In July 2024, there were 175 healthcare transactions reported, marking an 8% increase in healthcare M&A activity from June 2024, when 162 deals were announced, and a 4% from July 2023, when 168 healthcare acquisitions were reported. The deal volume of July 2024 accounts for nearly 15% of the 1,190 healthcare transactions announced since the start of 2024, according to data captured in LevinPro HC.
The most active sector was Other Services with 56 acquisitions. Other Services is a catch-all/miscellaneous sector that encompasses a variety of transactions from medical outpatient buildings (MOBs) to contract development manufacturing organizations (CDMOs). In July 2024, there were 19 MOB transactions, four infusion service acquisitions and two CDMO deals. The M&A volume announced during July 2024 is only slightly lower than that of June 2024, which saw 47 Other Services acquisitions.
Some of the buyers that reported acquisitions in July 2024 include Montecito Medical Real Estate, Big Sky Medical and AW Property Company.
Montecito Medical Real Estate, a real estate investment firm based in Nashville, Tennessee, purchased a 27,000-square-foot MOB in Panama City, Florida, for an undisclosed price. This is Montecito’s only acquisition during the month and its 13th transaction of the year.
Big Sky Medical, a Dallas-based real estate investment firm, made two purchases in July 2024, buying a 38,709-square-foot Class A MOB in Cedar Park, Texas and a 58,000-square-foot Class A MOB in San Antonio, Texas. Neither of the prices were disclosed. Throughout 2024, Big Sky Medical has completed five transactions.
North Palm Beach, Florida-based AW Property Company acquired a nine-facility MOB portfolio in North Carolina. The portfolio, which consists of 309,424 square feet, was sold for $99.5 million. This marks the largest MOB deal of the month in terms of both purchase price and square footage.
Buyers in the infusion services space include Vivo Infusion, backed by InTandem Capital Partners, and Dynamic Infusion Therapy, LLC (DIT).
DIT acquired Infusicare, a Cream Ridge, New Jersey, home-infusion provider that works on behalf of specialty pharmacies. This is DIT’s only transaction in July 2024, but the company completed three acquisitions in 2022.
DIT is a full-service, on-demand, outsourced provider of vascular access insertion services with a proven clinical model that lowers costs for its customers and leads to better patient outcomes. In early 2021, RiverGlade Capital, a healthcare-focused private equity firm, partnered with DIT to build on its reputation for clinical excellence.
Peter Harris, CEO and president of Dynamic, noted in the press release that “Infusicare is known for its quality of patient care. This transaction will allow Dynamic to reach the central and northern regions of New Jersey.”
Vivo Infusion’s acquisition of Infusion Associates Managements, Inc. will bring Vivo’s presence to nearly 80 ambulatory infusion centers across 15 states. Financial terms of the transaction were not disclosed. TripleTree served as exclusive financial advisor and DLA Piper served as legal advisor to Infusion Associates.
Vivo Infusion is a provider of infusion and injection care for patients suffering from compromised immune systems, infectious diseases and other medical conditions. It is based in Lakewood, Colorado.
Andre Ulloa, Founder and Managing Director at M&A Healthcare Advisors, offered insight into why infusion services have seen an uptick in transactions over the recent months.
“In short, the margins for infusion are substantial, there is limited competition from the large cap pharmaceutical companies and there is great growth potential in certain IV therapies, like neurological drugs,” said Ulloa. He seems to be optimistic that deal volume in the infusion services industry will continue to increase.
The largest purchase price in the CDMO market for July 2024 was Agilent Technologies Inc.’s acquisition of BIOVECTRA for $925 million. Agilent expects that the acquisition will be $0.05 dilutive to non-GAAP EPS in the first full year after closing.
Agilent provides bio-analytical solutions and services to the life sciences, diagnostics and genomics, chemical analysis, communications and electronics industries worldwide.
BIOVECTRA produces biologics, highly potent active pharmaceutical ingredients and other molecules for targeted therapeutics. BIOVECTRA delivered $113 million in revenue during 2023 and expects double-digit revenue growth in 2024, according to a July 22 press release on BusinessWire.
