Although healthcare M&A activity in Q3 declined slightly from the previous quarter, analysts believe the activity level declined much less than expected given the numerous headwinds—inflation, rising interest rates, labor shortages, and a poor stock market among them. These adverse forces were likely counterbalanced, in part, by the waning availability of federal funding for COVID-19 relief, which caused healthcare providers to seek out capital through other means. Overall, then, deal volume remained strong across all sectors.

Physician & Dental Practice Management

The highlight of deal activity within the physician and dental practice management sector in Q3 was the announcement of a multi-billion dollar, cross-sector transaction, reminiscent of UnitedHealth Group (NYSE: UNH) Optum, Inc.’s $300 million acquisition of Healthcare Associates of Texas during Q2. In September, CVS Health (NYSE: CVS) announced its planned acquisition of Signify Health for approximately $8 billion. Signify Health provides health risk assessments, value-based care, and provider enablement services. It has a network of 10,000 providers across all 50 states. Notably, since acquiring Caravan Health in March 2022, Signify Health has further expanded its focus on value-based care and population health. Signify Health recently announced that its accountable care organizations (ACOs) generated more than $138 million in gross savings in 2021, and in 2023 the Caravan business is expected to serve ACOs representing over 700,000 people—rivaling many standalone platforms. As part of CVS Health, Signify Health will continue to advance its extensive primary care enablement capabilities – including turnkey analytics, network, and practice improvement solutions – to help providers transition to value-based reimbursement and improve the quality of care. This deal is expected to close in early 2023.

Additionally during Q3, capital from private equity (PE) investors continued to pour into the physician and dental practice management sector. Much of that capital was allocated to the eye care space. EyeCare Partners, which boasts over 500 sites of service across multiple states, acquired two Virginia-based practices, Commonwealth Eye Care Associates and Retina Institute of Virginia, in July and acquired Ohio-based Corrective Eye Center in September. Retina Consultants of America, backed by Webster Equity Partners, similarly scaled up its operations: in August, it announced it had completed the acquisition of another ophthalmology practice, Austin Retina Associates, bringing its yearly total of eye care deals to seven, the most among any eye care platform. EyeSouth, a competitive platform, likewise remained busy. In September, EyeSouth announced affiliations with Raleigh Ophthalmology, its first in North Carolina, and Arbor Centers for EyeCare and Chicago Eye Institute, described by EyeSouth as “leading ophthalmic practices in Chicagoland for decades.” That same month, EyeSouth’s sponsor, Shore Capital Partners, announced it had entered into definitive agreements to sell the platform to Olympus Partners.

The specialties of dermatology, fertility and orthopedics also attracted a lot of attention from PE firms during Q3, but it appears that no specialty area attracted more attention than dental care—which Irving Levin Associates identified as the “top subsector in the [physician medical group] sector in 2022,” and Provident referred to as “highly active” in terms of transaction activity. And activity is unlikely to go down any time soon. Specialty Dental Brands’ sponsor, Leon Capital Group, announced in September that it partnered with TSG Consumer Partners to fund the multi-specialty dental platform’s next growth phase. Days later, Paradigm Oral Surgery, a portfolio company of InTandem Capital Partners, announced BlackRock Long Term Private Capital had entered into a definitive agreement to acquire a majority stake in the platform “to support the company’s continued expansion and strategic growth plan,” per the press release. Meanwhile, The Beekman Group and Court Square each launched new DSO platforms of their own with founder-owned companies: First Choice Dental (Wisconsin) and West Coast Dental & Orthodontics (California), respectively. Based on this, dental care will no doubt dominate healthcare transaction headlines for the foreseeable future.

Irving Levin Associates reports the physician and dental practice management sector had the most deal volume in Q3 among the 12 healthcare sectors it monitors and may be on pace to break records. We will revisit this prediction in our year-end report. Either way, it appears the pandemic had no adverse, long-term effect on the sector, which is thriving and continuing to draw significant interest from PE firms and their investors.

Ambulatory Surgery Centers

The ambulatory surgery center (ASC) sector continues to be influenced by the transition to value-based care. Although overall M&A activity slowed down because of ongoing economic concerns, industry leaders believe ASCs are in the ideal position to adopt value-based models due to their cost-efficient procedures.

Optum was active in the ASC space during Q3, closing the acquisition of Houston-based Kelsey-Seybold, a multi-specialty physician group currently operating two ASCs with plans to build an additional ASC on campus with space for 82 additional providers, for a reported $2 billion. Both parties emphasized their continued commitment to value-based care, with Optum stating, “Optum is aligned with Kelsey-Seybold’s care delivery model which brings coordinated, value-based care to patients and employers.”

Tenet Healthcare Corporation (NYSE: THC) recently became the sole owner of United Surgical Partners International (USPI) by acquiring Baylor Scott & White Health’s 5% equity position for $406 million.  Subsequently, Tenet announced in its Q3 earning conference call that USPI added 32 more centers across 10 states to its portfolio in Q3. USPI currently has over 450 ambulatory surgery facilities across 34 states and aims to have between 575 to 600 ASCs by the end of 2025. Looking forward, Tenet CEO Saum Sutaria announced that Tenet plans to invest $250 million yearly into its ambulatory surgery segment.

