Healthcare M&A update: H2 2021

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.