Welltower, Ensign Group Drive 2019 Long-Term Care M&A Activity

Interest in long-term care assets continued to lead health care merger and acquisition activity in 2019, although overall activity declined slightly amid growing uncertainty over the global economy, major health care policies and the 2020 elections.

Notably, deal volume for long-term care assets, which includes assisted living, accounted for 34% of health care M&A activity in the fourth quarter of 2019, and 36% for the full year, according to PricewaterhouseCooper’s (NYSE: PWC) year-end U.S. Health Services Insight report.

London-based professional services firm PwC analyzed data from Irving Levin Associates platforms, as well as Dealogic Equity Capital Markets Analytics, S&P Capital IQ and publicly available transaction information.

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Total deal volume fell 10.7% in Q4, versus the previous year, and only 1.5% for the full year compared to 2018. There were 293 health care transactions in the fourth quarter, and 1,229 for the full year. Total deal value, meanwhile, skyrocketed 137.1% in the fourth quarter, to $23.8 billion, and ended the year at $91.2 billion.

This marks the tenth consecutive quarter with over 250 deals in the health services sector. The sector has had over 1,000 deals per year since 2016.

In addition to eight consecutive quarters with 250 or more deals, the industry has recorded over 200 deals per quarter since Q1 2014.

Long-term care has paced M&A activity since at least 2014, accounting for between 30% to 45% of quarterly deal volume. The report singles out Toledo, Ohio-based health care real estate investment trust Welltower (NYSE: WELL) and Mission Viejo, California-based company The Ensign Group (Nasdaq: ENSG) as the most active buyers in long-term care.
There were 13 deals valued at over $1 billion in 2019. Two involved long-term care: Chicago-based health care real estate investment trust Ventas’ (NYSE: VTR) $1.8 billion acquisition in June of a Canadian senior housing portfolio of 31 existing properties and four in development through an 85%/15% equity partnership with Le Groupe Maurice (LGM); and Welltower’s $1.8 billion sale of its 48-property Benchmark Senior Living portfolio to private equity firm KKR.

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