Deal volume increased across all sectors of the healthcare industry last year, according to a recent report from accounting firm CliftonLarsonAllen. Long-term care was the highest segment in terms of volume, followed by physician practices, home health/hospice, and behavioral health.
“Nearly all sectors of healthcare services saw increased deal volumes in 2021. Although it’s tougher to get a read due to less publicly available data on operations, senior housing appears to be a sought after asset class. We may see less new inventory due to inflation and increases in labor for construction, Jed Cheney, principal at CLA, told the McKnight’s Business Daily.
Cheney said none of the results were necessarily a surprise.
It’s been known that funds are raising significant amounts of capital that need to get deployed. Many are still bullish on the aging demographic,” he said.
Deal volume shrank across the board with the onset of the pandemic in 2020, but began to rebound in 2021, according to the experts.
Source: Deal Search Online, www.healthcaremanda.com
“Despite intrinsic real estate challenges, transaction volumes appear to be back to historically high levels — likely due to significant levels of available capital,” the report’s authors noted.
The market is seeing the highest per unit/bed levels in years, even with record-low occupancy, particularly in skilled nursing. According to CLA, this signals investor confidence in the market.
“Provider relief funds have supported the long-term care segment in particular. Although lower than desired occupancy rates and an ongoing challenging operating environment continue to be of concern, long-term care appears to have a blended downward trajectory when looking at income capitalization rates,” according to the report.
:Seeing significant level of equity funds raised, it seems the M&A markets will remain strong into the near-term future. We have yet to see how an expected rise in interest rates may impact this activity,” Cheney said.
