Transaction professionals polled in mid-August predicted significant growth ahead for health care M&A, but not as much as they had forecast earlier in 2015, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP). (See related graphic.)
The 3-month composite score for health care was 78.1. While the forecast certainly suggests healthy activity, it’s a far cry from the 91.2 score that dealmakers bestowed on the sector previously. Transaction pros see growth slowing in the future, indicated by the lower 12-month score of 66.9.
In recent years, M&A in the sector has been driven by the Affordable Care Act, which has fueled widespread consolidation as providers search for cost efficiencies. Over time, the impact of ACA on consolidation in the sector is expected to lessen. And, while our poll occurred before the stock market volatility of late August, some respondents mentioned uncertainty about the economy, including concerns about the impact of China’s economic deceleration.
For more on recent deals in health care, check out transactions by Mednax Inc. (NYSE: MD) which underscored the physician group consolidation trend with the purchase of Millennium Anesthesia Care; and IBM Corp., which picked up Merge Healthcare Inc.
The MMP is a forward-looking sentiment indicator, derived from monthly surveys of approximately 250 executives and published in partnership with McGladrey LLP. Previous sector forecasts include technology, media and telecommunications,manufacturing, energy, consumer goods and retail and financial services.