Healthcare M&A doubles in first half of 2018

12 Jul 2018 | SOURCE: Healthcare Dive

Dive Brief:

  • The value healthcare sector deals increased to $315.74 billion, compared with $154.87 billion in the same period last year during the first half of the year, the New York Times reports, citing data compiled by Thomson Reuters. More than $2.5 trillion in total deals were cut in the first half of 2018.
  • Some 36 deals — including a number in healthcare — are valued at $10 billion or more. Combined, those 36 deals make up about 38% of M&A activity for a total of $950 billion in deals — up from $243 billion in 2017.
  • The healthcare sector ranks third behind energy and media entertainment in terms of total deal volume.

Dive Insight:

The healthcare industry has been in the throes of a merger frenzy for more than a year now, fueled by a myriad of factors, including depressed patient admissions, lower reimbursements and pressure to improve outcomes while reducing costs.

After several horizontal mergers were nixed, the recent activity has involved vertical integration.

The big megadeals include CVS Health’s $69 billion grab for Aetna and Cigna’s proposed $67 billion acquisition of Express Scripts. The CVS-Aetna bid won shareholder approval in March.

federal court ruling clearing the way for the proposed union of AT&T and Time Warner is likely to embolden more industry giants to seek big deals and possibly make way for deals like CVS-Aetna and Cigna-Express Scripts to pass regulatory muster.

Other recent tie-ups include Sanford Health and Good Samaritan Society, which would combine two of Sioux Falls, South Dakota’s largest employers. The merger would blend Good Samaritan’s senior care services into Sanford’s 44 hospital system, which spans nine states.

Catholic health systems Bon Secours and Mercy Health have also announced plans to merge. If approved, the deal would create the nation’s fifth largest Catholic system with 43 hospitals across seven states.

And last week, Amazon announced a definitive agreement to acquire online pharmacy PillPack, putting it in direct competition with CVS, which a week earlier said it was expanding its prescription drug delivery platformnationwide.

All the while, hiring in healthcare continues to rise. The sector added 25,200 jobs last month, with hospitals contributing 10,600 to the industry.

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