United States

Q4 2016 Health Care Industry Spotlight

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The health care industry remains challenging and dynamic, particularly in the arena of absorbing more and more enrollees. From that development flows the interlocking issues of keeping costs down, adapting to more stringent quality ratings and relating care episodes to patient billings in a more transparent fashion. It is a slow-paced yet unceasing evolution, prompting much consolidation and plenty of divestitures among businesses as they grapple with the entire array of challenges. In many ways, some of those challenges are essentially the same as they’ve always been; in others, they are entirely new phenomena in the realm of U.S. health care.

Mergers and acquisitions (M&A) deal volume in health care declined again in the third quarter—a reflection of the caution that is still apparent, with buyers eyeing reimbursement rate trends and carefully working through due diligence.

Key highlights from the third quarter:

  • With 211 completed transactions, health care M&A deal volume was at the lowest quarterly tally of activity in years.
  • Private equity activity has been slowing within the United States, and health care is no exception. Fresh off of recent highs, the 103 health care transactions closed in the third quarter of 2016 did not represent as much of a plummet as it may seem at first glance, but rather a pause, particularly as deal value remained relatively healthy.
  • Private equity’s portion of overall health care deal flow hit a remarkable 36 percent in the third quarter, the highest measure recorded since the start of 2013. As larger businesses take a breather after significant activity—much as hospitals are experiencing a lull of digestion after several quarters of elevated activity—smaller private equity firms geared toward the middle market are still staying active.

 

  • With 211 completed transactions, health care M&A deal volume was at the lowest quarterly tally of activity in years.
  • Private equity activity has been slowing within the United States, and health care is no exception. Fresh off of recent highs, the 103 health care transactions closed in the third quarter of 2016 did not represent as much of a plummet as it may seem at first glance, but rather a pause, particularly as deal value remained relatively healthy.
  • Private equity’s portion of overall health care deal flow hit a remarkable 36 percent in the third quarter, the highest measure recorded since the start of 2013. As larger businesses take a breather after significant activity—much as hospitals are experiencing a lull of digestion after several quarters of elevated activity—smaller private equity firms geared toward the middle market are still staying active.
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