Long-Term Care Megadeals Boost Health Industry M&A

The U.S. health services industry saw an “unusually high number of megadeals” in the second quarter of 2017—some of which took place in the long-term care sub-sector, according to data published by audit, assurance, tax and consulting firm Pricewaterhouse Coopers (PwC).

Overall, 219 deals occurred throughout the health services industry in the second quarter, totaling to $49.6 billion. This signifies an increase of over 201% year-over-year, and a 514% increase in deal value over the first quarter of 2017. The performance is also the strongest the health services industry has seen since the third quarter of 2015, according to PwC.

Driving this significant growth were a large number of “megadeals,” or transactions exceeding $1 billion. Since 2015, the average number of megadeals has remained at about four per quarter; performance in the second quarter of 2017, however, eclipsed this average with a total of 10, making up more than $43 billion in deal value.

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Long-term care deal volume led the pack among sub-sectors, accounting for 75 of the 219 total deals, or 34% of all second quarter 2017 transactions in the health services industry. Overall, year-over-year deal growth by volume for the sub-sector fell 17%, and deal growth by value increased 299%.

Two long-term care megadeals totaling $6.6 billion helped catapult overall performance: the merger of Sabra Health Care REIT (Nasdaq: SBRA) and Care Capital Properties, Inc. (NYSE: CCP), for $4 billion; and Columbia Pacific Advisors LLC’s announced acquisition of Hawthorn Retirement Group for $2.6 billion.

The deal between CPA and Hawthorn Retirement Group echoes earlier reports regarding the transaction’s worth, which was previously estimated at $2 billion.

Written by Carlo Calma

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