Merger and acquisition (M&A) activity remained robust across healthcare sectors in the third quarter (Q3) of 2021, continuing the record-breaking pace of the first half of the year. The total value of deals announced in Q3 was $133.3 billion, up 4% compared with Q2’s $128.8 billion. This total was 18% above the the one for Q3 2020.

Private equity (PE) firms remain a significant driver of activity in several sectors, including physician practice management, digital health and behavioral health. The financial and operational impacts of the COVID-19 pandemic on smaller provider organizations also appear to be driving some activity. Healthcare companies also face longer-term pressures that drive transactions, including the ever-increasing complexity of the compliance environment and the push for provider organizations to take on financial risk in value-based arrangements.

Physician Practice Management

Deal activity remained strong in the third quarter, particularly in the physician practice management space, where many buyers and sellers are motivated to strike a deal. On the buy-side, PE firms continue to sit on mounds of capital built up throughout the early stages of the pandemic. Meanwhile, sellers, wary of the Biden administration’s proposed increases in capital gains tax rates, are eager to sell.

In Q3, PE firms targeted ophthalmology and women’s health practices, continuing trends from the year’s first half. In July, Chicago Pacific Founders’ SightMD portfolio company acquired Pennsylvania-based Progressive Vision Institute. Then, in August and September, Webster Equity Partners, Centre Partners and Shore Capital Partners added several practices to their growing ophthalmology platforms. Webster Equity Partners (Retina Consultants of America) added North Carolina Retina Associates and New York-based Rockland Retina. Centre Partners (Vision Innovation Partners) added two ophthalmology practices, Northeastern Eye Institute and Ophthalmic Associates, with Pennsylvania locations, and See Clearly Vision, with locations in Virginia. And Shore Capital Partners (EyeSouth) continued its expansion into the southeast eye care market by folding another Florida-based, independent practice into one of its managed practices, Retina Care Specialists. With some estimating revenue for eye care, which will continue to grow 2% annually through 2024 due to an aging population and increased access to care, PE firms will undoubtedly continue to invest heavily in eye care.

PE firms are also becoming increasingly interested in women’s health. In August, Unified Women’s Healthcare, a practice management platform backed by Atlas Partners, Ares Management Corporation and Oak HC/FT, announced the acquisition of another practice management platform, Women’s Health USA, creating in their words the “largest physician practice management company dedicated solely to women in the United States.” The month prior, Unified had also completed an add-on acquisition of IVF provider Colorado Center for Reproductive Medicine. If recent activity is any indication, PE firms will likely also continue to direct their capital to women’s health.


Repeating the theme from Q2, while hospital deal volume for the year continues to be low, the average deal size (measured by seller size) is higher than it’s been since 2015. In fact, according to a report by Kaufman Hall, the total revenue of hospital M&A so far this year has dipped only slightly from last year despite the number of deals being nearly cut in half. Significant transactions during Q3 included HCA Healthcare’s (NYSE: HCA) purchase of Steward Health Care’s five Utah hospitals, which will become part of HCA’s Mountain Division spanning Utah, Idaho and Alaska; and the announced merger of nonprofit organizations Intermountain Healthcare and SCL Health to form an $11 billion health system comprised of 33 hospitals and accessible to patients in Utah, Idaho, Nevada, Colorado, Montana and Kansas.

The deal volume and size is likely to remain the same heading into the end of 2021 as health systems continue to seek large, stable partners with the resources to compensate strained hospital staffs and (at a time when the volume of non-emergent and preventative care has been disrupted by COVID-19) contract for superior, value-based payment plans. However, as noted in our Q2 report, more significant deals may also slow as President Biden’s July 7 executive order calling for heightened scrutiny of hospital consolidation continues to linger.

Home Health & Hospice

Deal activity in the post-acute care sector (encompassing home health and hospice) is showing little signs of slowing. Transactions in this sector continue to be characterized by strategic partnerships emphasizing innovative care delivery. For example, Amedisys (Nasdaq: AMED) completed its acquisition of Tennessee-based Contessa Health, Inc., a company providing hospital-at-home and skilled nursing at-home services, for $250 million. According to the parties, the acquisition expands patients’ in-home care options for Amedisys and responds to evolving patient demand for in-home care options. Similarly, in September, Senior Helpers expanded its in-home care footprint by acquiring Milwaukee-based Miller Home Care LLC. Financial terms were not disclosed.

