Mergers and acquisitions involving senior living communities and skilled nursing facilities set a new quarterly record of 183 publicly announced transactions in the second quarter, and when annualized, the sector is on track to set a new yearly record as well.
That’s according to data released this week by LevinPro LTC.
The number of mergers and transactions in the second quarter was 21% higher than the 151 transactions recorded in the first quarter and 49% higher than the 123 deals in the second quarter of 2023.
“A belief that the capital markets environment will not improve substantially anytime soon has convinced many property owners to sell now rather than later,” stated Ben Swett, a senior care analyst and associate editor at Irving Levin Associates.
Assisted living communities accounted for 45% of M&A transactions in the second quarter, followed by skilled nursing facilities, at 35%. Independent living community deals accounted for 11% of the quarter’s total, affordable senior housing communities accounted for 5% of the transactions, and continuing care retirement / life plan communities and active adult community deals accounted for 3% and 1%, respectively.
“Interest in skilled nursing facilities remains strong among investors, and valuations are still above pre-pandemic averages,” Swett said. “Following the Supreme Court’s recent decision overruling the Chevron doctrine, the future of a [nursing home] minimum staffing mandate looks bleak, as well, which is another benefit to investors.”
Levin noted separately that private equity investment has continued to play a “substantial role” in the healthcare M&A market. The second quarter saw 12 PE-backed home health and hospice transactions, four rehabilitation acquisitions, 10 medical device-related deals and three pharmaceutical transactions.
“It’s clear industry headwinds and regulatory pressures are forcing private investors to slow down M&A activity,” said Dylan Sammut, editor of healthcare at LevinPro HC, which published the data. “But even so, private equity remains a dominant force in the healthcare investment space. When market conditions improve, we expect a flurry of activity in the future.”
