Please note that assistive links (commonly known as "skip to links") are used throughout this site. These links are not well-supported by some mobile devices. If you are encountering difficulty using these links, please navigate around these links, or access the site on a desktop browser.
Skip to the primary content of this page Skip to the footer of this page

Q1 Market Update & 2020 Year in Review: Strong Outlook for the Year Ahead

Skip to the end of the Expertise Menu

Q1 Market Update & 2020 Year in Review: Strong Outlook for the Year Ahead

In 2020, the healthcare industry experienced many ups and downs as the pandemic struck the nation early on. M&A activity briefly paused during the spring months before quickly returning to historic averages by mid summer. The first quarter of 2021 continued the uptick in M&A activity seen in the fourth quarter of 2020. The healthcare sector in particular has responded favorably as the Biden administration has doubled down on the pandemic response and economic recovery, vaccine distributions have been accelerated, new therapeutics are coming to market, and providers alongside health technology companies are innovating to meet evolving patient demands.

There have been several sectors that have seen increased activity driven by the continued effects of the pandemic during the early months of 2021. There has been a significant shift in the core dynamics of the market with a stronger push for telehealth and outpatient services, as patients have made convenience and accessibility a top priority. Additionally, behavioral health consolidation has increased in order to meet the needs of a growing number of patients suffering from depression, anxiety, and substance use disorder enhanced by the pandemic. Diagnostics deal volume has also increased as companies have invested into COVID-19 testing, allowing them to expand on their service offerings. Additionally, telehealth utilization has been on the rise with the strong push for digital health and at-home services. In the post-acute healthcare setting, several key transaction trends emerged including physician group partnerships and joint venture agreements between hospitals and home care/hospice providers. This has created an environment ripe for increased M&A activity, especially amongst strategic acquirers looking to expand their geographic presence. Several other sectors have seen increased deal activity, including life sciences, pharmaceuticals, biopharma, and medical device companies, which have all been at the heart of M&A activity this past quarter.

In the coming months, Provident expects healthcare M&A activity to continue at an elevated pace. Pent up demand for deal making based on depressed volumes in the first half of 2020 will continue to drive investors to put money to work in the healthcare space. Provident expects that the accelerated implementation of healthcare apps, telemedicine and web-based resources will continue to drive M&A activity across the health technology sector, with private equity firms and strategic acquirers spearheading these initiatives. These firms will also need to pay closer attention to improving access to care, reducing costs, and expanding data platform capabilities when choosing the ideal investment or strategic partner. In summary, 2021 is predicted to be another record setting year in healthcare M&A as persistent drivers of consolidation are set to play out in a post-pandemic period of economic recovery.

Provident actively tracks and analyzes M&A activity, key developments, and emerging trends among healthcare services verticals. We publish these findings in our quarterly newsletters, which can be accessed here. Provident also invites the readers of our newsletters to view our new Provident Perspectives publications, which focuses on current trends our professionals have identified in a variety of healthcare verticals. You can read some of our new posts here.

To print and download the full Q1 2021 Market Update report, please click below…

[holo_button icon=”” link=”/wp-content/uploads/2021/04/Q1-2021-Newsletters-Package-vF.pdf” color=”#003561″ target=”blank”]PRINT/DOWNLOAD[/holo_button]