Spring 2021 Healthcare M&A Spotlight: Avg. Seller Size by Revenue $676M (Q1 2021)

Commentary by: Eric Murphy, Managing Director, Global Healthcare Services

The first quarter healthcare mergers and acquisition transactions see a significantly large transaction size compared to last year's first quarter and one of the largest average seller sizes in the past ten years. Kaufman Hall reported in their Healthcare Merger & Acquisition Activity Report: Q1 2021 that the average seller size by revenue is $676M. The overall number of transactions for this first quarter is significantly less than last year, with 13 announced transactions for this quarter as compared to # for the same period last year. The small number of transactions is offset by the type of large transactions that have been reported.

Notable Transactions for the first quarter of 2021:

  • CommonSpirt Health signed a letter of intent to sell critical access hospitals to Essentia Health. The transaction includes CommonSpirit’s Alexius Medical Center in Bismarck, ND, 13 critical access hospitals, clinics, home health services and senior living facilities.
  • Aspirus Health announced the intent to acquire seven hospitals, 21 physician clinics and air and ground medical transport services in north and central Wisconsin.
  • SSM Health and Noble Health announced the transfer of ownership of SSM St. Mary’s Hospital – Audrain to Noble Health. The transaction will include ownership of community medical group practices and urgent care facilities.
  • OU Health and OU Health Physicians – The College of Medicine faculty practice announced the intent to merge the hospitals and clinics into one integrated organization. The merger will create a fully integrated health system.
  • UK Healthcare (the clinical health care system of the University of Kentucky) and King’s Daughters Health System announced a partnership in January to broaden their healthcare services into communities throughout Kentucky, southern Ohio and West Virginia.
  • OrthoLoneStar was announced as an integrated orthopedic practice group formed by six Texas-based orthopedic groups. The group comprises six divisions across Texas, including Dallas-based W.B. Carrell Clinic and Texas Orthopaedic Associates, Houston-based Fondren Orthopedic Group and Advanced Orthopaedics & Sports Medicine, Austin-based Texas Orthopedics, Sports & Rehabilitation Associates and Tyler-based Azalea Orthopedics.
  • OrthoCincy acquired Wellington Orthopaedic & Sports Medicine in Cincinnati to create the largest orthopaedic practice in the Tri-State. The merger will create a group with over 40 orthopaedic specialists, 12 locations and six physical therapy locations.

The impact of COVID-19 on providers will continue to influence the providers' strategy for partnership, merger or acquisition activity for throughout 2021. Healthcare M&A activity will continue to be driven by strategic alignments between providers to create scale, streamline operations and growth of medical services in local markets.

Source: Kaufman Hall, "Healthcare Merger & Acquisition Activity Report: Q1 2021".

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