With some exceptions, healthcare M&A activity is down this year compared to the record-breaking highs of 2021. Those exceptions include the hospital sector, which is still seeing fewer but significantly larger (i.e., billion dollar) deals, and the home health sector, which has received renewed interest as an alternative care model during the pandemic, led by UnitedHealth Group (NYSE: UNH)/ Optum, Inc.’s planned acquisition of LHC Group, Inc. (Nasdaq: LHCG) for $5.4 billion. However, when viewed through the lens of the times—when we are facing rapid inflation, ongoing supply chain issues, and a lingering bout with COVID-19—the volume of deals remains robust and should give stakeholders a reason to be optimistic.

Physician & Dental Practice Management

Optum’s reported $300 million acquisition of Healthcare Associates of Texas represented one of the more notable healthcare transactions in the second quarter of 2022. Following its acquisition of behavioral health provider Refresh Mental Health and the announcement of its plans to buy home health and hospice provider LHC Group (which appears to have been delayed due to a shareholder lawsuit and a second request for information from the Federal Trade Commission (FTC)) in Q1), Optum—one of the larger members of an increasing class of “payviders” buying and partnering with physicians and other providers—added the Dallas-based physician practice management company and its affiliated primary care practices to its enterprise.

Meanwhile, the total number of deals in the physician and dental practice space (142) outpaced those of the first quarter of 2022 by 5%, according to LevinPro HC. Not surprisingly, many of these deals involved private equity (PE) investors. Several of the specialties that were particularly hot during Q1—e.g., dentistry, women’s care, ophthalmology and orthopedics/PT—remained so during Q2. Indeed, there are reports that the number of dental deals in Q1 (28) increased by 50% (42) in Q2.

U.S. Oral Surgery Management (USOSM), backed by Oak Hill Capital, remained active, partnering with Southwest Virginia Oral and Maxillofacial Surgery located in Roanoke, Virginia, at the tail-end of Q1. Great Lakes Dental Partners, backed by Shore Capital Partners, continued to expand its footprint in the Midwest by partnering with Chicago-based Associates for Dental Care. Meanwhile, in March, Specialty Dental Brands (SDB) —a dental services organization focused on pediatric dentists, orthodontists and oral surgeons—obtained a $660 million senior credit facility from Oxford Finance LLC, a leading specialty finance firm focused on healthcare services and life sciences companies worldwide, which will likely accelerate SDB’s scaling activity over the coming months.

Our prior transactions report forecasted increasing investment in physical therapy for the remainder of this year and beyond. By all indications, Q2 made good on that prediction. U.S. Physical Therapy (NYSE: USPH), a publicly traded platform, acquired a six-clinic physical therapy practice in South Central Pennsylvania, Madden and Gilbert Physical Therapy. Several other privately held physical therapy platforms also announced acquisitions. Confluent Health, backed by Partners Group, announced affiliations with both Orthosport Physical Therapy, which operates in Culver City, California, and is known for providing education and preventative care to employees of its commercial neighbor, Sony Pictures, and Dresher Physical Therapy, a private and therapist-owned physical therapy practice with two clinic locations in Blue Bell and Fort Washington, Pennsylvania. Physician Rehabilitation Network (PRN), backed by Gryphon Investors and considered one of the leading owner-operators of outpatient physical therapy clinics in the western and central regions of the United States, announced the acquisitions of Kinetix Advanced Physical Therapy and Gillette Physical Therapy, based in California and Wyoming, respectively, further establishing its presence in those regions.

Finally, over the years, gastroenterology and urology have remained solid, steady options for investors. It appears that has not changed.

  • GI Alliance, backed by Waud Capital, acquired both Digestive Health Specialists (Missouri) and Gastroenterology Consultants (Texas).
  • Gastro Health, backed by OMERS Private Equity, acquired Digestive Disease Associates (Maryland).
  • U.S. Urology Partners, backed by NMS Capital, acquired Florida Urology Center (Florida).

We expect investors to continue allocating capital to these specialty areas.

Commentators seem aligned on the opinion that, after a strong showing in 2021, physician practice deals will remain strong and above long-term averages for the foreseeable future. Indeed, despite headwinds (e.g., inflation, rising interest rates, ongoing supply chain issues, and continued uncertainty around COVID-19), PE firms continue to sit on excess cash and are avidly looking to spend it, particularly on roll-ups, as they seek to increase their market share and the value of their investments.

Ambulatory Surgery Centers

The ambulatory surgery center (ASC) sector continues to grow as PE firms seek out physician practices with affiliated ASCs and health systems and hospitals seek out joint venture opportunities with ASCs, given the migration of patients to these more efficient, lower-cost facilities. Commentators expect this growth to accelerate in the wake of the hospital price transparency rule that went into effect last year.

Indeed, in June, Tenet Healthcare (NYSE: THC) announced it would be pumping even more funds into its United Surgical Partners International ASC service line by partnering with United Urology Group, a network of urology affiliate practices, to jointly operate 22 ASCs across Arizona, Colorado and Maryland. The partnership will further bolster Tenet’s ASC portfolio, which has reportedly already leapfrogged the number of hospitals it operates. According to commentators, by the end of 2023, Tenet’s ASC earnings will represent approximately half of its overall profits.

