The overall number of deals in the healthcare sector rose more than 7% in the second quarter compared to earlier this year, according to a new report from PwC.
However, there were no megadeals, and total deal volume in the second quarter was $15 billion, down about 40% compared to the same quarter of 2018 and down about 51% compared to the first quarter.
There were about 281 deals, which is down 7.3% compared to the same quarter last year. It is the eighth quarter in a row with more than 250 deals.
Key drivers of deal activity include tax reform impact, inpatient volume pressure, cross-industry deals and vertical integration and the evolution of technology.
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"While the ACA's future, plus macroeconomic factors such as interest rates and tariffs, continue to dominate headlines, we think that industry fundamentals remain favorable to deals," PwC's U.S. Health Services Deals Leader Nick Donkar said in a statement. "Interest in managing high costs and population health, while engaging patients and addressing social determinants of health, remain top-of-mind issues."
Among the most notable transactions for the second quarter:
- The largest transaction last quarter was UnitedHealth Group's $3.2 billion acquisition of payment-processing firm Equian from New Mountain Capital. The addition of Equian could help Optum branch out beyond healthcare, as Equian also serves other types of insurance, officials said.
- The top private equity deals included West Street Capital Partners CII's $2.7 billion deal to acquire Capital Vision Services LP. Amulet Capital Partners LP acquired three gastroenterology practices for $100 million.
- West Street Capital Partners VII announced plans to acquire optometry group Capital Vision Services for $2.7 billion.
- U.S. REIT announced plans to the buy Quebec-based portfolio Ventas in partnership with current operator Le Groupe Maurice, in a deal valued at $1.8 billion.
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When past megadeals, or deals worth more than $5 billion, are excluded from the data, the second quarter's deal value was more than 10% higher than the average of the preceding seven quarters. The most recent megadeal was Centene Corp's $17.4 billion acquisition of Wellcare .
Long-term care saw the most quarterly activity with 114 total deals. There were no deal values disclosed in the behavioral health care sector. Labs, MRI and dialysis grew the most in terms of overall deal value, seeing a spike of 114%.
There have been no initial public offerings in the health services sector since 2016.