2, as compared to May (104) and April (106).

The pandemic has fueled an intensified focus on life sciences and pharmaceuticals as the race to identify effective vaccines and therapeutics to prevent and treat Covid-19 has attracted new investment. Health-care IT and software transactions have also been spurred by the ongoing demand to meet patient needs both inside and outside of traditional care settings.

Covid-19 has left many health-care provider entities to re-examine their strategic priorities. The initial wave of cases resulted in sudden shift in operational focus to properly care for patients. In select “hot spots” areas across the country, many providers continue to manage an influx of new Covid-19 cases as well.

As a result, financial profiles across the provider landscape have been evolving with changes in utilization patterns. Providers with strong financial profiles are actively seeking to continue to increase their footprints and combine with organizations that are experiencing increased levels of distress and/or strategic uncertainty.

Moreover, many independent hospitals, physician groups, and other provider companies that previously desired to “go it alone,” have had a change of heart and are now exploring partnerships with larger health-care organizations with substantial capital and corporate infrastructure, to enable them to better weather Covid and any future pandemics or major economic downturns.

Others have been forced to seek these partnerships because of diminishing revenues that are not likely to rebound given the surge in Covid-19 cases and the inevitability of a second wave.

Consequently, 2020 will continue to be a dynamic M&A environment for health-care provider entities such as hospital/health systems, physician practices and services, homecare and hospice, among other providers, faced with Covid-19 related challenges.