The overall market for health services assets shows no signs of slowing, as investors continue to aggressively seek deals. The long-term care dealmaking landscape, in particular, remains robust, though transaction volume is down slightly compared to recent stretches.
“We expect deal activity to remain strong, building on the resurgence that began in June 2020,” John Potter, deals sector leader for PwC U.S., said in the report. “Even as valuations remain high, deals are being accelerated by the demand for high-quality assets and the increasing willingness to sell.”
With 352 transactions, health services deals reached record-setting volumes in the fourth quarter of 2020. That mark was then eclipsed by the first quarter of this year, which tallied 426 transactions — a more than 20% increase.
The long-term care space saw 330 completed transactions through the last 12 months leading up to May 15, according to the report. That was the most of any health services subsector.
Combined, those deals were valued at $7.5 billion. Contextually, dealmaking volume was down 6% during that period, with deal value down 5%.
Rehabilitation saw the greatest growth in PwC’s analysis, with a nearly 3,000% spike in deal value against an increase of 59% in terms of total transactions completed.
The global consulting firm indicated that, compared with previous years, physician groups and behavioral care subsectors saw notable annual volume average increases, likely due to market fragmentation, pandemic-driven financial pressures and rising long-term care demand.
The laboratory category, which includes labs, MRIs and dialysis, continues to see growth through the pandemic, with a 200% increase in deal value against an increase of 21% in volume.
In a conversation with SNN this week, Michael Munter, chief operating officer of Chicago-based Symphony Care Network, admitted to seeing a surge in demand for in-house dialysis for skilled nursing facilities.
“I think that will escalate,” he said. “That’s a perfect example of what used to be someone going out three times a week and needing a third- party transportation to go to another site … because of all things infection control it’s moving under the one roof of a skilled nursing facility.”
Symphony’s overall portfolio totals over 30 assets across the Midwest.
Across all sectors, the total deal count of 1,304, exceeded the past five years, PwC observed.
“I’ve been doing this for almost 18 years., I’ve never seen such a robust mergers-and-acquisitions (M&A) market for skilled nursing facilities,” Jason Stroiman, president and founder of Evans Senior Investment, a Chicago-based senior housing and skilled nursing M&A firm, said in an interview with SNN.
Private equity and corporate capital is considered to be driving demand for assets by the PwC.
“Barring surprises — such as a major domestic worsening of the pandemic — we anticipate deal interest at similar levels through year’s end and beyond, despite a high-multiple environment,” the report said.
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