“We believe that Home Health and Hospice will continue to be targeted, particularly in the lower middle market; expect this year to end much stronger than 2023.” says Andre Ulloa.
In a recent report by Levin Associates, July 2024 saw a notable decrease in healthcare M&A activities with 130 deals, reflecting a 20% decrease from June and a 23% drop from the previous year. Levin suggests significant shifts in healthcare M&A based on this data.
Sector Highlights and Expert Insights
“Other Services” (a miscellaneous sector that encompasses a variety of transactions, most notably medical outpatient buildings) led the activity with 42 deals, including significant transactions in the medical outpatient building (MOB) space. Notable transactions were executed by Montecito Medical Real Estate and Welltower, Inc., demonstrating sustained interest in this sector.
Andre Ulloa, Managing Director at M&A Healthcare Advisors, commented on the Infusion Pharmacy market, highlighting its economic potential. "The margins for infusion are substantial, there is limited competition from large-cap pharmaceutical companies, and there is great growth potential in certain IV therapies, like neurological drugs," Ulloa explained.
Physician Medical Groups: Observations and Trends
The Physician Groups sector saw a slowdown with 26 transactions. Dental specialties were particularly active, suggesting continued interest despite broader market contractions. Mark Thomas, Founder and Director of Operations, noted an uptick in discussions with physician owners contemplating exits, hinting at potential increases in M&A activity across the sector as a whole.
Thomas also offered insights into the dynamics of the dental market. There appears to be daily dental acquisition announcements, Thomas shared, highlighting the sector's high activity and the potential for continued consolidation in the segment.
"I've spoken to a number of physician owners exploring a partial or full exit in the last few weeks, at a higher rate than the rest of 2024," Thomas observed.
Financial Overview and Future Outlook
Despite fewer transactions, disclosed spending in July exceeded $10.2 billion, driven by significant deals in the biotechnology/pharmaceutical sectors, including Lilly's $3.2 billion acquisition of Morphic Holding Inc. This points to the high stakes involved in strategic acquisitions.
“We believe that Home Health and Hospice will continue to be targeted, particularly in the lower middle market; expect this year to end much stronger than 2023.” Ulloa continued.
Ulloa also spoke about the overall M&A environment, emphasizing the need for strategic adaptation to market shifts. He noted that the ebb and flow of transaction numbers are typical in M&A landscapes, encouraging a strategic approach to navigating these changes.
Navigating Market Complexities with Expert Guidance
The insights from Andre Ulloa and Mark Thomas highlight the importance of understanding and responding to evolving market conditions in healthcare M&A. For more detailed insights and strategic advice, visit our Insights tab.