Merger & acquisition (M&A) deals involving labs and diagnostics companies in 2022 have been noticeably down in numbers. However, the deals that are coming to fruition tend to be larger in impact. Thus, two of the only seven transactions that were announced or closed in November were billion-dollar deals, including:

• Thermo Fisher Scientific’s agreement to acquire UK-based specialty diagnostics company The Binding Site Group for £2.25 billion ($2.60 billion) in cash; and
• Barcelona, Spain-based Werfen’s acquisition of transfusion and transplant diagnostics firm Immucor for $2 billion.

Larger Healthcare M&A Trends

The diagnostics segment’s current trend of decline in M&A deal numbers and increase in deal impact is consistent with what’s taking place across the wider healthcare industry. Thus, according to a report from financial advisory firm Kaufman Hall, there were only 10 hospital and health system M&A transactions in the third quarter of 2022, more than the seven posted in the same quarter last year, but still nowhere near the 19 posted in 2020 or the 25 in 2019. However, the $8.3 billion in total value of the deals that were made was the second highest for a third quarter in seven years:

Hospital & Health System M&A During Financial Third Quarter, 2016 - 2022

Year	Total Deals	Total Deal Value
2022	10	$8.3 billion
2021	7	$5.2 billion
2020	19	$7.4 billion
2019	25	$8.1 billion
2018	19	$10.8 billion
2017	26	$7.6 billion
2016	24	$6.6 billion

According to Kaufman Hall, while UChicago Medicine’s acquisition of a controlling interest in AdventHealth’s Great Lakes Region hospitals for an undisclosed price was the largest strategic M&A deal in Q3 2022, there were also a pair of what the firm describes as “mega transactions” in which the smaller party’s annual revenue was above $1 billion:

• Pure Health’s purchase of a minority equity stake in Ardent Health Services for $500 million; and
• Prime Healthcare’s purchase of nine hospitals and two medical office buildings in four different states from Medical Properties Trust, Inc. under a tenant lease purchase option.

Consolidation and acquisition of hospitals by healthcare systems has come under fire for reducing competition and care quality and leaving many communities without adequate access, particularly in rural areas. In 2021, President Biden issued an executive order calling on the US Departments of Justice and Commerce to crack down on hospital and health insurance consolidation.² (See, “Biden Orders Feds to Target Health Care Consolidation but Deals Continue,” LIR, August 26, 2021.)³

References:

1. https://www.kaufmanhall.com/sites/default/files/2022-10/KH_MA-2022-Q3-Activity-Report.pdf
2. https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/  
3. https://www.g2intelligence.com/biden-orders-feds-to-target-health-care-consolidation-but-deals-continue-2/

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Here’s a summary of the key M&A diagnostic deals that were signed or closed in November 2022: 

Mergers, Acquisitions, & Asset Sales