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Hospital megamergers boost total transaction revenue near historic high, study finds

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The total number of hospital and health systems transactions dropped to 19 in the second quarter of 2019, but the size of the mergers and acquisitions increased, according to a recent analysis by strategic and financial consulting firm Kaufman, Hall & Associates.

Six things to know:

1. The volume of announced transactions dropped from 27 in the first quarter of 2019 down to 19 in the second quarter. Last year during the second quarter, there were 21 transactions. 

2. The total transacted revenue in the second quarter increased significantly, to $11.3 billion, nearly four times the revenue of the second quarter of 2018.

3. The average size of the company being acquired (by revenue) also grew in the second quarter, to about $597 million. This compares to the average size of the seller in the first quarter, about $196 million.

4. "What we saw in Q2 is the continuation of a trend toward megamergers, transactions in which the seller has $1 billion or more in annual revenues," said Anu Singh, managing director at Kaufman Hall. "We expect to see this trend continue for the immediate future."

5. One of the largest transactions announced in the second quarter of 2019 was the acquisition of Wake Forest Baptist Health in Winston-Salem, N.D. by Atrium Health in Charlotte, N.C. Pending approval, Wake Forrest's seven hospitals will join Atrium Health's 42 existing hospitals, creating a health system with combined annual operating revenue of more than $9 billion. 

6. Another noteworthy transaction, according to Kaufman Hall, was made in June when Sanford Health in Sioux Falls, S.D., and UnityPoint Health in West Des Moines, Iowa, announced plans to explore a merger. If the transaction moves forward, the combined system would have more than $11 billion in revenue. 

Access the full M&A activity report here

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