By creator to www.fiercehealthcare.com
The variety of offers amongst payer and supplier industries within the first half of the 12 months declined by 21% in contrast with the identical interval in 2019 as healthcare continues to grapple with the COVID-19 pandemic.
The report on deal activity, released Friday by PwC (often known as PricewaterhouseCoopers), discovered that whereas deal exercise general slowed, some sectors akin to labs and long-term care grew. The pandemic may additionally change the sorts of offers that well being providers corporations discover extra engaging.
“The pandemic has accelerated the shift to digital well being, house well being, and distant work, making targets that allow these features extra engaging,” the report mentioned. “Behavioral well being can be seeing COVID-related demand, and Medicaid enrollment has elevated, so capabilities in these areas may turn into extra invaluable.”
PwC discovered that not solely is deal quantity down, however so is the worth. The entire deal worth within the first half of 2020 was $22.Four billion, down 52% in comparison with the primary half of 2019.
The report famous, nonetheless, that solely a couple of third of all well being service offers are inclined to get disclosed.
There have been some shiny spots although throughout the trade.
Labs, MRI and dialysis facilities had essentially the most invaluable offers within the first six months of 2020, producing $12.5 billion in worth on the again of 28 transactions. The sector noticed the most important deal as Thermo Fisher Scientific buying the testing provider Qiagen for $11.5 billion.
The long-term care trade additionally had 158 offers valued at $4.2 billion, the report mentioned.
One of many largest offers was within the managed care sector the place Molina Healthcare acquired the managed care firm Magellan Full Look after $820 million.
There’s additionally sturdy investments from personal fairness companies; for instance, the agency TPG Capital invested $1.2 billion within the on-line behavioral well being firm LifeStance Well being. The continued investments may recommend 2020 “will see extra massive offers amongst these with capital to spend,” PwC mentioned.
Of the offers that have been made within the first half, 32.7% have been within the long-term care sector and solely 8.1% have been amongst hospitals, which have been hit exhausting financially by the COVID-19 pandemic and the cancellation of elective procedures.
PwC recognized three clear elements that would have an effect on offers within the quick time period: an organization’s liquidity place, quick and long-term wants that the pandemic has created and preexisting market dynamics.
“in every case, offers could be a resilience technique: a method so as to add strategic belongings or relationships that protect progress, profitability or operational excellence; and/or a technique to liberate wanted capital by shedding non-core belongings,” the report mentioned.
Hospitals or doctor medical teams may turn into engaging acquisition targets because the pandemic has induced the postponement of elective procedures and doctor workplace visits, inflicting liquidity issues for sure suppliers.
The pandemic may additionally create a brand new concentrate on social determinants of well being however there may be surprising adjustments for companies.
As an example, “present actual property footprints could also be rethought due [to] progress in distant care and work,” the report mentioned.
PwC estimates that deal volumes might be uneven for the rest of the 12 months.
“In pre-deal diligence, patrons could have to disentangle targets’ short-term challenges from their longer-term strategic potential,” the report mentioned.