Fourth Quarter 2023 Healthcare Overview Provided by SOLIC Capital Advisors
PMG Sector continues to face significant distress
Healthcare M&A activity declined in Q4 2023, dropping to approximately 500 deals, 4% lower than the prior quarter and 13% lower than Q4 2022 as heightened interest rates and mounting labor costs continue to negatively impact broader investor demand coupled with trends in the sub-sectors detailed herein
The M&A slowdown was pervasive across many healthcare verticals with Physician Medical Groups (PMG) experiencing some of the steepest declines of the quarter with approximately 100 deals, an almost 20% decrease compared to the previous quarter
M&A in the Hospital sector was down 18% in Q4 as compared to Q3 with most transactions driven by acquisitions by large health systems
However, activity in the Home Health & Hospice and Behavioral Health Care sectors remained relatively stable compared to Q3 as more and more patients seek alternatives to facility based care, turning toward home health services
Despite the slowdown in M&A transaction deal count, transaction dollar volume in the quarter totaled $78.3 billion, an increase of 48% compared with the $40.5 billion in Q3
Thomas Bravo’s $1.8 billion take-private buyout of NextGen Healthcare, a California-based provider of healthcare solutions for ambulatory and specialty practices, was one of the largest transactions of the quarter
With just over 100 transactions, Primary Medical Group ("PMG") M&A activity was 18% lower in Q4 2023 than the prior quarter with growth dynamics varying significantly by sector
PMGs experienced a level of sector rotation with traditional high M&A activity areas such as ophthalmology and gastroenterology declining in M&A transactions and emerging sectors such as cardiology, ENT, and Urology accelerating
The dental sector accounted for the most deals in the PMG sector in Q4, representing almost 40% of M&A transactions in the sector
Notable transactions of Q4 include:
MB2 Dental Partners (sponsored by Charlesbank Capital Partners) acquired 15 practices in Q4, growing its dental network to more than 1,500 physicians and 650 practices
Cardiovascular Associates of America (sponsored by Webster Equity) acquired Atlanta Heart Specialists, bringing its location count to over 140 across eight states
SENTA Partners (sponsored by Shore Capital) acquired Northeast Georgia ENT growing its provider base to 195