On a smaller scale, Michigan-based BHSH System and Atlas Healthcare Partners recently announced a joint venture to develop and operate an orthopedic ASC at the health systems’ Grand Rapids campus. Additionally, Prisma Health, which proclaims itself as South Carolina’s largest private, nonprofit healthcare system, acquired its first ASC, Moore Orthopaedic Clinic Outpatient Surgery Center, in Lexington, South Carolina. These transactions are less notable for their size but demonstrate, again, that health systems and hospitals are increasingly relying on ASCs to support outpatient surgical care and, ultimately, their bottom line. BHSH System is likely hoping Atlas will do for it what Atlas has done for another of Atlas’ joint venture partners. Since Banner Health formed a joint venture partnership with Atlas in 2018, Atlas has helped Banner develop and operate ASCs in Arizona, Colorado and Wyoming and triple its ASC footprint. The partnership between Banner Health and Atlas has been so successful that, in May, Banner Health directly invested in Atlas to, in the words of Banner Health’s chief strategy and growth officer, “help [Atlas] scale and grow into a larger national partner for other health systems as well.”

In addition to health systems and hospitals investing in ASCs, other stakeholders likewise boosted their investments in ASCs. Surgery Partners (Nasdaq: SGRY), a leading operator of surgical facilities, announced in May a joint venture with ValueHealth to build new ASCs utilizing the latter’s value-based surgical programs. The same month, Orthopedic Care Partners, backed by Varsity Healthcare Partners, announced its purchase of an ownership interest in ValueHealth’s new valued-based, multi-specialty ASC in The Villages, Florida.

The anticipated growth of ASCs and investments in such facilities may stall a bit in the short term in the face of inflation—high staffing costs are challenging ASCs’ ability to keep costs down, which remains their primary appeal—but all signs point to the numbers going up in the long-run. Commentators believe ASCs are resilient investment vehicles given they can be multi-specialty and offer multiple ancillary services, which further supports growth potential in the long run.


Although the volume of hospital and health systems acquisitions in Q2 held steady, the value of transactions within the sector soared, reaching historical levels of $19.2 billion. The uptick in value can partially be attributed to the announcement in May by Aurora Health and Atrium Health that the two plan to combine, creating a system that generates an estimated $27 billion in revenue. According to the parties, the combination seeks to push for more health equity, create jobs, and drive innovation. The combined entity will have 5.5 million patients and nearly 70 hospitals. The transaction is currently subject to regulatory review and, if approved, would create the fifth largest hospital system in the country. In April, Trinity Health and CommonSpirit entered into a definitive agreement under which Trinity Health plans to acquire all the assets of MercyOne, a health system with 16 medical centers and 3.3 million patients in Iowa and Nebraska. The transaction is expected to close later in the summer and financial terms were not disclosed. Finally, Intermountain Healthcare and SCL Health closed their merger, creating a 33-hospital system operating under the Intermountain Healthcare brand and making Intermountain the eleventh largest nonprofit health system in the country. The new entity is estimated to have annual revenues of approximately $14.2 billion.

Although there continues to be a wealth of transactional activity in the sector, regulatory bodies, such as the FTC and state attorneys general, are exercising their authority and impacting the M&A landscape. In June, HCA Healthcare (NYSE: HCA) and Steward Health Care System called off their proposed transaction, under which HCA would have purchased five hospitals from Steward after federal regulators contested the deal. Similarly, RWJBarnabas Health, a New Jersey nonprofit system that operates 12 hospitals and several ASCs, and Saint Peter’s Healthcare System—a New Jersey nonprofit system operating a hospital, children’s hospital, and ASC—also called off merger talks after the FTC announced that it planned to block the transaction. In both cases, the FTC argued that the transactions were ultimately anticompetitive and could result in higher prices and lower quality of care. Hackensack Meridian Health and Englewood Health called off plans to merge after resistance from the FTC, and Dartmouth Health and GraniteOne Health called off plans to merge after opposition from the New Hampshire Attorney General.

At-Home and Hospice Care

The post-acute care sector—which encompasses home health, home care and hospice services—remained active throughout the second quarter of 2022, with the announcement or closing of several transactions. Transaction activity has been slightly lower compared to 2021, but home health and hospice M&A activity still outpaces the broader market.

Help at Home closed four acquisitions in Q2, as it acquired two New York-based home care agencies, Edison Home Health and Preferred Home Care, and AnswerCare, an Ohio provider, in April, and followed with Alliance Home Health Care Services, a Michigan provider, in June. As a result, Help at Home provided services to 65,000 clients monthly through 47,000 caregivers during Q2 of 2022.

In May, Agape Care Group continued its expansion strategy in North Carolina with the acquisition of Hospice of the Carolina Foothills; and HouseWorks completed its acquisition of Greater Boston Home Health Care Services, expanding its footprint to include Cape Cod and Martha’s Vineyard.

