1Q20 Healthcare M&A Transactions

INDUSTRY INSIGHTS

H2C Industry Insights • 1Q20

Healthcare M&A Transactions Database

Nine hospital and health system transactions were announced in March alone.

Q1 2020 HCIT funding marked the second-largest quarter since 2016.

Post-acute M&A activity started strong, but dropped sharply at the end of Q1 during the pandemic.

Volume remained steady year-over-year in the behavioral health sector.

The sector is dominated by large players that continue to execute tuck-in acquisitions.

Larger companies continue to complete tuck-in acquisitions as smaller players struggle with reimbursement.

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Q1 M&A Activity Starts Strong, Then Dips

posted on May 12, 2020

Data from the Hammond Hanlon Camp LLC (“H2C”) mergers and acquisitions (“M&A”) database shows 160 transactions were announced in Q1 2020.

HOSPITALS

Announced

HCIT

Announced

POST-ACUTE

Announced

BEHAVIORAL HEALTH

Announced

LABS

Announced

MANAGED CARE

Announced

TOTAL

2Q19

167

3Q19

158

1Q19

161

1Q20

160

4Q19

146

Note: Historical figures are adjusted based on newly available information.

"The pandemic will likely act as an accelerant for many trends we have seen over the previous years, which include a shift toward value-based care, an emphasis on moving elective procedures to an outpatient setting, and continued investment in HCIT—specifically, telehealth."

- Nick Beale
Director, H2C

Volume remained steady year-over-year in the behavioral health, managed care, and laboratory sectors. Hospital and health system transactions, meanwhile, dipped slightly, with only 20 transactions reported, compared with 24 in Q1 2019.

There were 61 transactions announced in the post-acute sector, and volume was down nearly 22 percent from Q1 2019, when 78 transactions were announced. HCIT volume nearly doubled year-over-year, with 55 transactions announced, versus 32 in Q1 2019.

It is important to note that some announced transactions do not go on to close due to unforeseen risks, regulations, or other factors. In a COVID-19 environment, the number of announced transactions that do not ultimately close could be higher than usual because of the economic impact of the pandemic on healthcare organizations.

Data points that stand out include the following:

While HCIT and post-acute M&A volume started off strong in Q1, with 26 and 33 transactions announced in January, respectively, volume decreased sharply toward the end of the quarter, with only 15 and 13 transactions, respectively, announced in March.
Hospital and health system M&A volume bucked this trend, with nine hospital and health system transactions announced in March, compared with nine in January and two in February. Volume in this sector is traditionally driven by strategic buyers.

“Q1 2020 appeared to be off to a great start. Transaction volume remained steady with record-breaking investment across many sectors,” said Nick Beale, Director, H2C. “While the COVID-19 outbreak introduced uncertainty, ample opportunity remains in the market. We encourage our clients to continue thinking strategically and to be proactive in their approach for the remainder of the year. The pandemic will likely act as an accelerant for many trends we have seen over the previous years, which include a shift toward value-based care, an emphasis on moving non-emergent procedures to an outpatient setting, and continued investment in HCIT—specifically, telehealth."

If your organization is considering evaluating options and opportunities for merger, acquisition, divestiture, or partnership, H2C is uniquely positioned to offer expert advice. Let us put our market knowledge and expertise to work for you. Contact an H2C professional directly.

For more information, access H2C’s M&A database.

View the Healthcare M&A Transaction Database

About Hammond Hanlon Camp LLC

Hammond Hanlon Camp LLC (“H2C”) is an independent strategic advisory and investment banking firm committed to providing superior advice as a trusted advisor to healthcare organizations and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers & acquisitions, capital markets, real estate, and restructuring transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value. Hammond Hanlon Camp LLC offers securities through its wholly-owned subsidiary H2C Securities Inc., member FINRA/SIPC. For more information, go to h2c.com.

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