1H 2020 Healthcare M&A Report

If there’s a sector impacted by a global viral pandemic, it’s Healthcare. While patient care, research, workplace safety, and supply logistics took center stage in 1H20, it was understandable that M&A activity in the sector was disrupted during what may be one of the most unusual and unanticipated periods in a generation. Healthcare, an industry generally considered immune to economic disruptions, took this one hard. As the virus dug in its heels and valuation uncertainty became apparent, M&A activity fell in 1H20 year-over year. But looking forward, we see a sector where consolidation, fueled by the pandemic’s effects, will only accelerate. Those in the best position to act are those who have remained engaged, attuned, and ready. The COVID-19 pandemic is exposing inherent weaknesses in the Healthcare system. Hospital systems that papered over fissures in the past are being exposed to cash flow strains, debt loads, staffing issues, and patient concerns over safety. Lucrative elective procedures and routine care visits are being postponed while pandemic protection measures are increasing costs and demand for less profitable services. Envision Healthcare Group, operating in 45 states and held by private equity firm KKR, in April found itself wrestling with $7 billion in debt and hired restructuring advisors. The company reportedly took drastic action, slashing senior staff pay 50% and suspending retirement contributions and raises amid decreases in patient volumes as high as 70% for ambulatory surgeries and anesthesia services…

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