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Healthcare M&A hits 3-year low

The number of healthcare mergers and acquisitions continued to decline in the second quarter of 2023, with the volume of deals at the lowest level in three years, according to an analysis from KPMG

The total of 245 deals in Q2 this year was 7 percent lower than deal volume in Q2 of 2022 and 41 percent lower than Q2 of 2021. Not since the second quarter of 2020 has M&A been so restrained. The count includes deals among physician groups, health IT, post-acute care and health systems.

"Ongoing pressures could keep second-half M&A near first-half levels," Kristin Pothier, leader of healthcare and life sciences for KPMG and principal of deal advisory, said. "Additional interest-rate hikes even amid an economic downturn, political divisions in advance of a presidential election year, and uncertainty about the valuations of potential acquisition targets may combine to postpone a rebound in deal making. But we expect at least some of those headwinds to moderate toward the end of the year, and that could begin to release long-pent-up demand." 

Although deal volume was muted, Q2 did bring at least one significant acquisition per subsector, such as CVS Health's May closing on Oak Street Health for $10.6 billion and UnitedHealth Group's $3.3 billion agreement to take over Amedisys in late June. 

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