US health services deals insights: Q3 2018

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Robust deals volume, increasing multiples, two Justice Department megadeal decisions and pockets of growth heading into midterm elections

Deal volume remained high in Q3 2018. We have now seen over 200 deals per quarter since Q4 2014, and over 250 per quarter since Q3 2017. Long-Term Care remained the largest sub-sector by deal volume (102), continuing a multi-year trend.

Disclosed deal value was at its lowest level since Q1 2017, and there were double-digit declines in value over prior year and quarter. These declines could be partly attributed to data disclosures – for example, value declines over Q3 2017 were greatest in Physician Medical Groups and Managed Care but in each sub-sector, only one deal’s value was disclosed.


Sustained high deal volumes and megadeal interest

Although Q3 2018’s total deal volume of 261 was slightly lower than the average of the preceding seven quarters (264), levels are still robust in historical terms. Quarterly deal counts have exceeded 200 since Q4 2014and have exceeded 250 for five consecutive quarters.

Deal value was at its lowest level since Q1 2017, but interest in megadeals continues: Q3 2018’s single megadeal (defined as exceeding $5 billion) represented 35% of disclosed deal value. This level is in line with the 2016-2017 average of one megadeal per quarter, representing 34% of total deal value.

In terms of growth, deal volume was consistent with prior year (0.4% increase). Total deal value declined by 35.8% versus prior quarter and by 10.1% versus prior year. One sub-sector that declined notably was Physician Medical Groups, which saw fewer deals on a quarterly basis than any quarter since Q4 2016. However, this recent result is likely an outlier, given recent sustained high levels of deals in the sub-sector.

Contact us

Thad Kresho

Health Services Deals Leader , PwC US

Tel: +1 (404) 285 3290

Nick Donkar

Partner, Deals Practice, PwC US

Tel: +1 (213) 217 3791

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