INSIGHT: Long-Term Care Consolidations Lead Third Quarter Health Transactions

Bloomberg BNA Health Care Daily Report

Gary W. Herschman and Paul D. Gilbert, Members of the Firm in the Health Care and Life Sciences practice, in the firm’s Newark and Nashville offices, respectively, co-authored an article in the Bloomberg BNA Health Care Daily Report, titled “INSIGHT: Long-Term Care Consolidations Lead Third Quarter Health Transactions.”  Yulian Shtern, Associate in the Health Care & Life Sciences practice, in the firm’s Newark office, also advised on the article.

Following is an excerpt:

The breakneck pace of healthcare transactions continued unabated in the third quarter. Based on a list of healthcare transactions curated from investment bankers, 287 transactions were announced or closed during the third quarter of 2018.

Compared to the 299 recorded deals in the same period last year, 2018 remains on track to be an extraordinarily active year for healthcare transactions. Seemingly undeterred by the approaching mid-term elections, the pace of deals in 2018 continues to trounce the 167 deals noted in the third quarter of 2016, the most recent general election year.

The most active sectors for M&A activity within the healthcare industry are: Long-Term Care, Home Health, Hospitals & Health Systems, Physician Services and Healthcare IT.

Long-Term Care & Home Health Sectors Continue to Consolidate at a Fast Pace

The long-term care sector continues to consolidate, as evidenced by 69 long-term care transactions being announced or closed during the third quarter, the most of any healthcare segment tracked by investment bankers.

Although September experienced a slight drop-off in closed/announced transactions, overall transactions picked up compared to last year’s 31 in the third quarter. YTD volume has now reached 143 announced/closed transactions, a meaningful uptick from 2017’s YTD total of 74 transactions. …

Physician Group Transactions Continue Momentum

With 38 transactions announced or closed during the quarter (compared to the 39 announced or closed during the previous quarter), physician practice consolidation continues the heightened pace we have seen for the majority of 2018. Industry advisors expect that this already strong activity will gain in strength in the coming months and through 2019.

This continually growing interest in physician services is due to a number of factors, including: (i) the need for substantial capital to invest in advanced EMR and data analytics, to enable them to better succeed in clinical integration and population health initiatives, and thereby better compete in the changing value-based marketplace; (ii) the desire to expand through acquisitions, de novo growth and the addition of new and supplemental ancillary services (e.g., ASCs, lab, therapy, infusion, DME, etc.); and (iii) the competitive benefits of professional and centralized management teams to help navigate the industry changes and strategically position themselves, including gaining the expertise of C-suite executives such as CEOs, COOs, CFOs, HR departments, and managed care experts.