Healthcare Acquisitions Drop in 2022
The healthcare industry’s deal volume fell by 30% in 2022 to 2,878 transactions, and aggregate deal value declined 56% to $202 billion, according to a report by S&P Global Market Intelligence. The decline is partly attributable to an imbalance in expectations as healthcare executives have been hesitant to accept lower valuations amid significant market declines. In contrast, acquirers have seen record-high 2021 valuations as ceilings, not a baseline to begin negotiation.1 2
Private Equity Firms Continue Roll-up of Healthcare Companies
Private equity firms have increased healthcare services acquisitions over the last couple of years as they continue rolling-up companies in the sector, according to data from Pitchbook. PE firms have completed over 725 healthcare services acquisitions by the third quarter, 77% of which are add-ons. Volume surpassed 2020 levels, although falling short of 2021’s high. With looming recession concerns, PE firms are expected to remain acquisitive as healthcare services are typically considered more resilient.3
Hospitals Continue to Face Inflation and Tight Labor Markets in 2023
Hospitals faced a challenging year as inflation and labor shortages tightened margins, a trend expected to continue into 2023, according to a report from Deloitte. Affordability issues for patients and continuing supply-chain constraints will likely hamper the industry’s outlook. Payers, who have not yet fully felt the impact of inflation, are also expected to face rising prices as fixed-rate contracts are renegotiated over the coming years.4
J&J Acquire Heart-Device Maker Abiomed for $16.6 Billion
In December, Johnson & Johnson (J&J) completed one of the year’s largest acquisitions with their purchase of heart-device maker Abiomed Inc. for $16.6 billion. The transaction was an all-cash offer at $380 per share, in addition to shareholders receiving a non-tradeable contingent value-right, worth up to $35 per share if certain commercial and clinical milestones are met. The company will operate as a standalone business under J&J’s MedTech segment.5
Largest Transactions Closed
- Abiomed, Inc.
- Johnson & Johnson
- Change Healthcare Inc.
- Optum, Inc.
- Biohaven Pharmaceutical Holding Company Ltd.
- Pfizer Inc.
- Global Blood Therapeutics, Inc.
- Pfizer Inc.
- ChemoCentryx, Inc.
- Amgen Inc.
- Covetrus, Inc.
- Clayton, Dubilier & Rice, LLC; TPG Capital, L.P.; TPG Global, LLC
- Biosimilars Portfolio and Related Commercial and Operational Capabilities of Viatris Inc.
- Biocon Biologics Limited
- Hanger, Inc.
- Patient Square Capital, LP
- Shields Specialty Pharmacy Holdings, LLC
- Walgreens Boots Alliance, Inc.
- Magellan Rx Management, LLC
- Prime Therapeutics, LLC
Other Financial Buyer Transactions Closed
- Certara, Inc.
- Arsenal Capital Partners
- Etain, LLC
- RIV Capital Inc.
- Applied Genetic Technologies Corporation
- Syncona Limited; Syncona Investment Management Limited
Other Strategic Buyer Transactions Closed
- Aerie Pharmaceuticals, Inc.
- Alcon Research, Ltd.
- Forma Therapeutics Holdings, Inc.
- Novo Nordisk A/S
- Rx Savings, LLC
- McKesson Corporation
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes