The top 10 healthcare M&A deals of 2021

M&A concept - M&A word made with wooden blocks on laptop
M&A in the healthcare industry has been more robust than anticipated, with over 3,000 total transactions expected by year-end. That represents an increase of more than 25% as compared to 2020, according to law firm Epstein Becker & Green. (SB/GettyImages)

Healthcare merger and acquisition activity hit a new stride in 2021, fueled by investor interest in digital health and virtual care as well as the SPAC craze that's pumping a lot of cash into the market.

M&A in the healthcare industry has been more robust than anticipated, with over 3,000 total transactions expected by year-end. That represents an increase of more than 25% as compared to 2020, according to law firm Epstein Becker & Green.

The law firm and health industry financial/investment analysts at KPMG and FocalPoint Partners predict a record year for healthcare deals in 2021, with many deals set to close by the end of the year amid uncertainty around tax rate changes and high valuations in the current market. 

Announced and closed deals through the first three quarters of 2021 already exceed the total deal volume for all of 2020. At the current pace, deal volume for 2021 will easily exceed 2,750 and may traverse the 3,000 deal mark, according to Epstein Becker Green, KPMG and FocalPoint Partners. 

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On the provider front, larger hospitals and health systems are seeking new partners to recover from the devastating impact of the COVID-19 pandemic. 

"There are fewer hospital consolidations but much larger deals," Don McDaniel, CEO of Canton & Company and a healthcare economist, entrepreneur and advisory services leader, told Fierce Healthcare.

RELATED: Surge in healthcare M&A activity continued in August, with life sciences, pharma companies leading the pack 

This year saw several megamergers among health systems, although many of these deals will likely not close until 2022.

In the third quarter, Intermountain Healthcare inked a deal to merge with SCL Health, a Catholic health system based in Broomfield, Colorado, to form an $11 billion health system. That deal is expected to close early next year.

Healthcare IT and software continue to be the top sectors in M&A activity, having exceeded 320 deals and expected to end the year with around 450 deals. 

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One of the most closely-watched deals in the market is UnitedHealth Group's $13 billion bid for tech company Change Healthcare. The deal, which was first announced in January, has been a controversial one, with critics such as the American Hospital Association arguing that it could lead to significant consolidation in healthcare data. The Department of Justice has been taking a close look into the potential ramifications of the acquisition. It's now slated to close in early 2022.

Other notable deals that have yet to close include Centene Corp.'s $2.2 billion purchase of Magellan Health and the recently proposed deal by private equity firms Bain Capital and Hellman & Friedman to pick up Athenhealth for a hefty $17 billion.

Other deals that made waves this year that didn't make the top 10 list were Accolade's $400 million acquisition of PlushCare, a virtual primary care and mental health treatment company, and Cigna's takeover of urgent care telehealth provider MDLive for an undisclosed price.

In this report, we’ll take you through the biggest deals in 2021 with disclosed values that have either already closed or are scheduled to close by the end of the year. The list includes the deal by a consortium of private equity firms to pick up medical supply company Medline for a hefty $30 billion and Humana's $5.7 billion bet to become the country's largest provider of home healthcare services.

As always, we hope you enjoy this report and invite you to reach out with any questions or comments.