The second most active sector was Physician Medical Groups (PMG) with 38 transactions. Typically, the PMG and Other Services sectors are the most active so this is not surprising. However, what is surprising is the fact that the PMG deal totals increased from June 2024 (31 transactions) to July 2023 (36), as some industry experts seemed to have indicated a slight decline in deal activity.
The most active PMG specialty was dental, with 17 transactions, which is a slight decline from June 2024, when 19 were reported, but an increase from July 2023, when nine dental deals were announced.
In addition to speaking with Ulloa, we also spoke with Mark Thomas, Founder and Director of Operations at M&A Healthcare Advisors. He addressed the high activity in the dental market, noting that it seemed like he read about a dental transaction every other day, if not daily, which is a sentiment we share.
He said, “I’ve spoken to a number of physician owners exploring a partial or full exit in the last few weeks, at a higher rate than the rest of 2024. So, there seems to be both increased successful M&A activity in the physician space, as well as a possible trend of more sellers entering the market in the coming 12 months.”
Building on the notion that the dental market is one of the more active PMG specialties, three PMG buyers announced more than one deal during July 2024, and two of them were dental buyers. Heartland Dental, which is backed by KKR, and Specialized Dental Partners, a portfolio company of Quad-C Management, both announced two transactions.
Other active PMG specialties include OB/GYN (three deals), dermatology (three deals), eye care (two deals), internal medicine (three deals), oncology (two deals) and plastic surgery (three deals). Together Women’s Health, which is backed by Shore Capital Partners, completed two transactions, marking the only PMG buyer outside of the dental space that made more than one acquisition this past month.
In addition to PMG’s deal volume declining, several other sectors decreased as well. eHealth experienced the most drastic decline in deal volume, going from 30 transactions in June 2024 to 20 in July 2024, an approximately 33% decline. Home Health & Hospice (HH&H) also declined, going from 14 reported acquisitions in June 2024 to four in July 2024.
Regarding the HH&H sector, Ulloa said, “This sounds like a slow month with only four transactions on record. It may be due to the elevated deal flow in Q2, and deals scheduled to close by mid-year (June 30)…We believe that Home Health and Hospice will continue to be targeted, particularly in the lower middle market; expect this year to end much stronger than 2023.”
So, while HH&H’s deal volume dropped in July 2024, a lower M&A volume is not expected to become the norm. It’s normal for sectors to ebb and flow, so we hope that July 2024 was simply an ebb for the sector.
Disclosed spending in July 2024 totaled more than $13.5 billion across 40 transactions. This is an increase from announced spending in June 2024 which totaled more than $8.1 billion across 32 deals. However, disclosed spending in July 2024 is a decrease from July 2023 when more than $15 billion was reported across 28 acquisitions.
The sectors with the most purchase prices were the Biotechnology/Pharmaceutical sectors. More than $7.5 billion in purchase prices was announced and the transaction with the largest purchase price in July 2024 was Lilly’s acquisition of Morphic Holding Inc. for $3.2 billion.
Morphic Holding Inc. is a biotechnology company that develops oral integrin drugs for inflammatory bowel diseases. Its proprietary drug discovery platform combines an expert understanding of integrin dynamics and analytical capabilities with foundational structural biology insights and ongoing input from the Springer laboratory, the original integrin research leader. According to the press release, as of March 31, 2024, the company had $658.8 million in cash, cash equivalents and marketable securities.
“We are eager to welcome Morphic colleagues to Lilly as this strategic transaction reinforces our commitment to developing new therapies in the field of gastroenterology, where Lilly has made significant investments to deliver first-in-class molecules for the benefit of patients,” Daniel Skovronsky, M.D., Ph.D., president of Lilly Research Laboratories, said in the original press release.
Overall, July 2024 showed an increase in transaction volume, indicating that the market remains dynamic, with ongoing activity and potential for growth in various sectors. While some sectors, like eHealth and Home Health & Hospice, experienced sharp declines, industry experts remain optimistic about future growth, particularly in infusion services and dental.
For more information on notable deals in July 2024, click below:
- Mankind Pharma Acquires Bharat Serums and Vaccines Limited for $1.64 Billion
- Cressey & Company Buys Heartbeat Health
- Welltower Acquires Sacramento, California MOB for $45.55 Million
- Dental365 Purchases 4 Dental Practices
- MEDIROM Healthcare Technologies Acquires Japan Gene Medicine Corporation
