The healthcare business confronted a number of headwinds within the final 12 months, resembling larger rates of interest, extra antitrust regulatory assessment considerations, larger valuations and recession worries. However regardless of these headwinds, well being companies offers “remained resilient” for the 12 months ending Could 15, in line with a PwC report printed Wednesday.
“We proceed to stay optimistic concerning the well being companies offers outlook for the rest of 2023, with company and personal fairness (PE) gamers alike holding massive ranges of capital that must be deployed, and sector dynamics driving a necessity for well being companies firms to adapt and reinvent themselves,” the report acknowledged.
Within the 12 months main as much as Could 15, well being companies deal volumes decreased simply 4% from the 12 months prior. Deal volumes this 12 months had been nonetheless almost twice as excessive as from 2018 to 2020, nonetheless.
With regards to deal values, there was a 15% lower in 2023 in comparison with final 12 months. This represents a “continuation of the pattern seen in 2022 the place a higher portion of deal quantity is being pushed by smaller worth roll-up and add-on transactions versus transformational platform offers and megadeals,” the report stated.
Nonetheless, greater than half of the deal worth within the final 12 months was pushed by megadeals, that are offers with a valuation of not less than $5 billion. That is much like 2021 and 2022.
There have been six megadeals within the 12 months ending Could 15, in line with PwC. These embody:
- CVS Well being’s $10.6 billion acquisition of major care firm Oak Avenue Well being
- Walgreens-backed VillageMD’s $8.9 billion acquisition of Summit Well being-CityMD, an organization that provides major, specialty and pressing care.
- The $7.1 billion acquisition of contract analysis group Syneos Well being by a non-public funding consortium, which included Elliott Funding Administration, Affected person Sq. Capital and Veritas Capital
- CVS Well being’s $8 billion acquisition of house care firm Signify Well being
- The $7.4 billion acquisition of Mediclinic Worldwide by a consortium of buyers
- Chubb’s $5.4 billion acquisition of Cigna’s life, accident and supplemental advantages enterprise
When trying forward, “latest uncertainty presents headwinds, but additionally yields potential alternatives,” the report stated.
These uncertainties embody Medicaid redeterminations — the method for figuring out enrollees’ eligibility for Medicaid — which resumed in April after a pause through the Covid-19 public well being emergency. However this may very well be a possibility for extra progress within the change and employer-sponsored plans.
Antitrust opposition to offers might imply extra medium-sized gamers may very well be in higher positions for offers as effectively.
There can even be “phased in” danger adjustment-based reimbursement declines over the following three years for Medicare Benefit, as an alternative of the declines occurring suddenly, in line with PwC.
“Whereas partially assuaging the rapid fears round MA plans, the continued concentrate on danger adjustment normalization presents alternatives for managed care, profit administration, and level options packages to distinguish themselves in driving decrease prices of care, and in flip, quantity share within the broader payer and associated help companies section,” the report stated.
Picture: metamorworks, Getty Photos
