Article
Healthcare M&A update: H2 2021
Mar 03, 2022 · Authored by
2021 healthcare M&A on the rise
Continuous employee turnover indicates long-term staffing concerns
U.S. hospitals and healthcare facilities alike have witnessed employees resign for a variety of reasons, creating a surge in demand for healthcare workers coupled with an increase in average wage and salary. This confluence of COVID-driven market conditions is responsible for the significant growth in the healthcare staffing space over the last 12 months, with long-term implications anticipated for 2022 and beyond.
M&A overview
There were 923 reported M&A transactions that closed during the second half of 2021, up from the 872 transactions during H2 2020. Reported closed transactions in H2 2021 increased 25% compared to 185 closed deals for the same period in 2020.
The aggregate deal value of the closed M&A transactions with reported values was $213.1 billion during H2 2021. This was a significant increase from the total reported deal value of $110.6 billion in H1 2021, driven by an increase in both average deal size and deal volumes. Of note, a greater number of deals reported transaction values during the period.
One particular acquisition, in July 2021, accounted for a substantial portion of the increase: AstraZeneca PLC’s (LSE:AZN) $43.4 billion acquisition of Alexion Pharmaceuticals, Inc.
Quarterly U.S. healthcare M&A activity for transactions closed.
Aggregate transaction value and number of deals.
Source: S&P Capital IQ
32 revenue multiples reported in both Q3 2021 and Q4 2021
The escalating need for healthcare workers
U.S. hospitals, which are facing growing challenges in retaining employees, have been forced to increase salaries and offer signing bonuses to attract nursing applicants. In a study backed by the American Hospital Association (AHA), hospital labor expenses have increased 12% through November 2021 as compared to pre-pandemic levels.
The Biden administration announced in November 2021 it will invest $1.5 billion toward national health providers to address workforce shortages and healthcare disparities across the United States. The industry is projected to face a shortage of almost 60,000 primary care doctors, dentists and psychiatrists over the next 10 years.
U.S. healthcare employees migrated from their employers primarily due to:
- Burnout from long and intense working hours brought on by COVID
- Lucrative employment alternatives from competing providers and staffing agencies.
AMN Healthcare Services, Inc. anticipates demand for nurses and clinical workers to remain above pre-pandemic levels. Hospitals and healthcare providers will likely remain dependent on healthcare staffing agencies, as recent trends in employee migration and flexible working conditions have become the new norm.
Get the pulse of the industry
Download your free copy of the Healthcare M&A update H2 2021 for more information on:
- Financial performance of specific healthcare sectors
- Growing demand for labor
- Rise in travel nursing
- Potential pricing regulation
- Deals made in 2021
Mergers and acquisitions reports
See more M&A reports
Baker Tilly Capital professionals develop mergers and acquisitions (M&A) updates in different industries and regions. These reports provide an overview of M&A activity, including:
- M&A activity by market segment
- Transaction data for middle market M&A activity
- Buyers and targets by location
- Notable transactions closed during the period of the report
To view more on this topic or learn how Baker Tilly specialists can help, contact our team.