Health care mergers and acquisitions ‘regain momentum’ in 2022

A total of 17 health care transactions – including four “mega mergers” – made the end of 2022 one of the most active quarters since the COVID-19 pandemic began in the first part of 2020.

The final three months of 2022 marked the third consecutive quarter of the year with in which the average size of the smaller party exceeded $800 million across all transactions. The year had a historic large size for smaller parties involved in the deals – $852 million, topping the 2021 record size of $619 million.

The figures were part of the research report “2022 M&A in Review: Regaining Momentum,” by analyst Kaufman, Hall & Associates LLC.

The year had a total of 53 announced transactions, with 66% of those involving nonprofit organizations acquiring other not-for-profits, followed by nonprofits acquiring for-profits (19%), for-profits acquiring for-profits (9%), and for-profits acquiring not-for-profits (6%).

Among the smaller parties involved, 15% had revenues of $1 billion or more. Another 42% had revenues $100 million to $500 million; 27% had revenues less than $100 million; and 15% had revenues $500 million to $1 billion, according to the report.

The total number of transactions increased in 2022, below pre-pandemic activity levels, but surpassing 2017’s record of $44 billion in total transacted revenues for the year.

Based on the 2022 action, the Kaufman Hall report said momentum for mergers and acquisitions likely will continue this year based on three factors:

• The need to transform health care. Firm Managing Director and Chairman Kenneth Kaufman has said “this is a transformative period” when hospitals must reinvent themselves financially and clinically.
• Severe financial pressures, with 2022 “extremely challenging” for many hospitals and health systems.
• Moving past the COVID-19 pandemic, with the disease still present, but not in the worst strains.