The pace of healthcare mergers and acquisitions slowed for the first quarter of 2022 after a large volume of deals in 2021, an April 26 KPMG report found.
Eight things to know:
1. Total healthcare transactions fell 34 percent in the first quarter of 2022 compared to the fourth quarter in 2021.
2. The largest decline was seen in private equity buyers, which declined 50 percent. The first quarter of 2022 had less than half as many deals with private equity buyers than the fourth quarter of 2021.
3. Strategic healthcare deal volume fell 13 percent from the fourth quarter of 2021 to the first quarter of 2022.
4. The report attributed several reasons to the decrease in healthcare deals, including that some acquirers pushed transactions ahead in 2021 because of expected changes in tax laws. The omicron variant also created challenges at the beginning of the first quarter of 2022. Inflation and supply chain issues slowed deals as well.
5. Investors have become more cautious and are reconsidering their expectations given the new economic environment, according to the report.
6. The increase of interest rates could also give private equity investors less leverage.
7. Providers with a high reduction in employees and variable rate debt may have a tougher time with deals in 2022, the report stated. Large for-profit organizations are in a good position financially, but smaller hospitals may see consolidation, restructuring, closures and bankruptcies.
8. KPMG anticipates private equity and strategic investors will continue to be cautious. System operators will remain interested in chances to add services, and investment in innovation will go on.
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