Transaction volume in healthcare IT (“HCIT”) has risen significantly in 2020, with a year-to-date total of 146 transactions, up from 101 year-over-year. Much of this increase was reflected in Q1 and Q3, as Q2 volumes in 2020 and 2019 were similar. The post-acute sector, which saw a dramatic slowdown in February and March following a strong start to 2020, experienced an active third quarter, with 76 announced transactions, representing a year-over-year increase in volume of 15 percent. Despite this, year-to-date volume is still down 14 percent versus 2019.

Across all other sectors, volume fell. Hospital and health system transactions continue to trail 2019 figures, with 18 transactions announced, compared with 22 in Q3 2019. The year-to-date volume of 57 transactions is behind the 66 transactions announced year-to-date in 2019. Despite the slowdown in hospital-related M&A activity in 2020, many of our health system clients have indicated that they are refocusing their attention on strategic growth and expect to see an uptick in activity over the next 12 months.

Notable hospital and health system transactions in Q3 2020 include WVU Health System’s acquisition of Wheeling Hospital, which would become the system’s 13th hospital and 7th acquisition since August 2018. Another notable hospital transaction announced in Q3 was the merger of Sentara Healthcare and Cone Health. When completed, the combined system will include 17-hospitals with more than 2,400 physicians and advanced practice clinicians.

Meanwhile, the behavioral health sector recorded 13 transactions, down 38 percent from Q3 2019, when 21 transactions were announced. This compares to an average of 18 transactions over the past six quarters.

Managed care and laboratory transaction volume also fell. In the managed care space, the year-to-date volume of eight transactions is down 63 percent compared with 2019, when 22 transactions were announced. In the laboratory space, year-to-date volume of 16 transactions is down 24 percent versus 2019, when 21 transactions were announced.

In the post-acute sector, Providence Service Corporation (Nasdaq: PRSC) entered into a definitive agreement to acquire Simplura Health Group (“Simplura”), which operates a large network of home health and personal care agencies across seven states, from One Equity Partners (“OEP”) in an all-cash transaction at an enterprise value of $575 million.