Insight

M&A in healthcare dwindled in Q1’22

After a slow start, healthcare M&A might pick up, but buyers will be extra diligent in the search for strategic value

After a strong year for M&A in the healthcare sector, Q1’22 saw a dramatic downturn as the economy slowed, interest rates and inflation spiked, and the Russia-Ukraine war began.

In Q1’22, overall deal volume declined by 34 percent from Q4’21, with PE deal activity falling by as much as 50 percent.

Key trends in M&A for healthcare in Q1’22:

  • Significant drop in the number of deals after exceptional volume in 2021 and throughout the pandemic
  • The quarter’s biggest deals were focused on acquiring digital capabilities, such as digital care and cloud-based platforms
  • Private equity funds slowed their chase for hospitals and health systems in Q1’22, discouraged by rising supply and labor costs; interest in physicians’ practices and healthcare IT and analytics remained steady
  • Constrictions in the global supply chain, already severe in the pandemic, multiplied with Russia’s invasion of Ukraine, raised prices, and caused shortages of everything from surgical gloves to exam tables

Considering the huge quantities of dry powder, ongoing hospital consolidations and restructuring activities, health care players and private equity will continue making deals in 2022. Deal volumes and valuations are likely to remain lower than in 2021, however, given ongoing geopolitical uncertainty, supply chain challenges, rising interest rates and less leverage for investors.

Our Q1’22 report unpacks these trends and offers deep dives in two key areas:

Download the full report to uncover what’s happening in these dynamic sectors, how deals are being done today—and why.

Private equity healthcare deal volume


 

Strategic healthcare deal volume

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Osman Yousuf

Osman Yousuf

Director Advisory, Strategy - TE, KPMG US

+1 404-536-6727
Ross Nelson

Ross Nelson

Principal, Advisory, Strategy, KPMG US

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Michael Lane

Michael Lane

Advisory Managing Director, Strategy - PDT, KPMG US

+1 815-236-7080
James A. Stephanou

James A. Stephanou

Director Advisory, Strategy, KPMG US

+1 312-665-3183