Q2 2021 M&A Activity

15 Jul


Q2 2021 M&A Activity

Moderate levels of announced transactions continue; new baseline established, or poised for breakout to higher levels?

The first two quarters of 2021 recorded announced transactions volume that were in line with the average quarterly volume for the past two years.

Announced Hospital Change of Control Transactions Q2

2021 Q2 Transactions

Yearly Transactions

Activity remained moderate in Q2 2021 with 20 announced transactions, following the 21 announced transactions in Q1. Across 2019 and 2020, the average announced transaction volume was 20.5 per quarter. The 41 transactions announced in the first two quarters of 2021 exceeded the total from the first half of both 2019 and 2020 which each recorded 37 announced transactions. However, this falls well below the average for the corresponding periods between 2015 and 2018, which averaged 59 announced transactions for the first half of the year.

Year-Over-Year Q2 Announced Transactions

With the pandemic largely subsiding in most parts of the country, Q2 2021 benefited from the re-opening of regular lines of communication between organizations with less focus on managing the crisis of the pandemic. As such, 50% of the hospitals that announced transactions in the quarter were independent hospitals compared to less than 30% in Q2 2020. Comparing the size profile of independent hospitals from each period, Q2 2021 more than tripled the median revenue compared to Q2 2020 ($83.8 million versus $25.2 million).

For-profit divestitures represented 30% of Q2 2021 volume compared to 41% in Q2 2020, which was the highest quarterly concentration of for-profit divestitures that Ponder has recorded since we began our database in 2009. CHS and HCA each announced divestitures in both periods, with one and two, respectively, in Q2 2021 compared to five and one, respectively, in Q2 2020. At the same time, for-profit acquisitions of not-for-profit entities remained very low for the second straight quarter. Only one such transaction was announced, and it occurred on the last day of the quarter with LifePoint’s proposed joint venture with Yuma Regional Medical Center.

Non-Acute Partnership Activity

Several significant acquisitions were announced by health systems expanding their presence in non-acute or post-acute sectors. Following rumors of discussions with Ardent Health Services earlier in the year, LifePoint announced the acquisition of Kindred Healthcare in June. The acquisition will combine LifePoint’s network of community-based hospitals and providers with Kindred’s comprehensive long-term acute care, rehabilitation, and behavioral health services.

Also in June, Bronson Healthcare announced the development of a 96-bed behavioral health facility in a joint venture with Acadia Healthcare, which marks the third consecutive quarter that Acadia has announced a joint venture partnership with a not-for-profit partner, following the partnerships announced with Geisinger in Q1 2021 and Henry Ford Health System in Q4 2020.

Academic Affiliation Activity

In addition to the Renown Health master affiliation with the UNR School of Medicine that was recorded in this quarter, several other academic institutions and physician practice organizations shored up their existing partnerships with affiliated health systems. In June, the University of Oklahoma College of Medicine faculty practice, University Hospitals Authority and Trust (parent organization of OU Medicine) announced a definitive agreement to create the state’s first integrated academic health system. Also in June, Eastern Carolina University and Vidant Health announced a full clinical integration and rebranding.

Mega-mergers Activity

One mega-merger (target hospitals with greater than $1 billion in revenue) was announced in the recent quarter. Mentioned above, Renown Health, a five-hospital system in and around Reno, NV, announced a definitive agreement with University of Nevada Reno School of Medicine. Nevada state lawmakers passed enabling legislation for this affiliation effective July 1, 2021.

Other Affiliation Activity in Q2


  • Beaumont Health System and Spectrum Health announced an LOI towards creating a statewide health system in Michigan
  • Rush Health Systems announced a shared mission agreement to join Ochsner Health which is expected to be finalized in mid-2022
  • Select Medical announced the acquisition of Acuity Healthcare including four LTACs operated in joint ventures with NJ and WV health systems (Virtua Health, AtlantiCare, Mon Health, and physician partners)
  • Woodlake Specialty Hospital (NJ) announced an application to acquire and reopen Westlake Hospital (Chicago, IL) by December 2022
  • The Muskogee Nation voted to purchase the former Cancer Treatment Centers of America – Tulsa hospital and convert the hospital into the tribe’s largest healthcare facility
  • Cone Health and Sentara Healthcare ended discussions towards merger following an LOI in August 2020


  • Following an LOI in January 2021, CommonSpirit Health and Essentia Health ended negotiations for the acquisition of CommonSpirit’s Minnesota and North Dakota facilities
  • University Health Care System (Augusta, GA) announced an LOI to join Piedmont Healthcare
  • Trinity Health’s St. Francis Medical Center (Trenton, NJ) announced an LOI to join Capital Health
  • City leaders in Riverton, WY, announced the creation of a new medical district to construct a hospital that will be affiliated with Billings Clinic
  • Minnie Hamilton Health System (Grantsville, WV) announced a clinical affiliation with Mon Health


  • The University of Kansas Health System and its affiliate, HaysMed, agreed to separate with the transition expected to occur over the next several months
  • Blue Ridge HealthCare System announced an LOI towards a comprehensive management services agreement with UNC Health
  • Abilene Memorial Health System announced a management agreement with Salina Regional Health Care
  • Campbell County Health (WY) announced an LOI to join UCHealth
  • Long Island Community Hospital announced an LOI to join NYU Langone Health

Outlook for Remainder of 2021

While the number of definitive agreement announcements were moderate in Q2, affiliation discussions between systems are increasing and could signal a breakout to higher levels of consolidation activity in the coming quarters. Tempering that expectation is the recent executive order from the White House directing the Justice Department and FTC to review and revise their merger guidelines with an ambiguous directive to ensure patients are not harmed by mergers. Even though balance sheets and liquidity metrics have been bolstered by pandemic support initiatives, maintaining regional relevance and other primary drivers of affiliations, such as expense inflation and the need for greater topline growth, are still present and meaningful realities for many hospitals and healthcare systems considering their strategic options.