1H 2019 Healthcare M&A Report

Major players in the Healthcare Industry led the way in the flurry of M&A activity during the first half of 2019, which culminated in a total of 371 transactions tracked by SDR Ventures in the sector. Many prominent corporations have successfully executed or announced major acquisitions thus far in 2019, including multi-billion-dollar deals by Centene, Danaher, 3M and Ethicon. The combined enterprise value of these companies’ 2019 targets alone totals to nearly $50 billion, which reflects an increase in the implementation of large-scale inorganic growth strategies by the largest Healthcare Companies in the United States. Furthermore, The KPC Group made quite a splash with its $610 million acquisition of the Verity Health System of California, Inc., which is comprised of four notable subsidiaries: Orange County, Anaheim, Chapman, and South Coast Global Medical Centers. That being said, there was no shortage of active financial buyers in the Healthcare sector in the first six months of 2019. Both New MainStream Capital and Gryphon Investors, Inc. completed five investments each during this period. It is important to note that the majority of these financial firms’ targets shared a key attribute – they are categorized as Specialty Providers. These companies operate in a variety of specialty fields, including but not limited to podiatry, ophthalmology, and dermatology.

BUYER SPOTLIGHT: THE ENSIGN GROUP

No one individual group made more acquisitions in the Healthcare Industry in the first half of 2019 than The Ensign Group (NASDAQ:ENSG), which has already completed 10 transactions this year. Ensign is the parent company of a group of subsidiaries that consists of skilled nursing, rehabilitative care services, home health care, hospice care and assisted living companies. The company’s 2019 acquisition portfolio is predominately comprised of Long Term & Behavioral Care targets, with the exception of Bruno Dialysis – a Specialty Provider. Ensign’s deals in the first half of 2019 demonstrate the group’s willingness to employ an inorganic growth strategy in order to bolster its presence within its primary segment. The 2019 acquisition spree for Ensign appears to be less focused on service diversification and more targeted towards geographic expansion. With 9 of the 10 deals completed by the group this year being in the Long Term & Behavioral Care segment, the targets that are being pursued by Ensign all provide skilled nursing, assisted living, and rehabilitation services. The geographic footprint of this acquisition campaign spans the western side of the country, with 4 deals closed in Arizona (Olive Ridge Senior Living, Vista Post Acute & Rehabilitation, Groves Assisted Living Community, and Phoenix Mountain Nursing Center), 4 deals closed in California (Portside Healthcare, Genesis Healthcare, Bruno Dialysis, and Downey Care Center), and a single acquisition in Nevada (Goldfield Mountain Healthcare and Utah (Bella Terra Cedar City) respectively.