Nine of the 14 healthcare transactions in the second quarter involved for-profit sellers, including for-profit health systems looking to reshape their portfolios, according to Kaufman Hall's M&A Quarterly Activity Report.
Six things to know from the report:
1. There were 14 healthcare transactions announced in the second quarter. This is a slowdown from the first quarter when there were 29 transactions announced. However it is down slightly from the 19 transactions announced in the second quarter of 2019.
2. In the second quarter, six of the 14 announced transactions were divestitures by major for-profit health systems, such as Franklin, Tenn.-based Community Health Systems, Brentwood, Tenn.-based Quorum, and Nashville, Tenn.-based HCA Healthcare. There were also three other deals involving for-profit sellers.
3. The average size of the seller by revenue in the second quarter was $800 million. Kaufman Hall said this is the highest figure for average size of the seller it has recorded.
4. Total transacted revenue for the quarter was about $12 billion.
5. Some noteworthy transactions include Dallas-based Steward Health Care's acquisition by a group of affiliated physicians and Advocate Aurora Health's proposed merger with Southfield, Mich.-based Beaumont Health. Advocate Aurora has dual headquarters in Downers Grove, Ill., and Milwaukee.
6. "We believe the COVID-19 crisis has only strengthened the healthcare industry’s imperative for transformation. We anticipate that we will see more discussions that began pre-pandemic moving to definitive agreements or closure in the remaining quarters of the year. And we look for a resumption, or even an acceleration, in the pace of new transactions as hospitals and health systems reposition themselves for the post-pandemic future," Kaufman Hall analysts wrote.