Other notable transactions include HCA’s purchase of an 80% stake in Brookdale Senior Living’s (NYSE: BKD) home health and hospice business for $400 million. The venture will expand post-acute care services and add an estimated 80 sites of care to HCA’s network. We expect to see similar levels and types of deals to continue in the post-acute care space in the coming months.

Digital Health & Health Information Technology

Transactions activity has kept up with the continued breakneck pace of funding of digital health and health information technology companies. These trends are complementary: The explosion of digital health fundraising in the past three years created a large cohort of companies that are now looking to scale through acquisition, whether as acquirer or target. Many are looking to pull together several digital strands to provide an enterprise-level platform that simplifies choices for healthcare provider organizations. For example, Unite Us, a technology platform for providers to connect patients with social care resources such as food and housing assistance, announced two deals in Q3, adding Carrot Health for analytics and broadening its social care resources referral technology and networks with NowPow.

Q3’s largest merger in this space brought together meditation app Headspace and video-based therapy services provider Ginger to form Headspace Health in a deal valuing the combined company at $3 billion.

Behavioral Health

Activity remains strong in behavioral health, driven by an increased need for services and PE interest. Substance-use disorder treatment providers remain the largest segment for deal activity. Two deals in this space in Q3 topped $1 billion valuations: Patient Square Capital acquiring Summit BHC from FFL Partners and Lee Equity Partners for $1.3 billion and Onex Partners acquiring Newport Healthcare in a $1.3 billion deal.

Other behavioral sectors also saw large platform deals. While mental health services deal activity moderated, the subsector was marked by significant platform deals. Foremost among these is the merger of four mental health providers to form Transformations Care Network, a multistate outpatient behavioral provider backed by Shore Capital Partners. In the autism subsector, Cerberus Capital acquired Lighthouse Autism from Abry Partners in a deal reportedly valued at $400 million.

Managed Care

Consolidation continued in the managed care space in Q3. In August, Evolent Health, Inc. (NYSE: EVH) announced that it entered into a definitive agreement to acquire WindRose Health Investors’ portfolio company Vital Decisions, a company that provides technology to support advanced care planning, for $85 million with an additional earn-out of up to $45 million.

In July, Primerica, Inc. (NYSE: PRI) closed its acquisition of an 80% stake in e-Telequote, a digital insurance marketplace for Medicare-related insurance, at a $600 million enterprise value. According to the transaction terms, Primerica will purchase the remaining 20% equity for up to four years. In August, UnitedHealthcare (NYSE: UNH) acquired Preferred One, a Minnesota-based health insurer. The financial terms of the transaction were not disclosed, but the acquisition will add an estimated 250,000 members from PreferredOne to UnitedHealthcare’s network.


M&A activity in Q3 continued at a brisk pace, moderated slightly from the sprinter’s pace of the first half of 2021, but poised for a fast-finishing kick in Q4. All the factors driving transactions—COVID-19’s financial and operational impact, accelerating changes in care delivery and payment models, anticipated tax changes that affect exit decisions for founders, and PE capacity and interest in healthcare investments—remain firmly in place.

For Q4, the main headwind is the bandwidth to complete deals: The limits are not in the funding available or the desire to make transactions but in the time for principals to consider and execute deals, to provide advisors adequate time for due diligence, and the difficulty in obtaining representations and warranties insurance. This combination of factors suggests a busy Q4 and a strong start to Q1 2022, as well.

If you have questions about any of the information listed above, please contact one of the authors. In case you missed it, read our Healthcare Transactions Q2 2021 Update and our Healthcare Transactions Q1 2021 Update.

About Our Healthcare M&A Team

Since 2005, the Healthcare M&A Team at Bass, Berry & Sims has represented healthcare clients in transactions with a combined value in excess of $136 billion. Representing providers and non-providers, our attorneys have developed a thorough understanding of the legal and regulatory constraints affecting the healthcare industry. The industry engenders unique challenges in the areas of due diligence and evaluation of potential risks and liabilities. We offer an unmatched combination of sophistication and value and are focused on serving and adding value in the middle- and lower-middle markets, and are uniquely positioned to provide the cost-effective yet sophisticated transactional solutions the current environment demands. Our results-oriented, business-minded deal attorneys work seamlessly with our nationally ranked healthcare regulatory attorneys to help healthcare companies, private equity funds and their portfolio companies achieve their strategic goals. Most notably, we pride ourselves as being deal facilitators and real-world risk analyzers. As a result of this experience and depth, the firm continues to be recognized as a choice firm for healthcare transactions. To learn more about our team, industry experience and value-add, click here.