Announced Hospital M&A Activity Report 2018 Q3
Q3 2018 recorded 25 announced transactions, which is the second lowest quarterly total since the beginning of 2017, although the first three quarters annualized volume is similar to 2017’s full year total.
Target Beds: Average 951; Median 138
Target Rev. ($’s MM): Average $976; Median $139
Not included in the above are pending transactions at the letter of intent stage amongst not-for-profit health systems entered into during the quarter:
- SSM hospitals in Jefferson City, MO and Mexico, MO to the University of Missouri Health Care
- SSM hospital in Maryville, MO to Mosaic Life Care
- Ransom Memorial Hospital in Ottawa, KS with AdventHealth
- Braxton County Memorial Hospital in Gassaway, WV with the West Virginia University Health System
- Rochester Regional Health in Rochester, NY with St. Lawrence Health Syste
- Lakeland Health in St. Joseph, MI with Spectrum Health
Q3 2018 recorded 25 announced transactions, increasing from the preceding quarter which had 22 transactions, but trailing Q3 2017 which saw 26 announced transactions. Also, this is the second consecutive quarter that recorded transactions below the rolling quarterly average for the trailing twelve months. However, Q3 activity does not represent a precipitous decline. Annualized volume for the first three quarters equals approximately 114 transactions, just behind 2017’s total. In summary, volume is steady although not increasing.
Five large transactions in the quarter (Bon Secours-Mercy Health, Einstein-Jefferson, M Health-Fairview Health Services, Rutgers-RWJBarnabas and LifePoint-RCCH) had target systems with revenue in excess of $1B, the highest count of such transactions that Ponder has recorded in a quarter. Moreover, the average revenue and bed-count per transaction for the quarter was elevated to a level never seen since Ponder first started this tracker in 2009.
LifePoint Health’s anticipated acquisition by RCCH Healthcare Partners and Apollo Global Management is the largest transaction amongst for-profit health systems in the past 10 years, exceeding both the revenue bases of HMA when acquired by CHS and Vanguard when acquired by Tenet
CHS, QHC, and Tenet each announced one divestiture during Q3
For the second consecutive quarter, no publicly-traded for-profit health system announced an acquisition of a not-for-profit health system, although LifePoint briefly explored an acquisition of a community hospital in Michigan’s Upper Peninsula
JVs or JOAs were involved in five different transactions or 20% of activity in the quarter
Academic medical centers were participants in 28% of announced transactions in the quarter, which is the most quarterly activity since Q4 2017 saw 31% of transactions involve AMCs
Despite the number of mega deals in the quarter, median revenue and bed count per transaction were relatively unchanged.