On a smaller scale, in July HCA Healthcare (NYSE: HCA) expanded its ASC network by acquiring Fort Myers, Florida-based Performance Health Surgery Center. The multi-specialty center adds to HCA’s existing Ambulatory Surgery Division which operates over 150 surgery centers across 16 states. Houston-based Pulse Healthcare System also acquired a controlling interest in Crystal Outpatient Surgery Center. On the PE side, Texas-based Ridgeline Capital Partners added seven medical office buildings across the country to its existing portfolio of ASCs and other medical properties for $39.2 million.

Optimism surrounding the growth of ASCs remains high despite the current economic climate as overall surgical volume continues to shift toward freestanding ASCs. Indeed, the shift to value-based models, coupled with the 4.5% physician fee cut from CMS, which some commentators believe will cause physicians to seek out additional income streams, will help ASCs weather the current economic climate and likely fuel further growth in the long-run.


M&A activity in the hospital sector was driven by a few larger transactions, with a total value of over $8 billion. One “mega” transaction involved a $500 million investment in Nashville-based Ardent Health Services by Pure Health, based in the United Arab Emirates. The transaction, pending regulatory approval, will give Pure Health observer rights but no board seat. Pure Health CEO Farhan Malik said of the transaction, “Ardent has a strong track record of delivering outstanding services across the United States, and we look forward to gaining additional knowledge to support our north star of advancing the science of longevity and unlocking time for humanity.”

University of Chicago Medicine and Advent Health also announced a sizable transaction in the third quarter. In connection with the transaction, which is pending regulatory approval, University of Chicago Medicine will acquire a majority interest in Advent Health’s Great Lakes Region hospitals. This includes four hospitals: AdventHealth Bolingbrook, AdventHealth GlenOaks, AdventHealth Hinsdale and AdventHealth, each of which was previously a part of Advent’s Amita Health joint venture with Ascension Health, and that was unwound in April of this year.

Vandalia Health System also announced its purchase of Greenbrier Valley Medical Center in West Virginia from Community Health Systems, Inc. (NYSE: CYH). The deal also remains subject to regulatory approval. Medical Properties Trust (NYSE: MPW) announced the sale of nine general acute hospitals and two medical office buildings, spread throughout four states, to Prime Healthcare for approximately $360 million.

Investors and advisors predict transactions involving hospitals and health systems will continue to focus on expanding the depth and breadth of services offered in key markets and also anticipate that the trend of partnership models will continue as an avenue for strategic growth.

At-Home & Hospice Care

The post-acute care sector – which encompasses home health, home care, skilled nursing facilities, and hospice care – remained active throughout the third quarter of 2022. Although the sector has been weighed down by staffing shortages and concerns over CMS’s proposed Medicare reimbursement cuts to home health services in 2023, the former showed some signs of easing in the quarter and the latter was resolved at quarter-end with a determination to leave rates largely unchanged after originally proposing an unprecedented 7.69% cut. Q3 ended with 37 transactions announced in September, after beginning with 41 in July, followed by 55 in August. Overall, skilled nursing facilities made up 42% of those deals, and PE-backed deals accounted for only 9% of them.

In July, CommuniCare Health Services acquired Stonerise Healthcare and its 17 centers that span West Virginia and Ohio for roughly $650 million. Stonerise is known for its vast network of support services, including transitional and skilled nursing care, therapy, home health care and hospice. CommuniCare has grown to become one of the nation’s largest post-acute care providers for chronic and complex conditions. Adding Stonerise to the CommuniCare network continues to further CommuniCare’s mission to build care communities that cater to the unspoken needs of their guests and residents.

In September, Dwyer Workforce Development acquired a 50-property skilled nursing facility portfolio in Texas managed by Regency Integrated Health Services for $590 million. This acquisition is expected to provide a unique approach to solving staffing crises, as Dwyer provides free Certified Nursing Assistant training and healthcare job placement to individuals who lack opportunity but aspire to pursue a career in the healthcare industry. Students complete their training, participate in clinical rotations, and take the Board of Nursing exam. Once certified, Dwyer places students into full-time positions through its large network of long-term care industry partners to support the workforce and improve the lives of seniors.

Digital Health & Health Information Technology

M&A deal activity in the digital health space returned to pre-pandemic levels in the third quarter of 2022, coming off an unprecedented two-year period. Data indicates that investors are increasingly cautious, which is resulting in smaller deals. However, the digital health and health information technology spaces remain active as the impacts of COVID-19 continue to weigh on the healthcare system and create a need for the ongoing expansion of digital health.

A few notable deal announcements include Amazon’s (Nasdaq: AMZN) July announcement of its acquisition of One Medical for $3.9 billion. One Medical is a membership-based primary care services provider. The deal remains subject to the approval of One Medical’s shareholders and regulators. Amazon also announced that it would be closing its existing primary care platform, Amazon Care, by the end of the year.

In August, RLDatix, the international leader in governance, risk and compliance solutions for healthcare, announced the acquisition of Galen Healthcare Solutions, the market leader in implementation, optimization, data migration and archival solutions for HIT systems. RLDatix is backed by the PE firms Five Arrows, TA Associates and Nordic Capital.

In total, 51 deals were announced in Q3. While we do not expect all of these deals to close in Q4 of 2022, we expect deal volume in the digital health and health information technology space to remain steady, likely consistent with pre-pandemic levels.

Behavioral Health

The behavioral health sector also saw a modest decline in deal volume in the third quarter, with M&A advisory firm Mertz Taggart reporting that 25 transactions took place versus the 33 deals closed in the second quarter of 2022. Nevertheless, there were several notable transactions. For instance, in July 2022, Onex Partners completed its acquisition of a majority stake (60%) in Newport Healthcare from Carlyle Group. The estimated deal value was $1.3 billion. Newport operates two business lines for youths: the Newport Academy, which caters to teenagers, and the Newport Institute, which provides services to young adults. Each program treats behavioral issues such as anxiety, depression, trauma, and substance use disorders. In addition, Newport operates the Center for Families, which works with teens and their families to provide partial hospitalization, intensive outpatient programming, and outpatient care.

In September 2022, Delic Holdings (CSE: DELC) (OTCQB: DELCF) (FRA: 6X0) announced a binding merger agreement with Ketamine Wellness Centers Arizona LLC (KWCA), which was estimated to make Delic the largest psychedelic wellness chain in the United States. KWCA operates 10 ketamine infusion treatment clinics in Arizona, Colorado, Florida, Illinois, Minnesota, Nevada, Texas, and Washington. Delic expects to open 15 additional clinics in the next 18 months to meet the demand for psychedelic treatment for numerous mental health conditions.

Also in September, Monte Nido & Affiliates completed its acquisition of Walden Behavioral Care (WBC). WBC operates 12 programs that provide treatment for eating disorders and psychiatric conditions, adding to Monte Nido’s extensive eating disorder treatment offerings.

Managed Care

The managed care and adjacent sectors remained robust in Q3, albeit not necessarily making headlines outside of Chubb Limited (NYSE: CB) completing its acquisition of the life and non-life insurance companies that house the personal accident, supplemental health and life insurance business of Cigna (NYSE: CI) in six Asia-Pacific markets for $5.36 billion.

Meanwhile, stateside, Marpai, Inc. (Nasdaq: MRAI), described as a New York-based AI-technology company focused on the third-party administrator (TPA) market supporting self-funded employer health plans, announced its planned acquisition of Maestro Health for a reported $22.1 million. Maestro Health is a TPA based in Chicago, Illinois serving over 80 self-insured employers. The parties announced that the transaction closed on November 1.

Pharmacy & Life Sciences

Transaction activity in the pharmacy & life sciences sector was somewhat slower in the third quarter of 2022, although there were some notable transactions, particularly in the specialty pharmacy space.

Following Centene Corporation’s (NYSE: CNC) announcement in May that it was divesting itself of Magellan Rx (agreeing to sell it to Prime Therapeutics LLC) and PANTHERx Rare (agreeing to sell it to a consortium of The Vistria Group, General Atlantic, and Nautic Partners), for an aggregate sale price of approximately $2.8 billion, Centene completed the sale of the latter subsidiary in July. The divestitures follow Centene’s plan, announced last year, to exit the pharmacy benefit management space.

In another divestiture, in September, Novo Holdings agreed to acquire KabaFusion, a California-based home infusion company specializing in intravenous immunoglobulin, from Pritzker Private Capital. Pritzker purchased KabaFusion in 2019 for approximately $250 million and subsequently sold it for an estimated price of $1 billion-plus, suggesting a multiple of 19x-20x EBITDA. Novo is a Danish company that has made three investments in U.S. healthcare and life sciences companies.

That same month, Vivo Infusion, a portfolio company of InTandem Capital Partners, announced it had acquired Infusion Center of Pennsylvania (ICPA). Doctors Robert Singh and Emma Singh, the founders of ICPA, noted that “[t]he infusion landscape is continuing to rapidly evolve across the country, propelled by both continued startup activity and consolidation driven opportunities across the more established platforms.” Days later, Walgreens Boots Alliance (Nasdaq: WBA) built on last year’s $970 million investment in Shields Health Solutions, a specialty pharmacy company, by acquiring the remaining stake in Shields for approximately $1.37 billion. Shields offers medications with unique handling, administration, and monitoring requirements used to treat complex and rare conditions. Roz Brewer, CEO of Walgreens, noted that Walgreen could “now make further progress on [its] strategy through [Shields’s] integrated model, increasing [its] value to health systems, expanding access to payor partners and supporting improved outcomes and lower costs.”


As the market continues to cool slightly, we expect deal activity in the healthcare industry to remain strong. Although demand from buyers may be decreasing, the availability of sellers willing to strike a deal appears to be on the rise, which will have the cumulative effect of driving down prices. We will no doubt examine whether these trends continue through the final weeks of 2022.