Reflections on Healthcare M+A in 2022 and Expectations for 2023 

2022 proved to be a year that did not live up to everyone’s expectations. Riding on a wave of furious M+A activity in 2021, the initial optimism was met with bewilderment as buyers became increasingly selective and cautious in the transaction process as they sought to mitigate risk.  Deals that were expected to be straightforward experienced headwinds that led to a less-than-robust conclusion to the year.  Larger global economic issues, the continuing pandemic, and uncertainty in the political sphere undoubtedly influenced the healthcare M+A market.  However, we are already seeing signs of change in 2023. Deal activity is up and buyers still have a lot of dry powder to deploy.  The VERTESS team is pleased to offer its annual year-end review as well as the future outlook for each of the healthcare verticals our Managing Directors support.  We look forward to new challenges and successes in 2023! 

If you’d like to discuss your healthcare market in greater detail with any of our Managing Directors, we have provided contact information for each of them at the conclusion of their comments.

J. Blake Peart, Managing Director

Ambulatory Surgery Centers / Hospitals / Physician Practices

2022 served as a litmus test for health care companies as we move to a post COVID-19 norm. As a result, 2022 defaulted to safe acquisitions to mitigate risk for buyers. This was especially observed in companies who were affected both positively and negatively by the epidemic. Among these companies, Urgent care, laboratory companies, RCM, and ambulatory surgery centers were most affected. The good news for 2023 is we can now see acquisitions trending through platform consolidation and buyers entered the market more confident and willing to take more risk. The indicator for this change is a heavy interest in strategic buyers looking to add to existing platforms and enhance their portfolio with add-ons Where are these actions were stagnant in 2022. There is increased interest in revenue cycle management companies and urgent cares that were considered higher risk during COVID due the risk of future non-reoccurring revenue. Ambulatory surgery center management companies are looking to grow exponentially in 2023. This heightened interest can be validated by the increase in their 2023 acquisition budgets. The new target audience for these specific companies will be private equity groups who are still cautious about the risk and acquiring funding while staying competitive with bids. It will be the job of intermediary M&A companies to provide a narrative for sales side opportunities by utilizing 2022 da To justify a meaningful multiple for their client and minimize risk in a now more stable market.