The top 10 healthcare M&A targets in 2022

concept of chess board with letters M&A
Industry analysts predict a possible record year for healthcare deals in 2021, with many deals set to close by the end of the year in light of the uncertainty around tax rate changes and high valuations in the current market. (AndreyPopov/GettyImages)

Early in 2020, there was a massive pandemic-induced nosedive in merger and acquisitions deals in healthcare. But the industry rapidly rebounded, carrying the momentum from the latter half of 2020—which saw a flurry of deals—into 2021, which saw an accelerated pace of activity.

Looking at the first half of 2021, there were 872 reported healthcare M&A transactions that closed, up 15% from the 738 transactions during H2 2020, Baker Tilly reported.

"It doesn’t take a rocket scientist to see that we're in a healthy climate for M&A," Don McDaniel, CEO of Canton & Company and a healthcare economist, entrepreneur and advisory services leader. "I think this is, by most accounts, a benchmark year in terms of overall M&A. It doesn't matter which sector you focus on; I think we’re going to continue to see that, we won’t see a lessening of the appetite." 

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

There are a few factors driving a frenzy of M&A activity, including corporations looking for scale and growth as well as private equity firms and SPACs looking to invest capital. Within the hospital sector, there were fewer consolidations but much larger deals in 2021, and that's a trend that is expected to continue.

In particular, the shift to digital and virtual care during the COVID-19 pandemic has meant that hospital operators are grappling with rapid changes that are poised to fundamentally change the industry.

"I think there is a real reckoning that the future could be fundamentally different than the past, accelerated by COVID-19," McDaniel said. "With hospital revenues, there is a higher outpatient percentage than inpatient, and that is going to accelerate. Hospitals will need to figure out how to play to consumers in this new world."

RELATED: Hospitals saw more megamergers in the last quarter. Kaufman Hall explains why

Nathan Ray, who leads healthcare M&A for West Monroe, sees many healthcare sectors as ripe for increased deal activity, including the employer health benefits market and care navigation. 

And of course, the industry needs to keep an eye on retail behemoths Amazon and Walmart as they continue to make moves to expand their ambitions in healthcare, industry analysts say.

In this report, we’ll take you through some key targets that could be in the crosshairs for M&A deals, such as fast-growing digital pharmacy Alto Pharmacy, which was rumored to soon go public through a SPAC deal, and health systems Ascension and AdventHealth, which are now up for grabs after unwinding their joint venture.

One company removed from this list was Athenahealth, as it's now off the M&A market. Just last week, private equity firms Bain Capital and Hellman & Friedman picked up the health tech company for a hefty $17 billion.

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

The top 10 healthcare M&A targets in 2022