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Q1 Market Update: Strong Outlook for Healthcare Services M&A Market Persists

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Q1 Market Update: Strong Outlook for Healthcare Services M&A Market Persists

Healthcare services consolidation in Q1 2022 briefly slowed relative to the record year of activity in 2021. Although deal count decreased, investor interest has not waned. Value-based care models and tech-enabled services came to the forefront as leading value drivers of early 2022 transactions. Increased adoption of value-based reimbursement models spurred acquisition activity for both providers and payors to participate in broader care coordination. Tech-enabled services bolster broader capabilities and, as healthcare notoriously lags in technological advancement, leaves significant opportunity for investment and exponential growth.

Transaction activity in Q1 2022 was landmarked with several notable transactions including eight sponsor exits and over fifteen new private equity platforms.  Sectors such as physician services, healthcare IT, behavioral health, and home health realized premium valuations due to prevailing healthcare tailwinds. Athenahealth’s sale to Bain Capital and Hellman & Friedman, as well as Physician Partners’ sale to Kinderhook Industries highlight these trends. The threat of rising interest rates created more uncertainty in the market but ultimately did not significantly impact investor appetite or private credit markets within healthcare services. Due to high levels of dry powder and corporate cash and residual build-up of investor appetite from the pandemic, EBITDA multiples remain competitive in both private equity and strategic transactions.

As healthcare providers continue to rebound successfully from the pandemic, investors are regaining confidence in the market and certainty of its long-term outlook. Provident anticipates another strong year in healthcare services M&A and expects additional sizeable transactions complemented by subsequent add-on activity throughout the remainder of 2022.


To print and download the full Q1 2022 Market Update report, please click below…

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