Healthcare M&A volume up 16%, value drops 39% in Q2: 8 things to know
The number of health services mergers and acquisitions increased in the second quarter of 2016, but the value of the deals were down, according to a report from PwC.
Here are eight things to know:
1. The volume of mergers and acquisitions in health services grew 8 percent in the second quarter over the first quarter of 2016 and 16 percent year-over-year.
2. There were 239 deals in the second quarter. This is the seventh quarter where the deal volume was more than 200 transactions. There were 87 deals in the long-term care subsector.
3. The deal value increased 4 percent in the second quarter compared to the first quarter of 2016 but decreased 39 percent year-over-year. The biggest contributor was the physician medical group subsector, which made up 42 percent of the overall deal value.
4. AmSurg's $6.7 billion merger with Envision Health led the way for the physician medical groups in terms of value.
5. There were two mega deals — those exceeding $1 billion — in the second quarter, compared to five over the same time period last year. The value of mega deals was down 13 percent sequentially and 53 percent year-over-year.
6. The breakdown of deal value is:
• Physician medical groups: $6.7 billion
• Long term care: $2.3 billion
• Hospitals: $1.9 billion
• Home health: $426 million
• Behavioral care: $240 million
• Managed care: $159 million
7. The breakdown of deal volume is:
• Physician medical groups: 27
• Long-term care: 87
• Hospitals: 22
• Home health care: 12
• Behavioral care: 17
• Managed care: 5
8. The trading multiples trended up for labs and imaging, home health and managed care; the multiples were down for ambulatory care, outsourcing and acute care as well as skilled nursing facilities. The multiples for ambulatory care went from 16.1 in the second quarter last year to 13.8 in the second quarter this year.
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