Digital Health & Health Information Technology

Transaction activity has slowed in the digital health and health information technology space. While 2021 activity outpaced ten-year averages, Q2 of 2022 was the opposite. In fact, the number of transactions in Q2 of 2022 is far below those of Q2 of 2021, 2020, and 2019. In 2021, a total of 73 transactions were signed or closed in Q2. In Q2 of 2022, a total of 31 transactions signed or closed. There were only seven deals in April, the lowest month for digital health merger and acquisition activity in nearly a decade. Thirteen transactions closed in June, which is well below the averages in 2021. Some experts believe the lower volume of deals in Q2 might reflect a correction after the spike caused by the COVID-19 pandemic, while industry leaders believe that transaction multiples will remain strong even if the overall volume of deals slows.

One such high-dollar deal announced during the second quarter is Optum’s planned acquisition of EMIS Group in an all-cash deal that values the UK health-technology company at about $1.51 billion. EMIS provides healthcare software, information technology and other services in the UK. Optum is already a major supplier of health IT services in the United States and seeks to expand globally.

Behavioral Health

Smaller strategic acquisitions characterized deal activity in the behavioral health sector in Q2. In June, Mindpath Health, a provider of outpatient behavioral health services, announced that it acquired Acacia Counseling and Wellness, a provider of telehealth and outpatient mental health services for college students. Financial terms of the deal were not disclosed. Mindpath Health provides various services to an estimated 100,000 patients each year. Greenbrook TMS Inc. (Nasdaq: GBNH), a provider of transcranial magnetic stimulation (TMS) therapy across the country, has agreed to acquire Check Five LLC, which does business as “Success TMS.” Success TMS has 45 locations across the country, and the parties expect its acquisition to further Greenbrook’s position as a leading TMS provider. As consideration for the sale, the owners of Success TMS will receive nearly 12 million common shares of Greenbrook. Following the closing, Greenbrook will operate nearly 200 TMS centers.

In May, Transformations Care Network announced that it had acquired LightHeart Psychological Associates. Transformations, which is backed by Shore Capital Partners and provides outpatient mental health services at approximately 30 locations. LightHeart, which provides psychotherapy and medication management services, has 40 employees and two locations in Washington, and the acquisition will allow Transformations to expand into the western United States.

Managed Care

The managed care space saw notable deal activity in the second quarter. In May, Anthem, Inc. (NYSE: ANTM) closed the acquisition of Integra Medical Care, a New York-based long-term care plan. The deal adds 40,000 Medicaid members to Anthem’s network. The financial terms of the transaction were not disclosed.

In June, Evolent Health, Inc. (NYSE: EVH) announced plans to acquire IPG, a surgical management technology company, from TPG Growth for $375 million plus contingent consideration of up to $87 million. According to the parties, the transaction will further Evolent’s aim to be a leading provider of value-based care solutions. Upon closing, IPG will be integrated into Evolent’s cardiology and oncology arm, New Century Health. Also in June, CareMax (Nasdaq: CMAX), which provides value-based care through its technology platform, announced plans to add Steward Health Care System’s 171,000 Medicare value-based patients to its network in a deal valued at an estimated $135 million. According to the terms of the transaction, CareMax will become the exclusive value-based management services organization to Steward’s Medicare network. As deal consideration, CareMax will pay $25 million in cash and issue 23.5 million shares of CareMax’s Class A common stock to Steward’s equity holders, plus additional potential earnout consideration. The transaction is expected to close in the third quarter.

Pharmacy & Life Sciences

Some of the most significant transactions in Q2 involved pharmacy and life sciences companies. Chief among them was the definitive agreement between Pfizer Inc. (NYSE: PFE) and Biohaven Pharmaceutical Holding Company Ltd. (NYSE: BHVN), pursuant to which Pfizer will acquire the drugmaker. Under the terms of the agreement, Pfizer will acquire all outstanding shares of Biohaven not already owned by Pfizer for $148.50 per share in cash and stock consideration, totaling $11.6 billion.

In April, Option Care Health, Inc.  (Nasdaq: OPCH), the largest independent provider of home and alternate site infusion services in the United States, announced it had completed the acquisition of Specialty Pharmacy Nursing Network Inc. (SPNN) for $60 million. SPNN provides highly skilled specialty nursing resources across a broad range of healthcare providers, with over 400 nurses across the country. Under Option Care Health’s stewardship, SPNN will staff Option Care Health’s infusion services line while continuing to serve other infusion providers, specialty pharmacies and biopharmaceutical manufacturers as a separate enterprise within Option Care Health.

Also in April, GoodRx (Nasdaq: GDRX), a leading consumer-focused digital healthcare platform, closed its acquisition of vitaCare for $150 million in cash and an additional $7 million in contingent payments. GoodRx is counting on vitaCare’s pharmacy services platform to expand its offering to pharmaceutical manufacturers while improving patient access to affordable brand drugs.


We anticipate that based on the first two quarters of 2022, deal activity throughout the rest of the year will continue at a robust pace despite headwinds from inflation, lingering effects of the COVID-19 pandemic, and the monkeypox public health emergency.