portfolio realignment

Healthcare mergers and acquisitions (M&A) surged in Q3 2024, with total transacted revenue reaching $13.3 billion, the highest third-quarter total in eight years, according to Kaufman Hall’s M&A Quarterly Activity Report. A significant portion of this activity was driven by the Steward Health Care bankruptcy, which contributed to 11 of the 27 announced transactions. This quarter marked the busiest period for hospital M&A in 2024, matching pre-pandemic activity levels. Steward Health Care’s bankruptcy reshaped the market, with Health Care Systems of America assuming operations at eight Steward hospitals in Florida, Louisiana, and Texas. This transaction was one of four “mega mergers,” where the seller’s annual revenue exceeded $1 billion. Other notable mega mergers included Orlando Health’s acquisition of Brookwood Baptist Health from Tenet Healthcare, Prime Healthcare’s purchase of eight Ascension hospitals in Illinois, and the combination of Sanford Health and Marshfield Clinic Health System. While mega mergers contributed to the quarter’s high transaction volume, the average seller size decreased to $492 million, reflecting a broader trend of smaller-scale acquisitions. Seven of the 27 transactions involved for-profit acquirers, while not-for-profit systems, academic institutions, and religious organizations comprised the remainder. The Steward transactions, spanning multiple states, highlight the difficulties financially distressed hospitals face in finding buyers. Established health systems like CHRISTUS Health and Orlando Health stepped in to acquire key assets, while some Steward facilities struggled to attract interest, leading to closures in Massachusetts. Overall, Q3 2024 saw a mix of portfolio realignments, expansions into new markets, and the absorption of struggling facilities, reflecting both opportunity and ongoing financial challenges in the healthcare sector. Source: techtarget