M&A Activity Report Q2 2019

12 Jul


M&A Activity Report Q2 2019

20 Change of Control Transactions

MA Q2 2019 Change of Control Transactions

Target Beds: Average 181; Median 96

Target Rev. ($’s MM): Average $173; Median $78

Total Number of Announced Transactions 2013 – Q2 2019

Total Transactions 2013-Q2 2019

Number of Announced Hospital Change of Control Transactions 2009 – Q2 2019

Number Announced Hospital 2009-Q2 2019

Q2 2019 recorded 20 announced transactions, nearly returning to the 12-month rolling quarterly average following the preceding quarter’s depressed volume. The first six months of the year totaled 35 transactions, down 45% from the average of the total from the first six months of the prior two years.

No publicly-traded hospital operator announced an acquisition in the quarter, marking Q2 2019 as only the fifth quarter since 2009 to not have a publicly-traded operator announce an acquisition

CHS continues to divest assets, announcing the divestiture of four hospitals across three transactions in the quarter.

        • QHC has now also announced divestitures in consecutive quarters

Other News

Other creative pairings of health systems short of change of control:

        • Henry Ford Health System, Wayne State University LOI to merge physician organizations
        • Firelands Regional Medical Center closed its surgery center in May to reopen by October in conjunction with Fisher-Titus Medical Center and NOMS Healthcare
        • Sparrow Health System launched a pediatric joint venture with Michigan Medicine in May, with an expected second-phase of the venture to include a minority investment in Sparrow’s Physicians Health Plan by Michigan Medicine before year-end

Health systems are increasingly looking at more diverse options for M&A, evidenced in the below transactions announced in Q2 2019 between health systems and payors:

        • WVU Medicine and Health Plan merger
        • Henry Ford Health System’s Health Alliance Plan acquisition of 9,000-member Trusted HP
        • WellSpan Health System announced a long-term partnership with Capital BlueCross

Several mergers or mergers in preliminary discussions called off:

        • Partners and Care New England end merger discussions after several years of negotiations and an executed definitive agreement in 2018; Rhode Island Governor Gina Raimondo asked Care New England to work out an agreement with Lifespan Health System and the medical school at Brown University
        • University of Louisville ends discussions to buy KentuckyOne assets
        • Palos Health ends merger talks with Loyola in May following LOI in January

Florida canceling CON requirements as of July 1 for certain services as part of a two-phase plan that will eliminate CONs for specialty hospitals within two years, expected to result in an increased capacity to deliver services in the state.

Several systems are in affiliation discussions or the preliminary stages of a potential merger:

        • Sanford Health and UnityPoint announced an LOI to create a $12B health system
        • Marshfield Clinic Health System and Gundersen Health System are in discussions to create a health system spanning three states
        • Dartmouth-Hitchock and GraniteOne announced an LOI to expand access to services in New Hampshire to meet growing demand in a transaction expected to be completed in 2020
        • South Shore Health System (South Weymouth, MA) announced discussions with Wellforce, the parent of Tufts Medical Center and Lowell General Hospital
        • Jefferson Health System announced an LOI to acquire Fox Chase Cancer Center from Temple University Health System
        • UPMC expanding into Maryland and announced an LOI to acquire Western Maryland Health System (Cumberland, MD)
        • Peninsula Regional Medical Center LOI to acquire Nanticoke Health Services (Seaford, DE)
        • Christiana Care Health System announced an LOI to acquire Union Hospital of Cecil County (Elkton, MD)
        • Swedish Covenant Health announced an LOI with NorthShore University HealthSystem in Chicago
        • AdventHealth Hendersonville (NC) announced an LOI with Wake Forest Baptist Health, expanding upon an existing partnership between the organizations by offering a minority governance stake in the hospital for increased specialty staffing
        • WVU Health System has received a CON to acquire critical access hospital Jackson General Hospital (Ripley, WV), following a management agreement that began in September 2018
        • LifeBridge Health (Baltimore, MD) announced an LOI to acquire crosstown Bon Secours Hospital
        • Anne Arundel Medical Center announced an LOI to acquire Doctor’s Community Health (Lanham, MD)
        • Northeast Georgia Health System announced an LOI to acquire Habersham Medical Center (Habersham, GA)
        • St. Lawrence Health System (Potsdam, NY) announced management agreement of Massena Memorial Hospital, and is in on-going discussions to merge with Rochester Regional Health System since the September 2018 LOI