Healthcare M&A update: H1 2024

H1 2024 healthcare providers and services public market update

Healthcare (HC) public market overview

Healthcare providers and healthcare services companies had a sluggish start to 2024 as many of the headwinds and questions that the industry faced at the end of 2023 carried forward into H1 2024. Companies have implemented initiatives and strategies to address these headwinds.

Inflation has impacted nearly every sector of the economy and healthcare has been no exception. Healthcare providers and healthcare services companies continue to navigate difficult labor markets which see compensation negotiating power skewed toward physicians and other healthcare professionals. As the need for labor is only expected to increase in the years ahead, operators will need to be creative in finding ways to leverage outsourcing, managed services partnerships and automation to ensure they are properly staffed.

The increased adoption of technology within the healthcare ecosystem was highlighted in the H2 2023 report and remains a key area of strategic growth into 2024. Generative artificial intelligence (AI) has the possibility to drive productivity gains, reduce administrative costs and improve patient outcomes through more efficient data analysis and organization. While this presents a significant opportunity for operators, the benefits likely will not come overnight as the sector is characterized by heavy regulation. AI’s use of and exposure to patient data remains a key area of concern for both operators and regulators.

Consolidation remains a key theme within the industry as companies look to reshape their business and pursue acquisitions that foster strategic alignment. Changing market dynamics such as the rise in alternative care sites, increased use cases for AI and the overall increased usage of technology in the space present opportunities for well-capitalized buyers to acquire strong operators; however, regulatory approval continues to be a hurdle for closing larger deals.