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Life sciences & health care M&A update: Q3 2017

The aging US population and prevalence of chronic diseases drives demand within the long-term care industry—both for traditional and alternative care models—making it an attractive investment for many health care acquirers. This 'Life sciences & health care M&A update: Q3 2017' provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the life sciences and health care industry.

Long-term health care M&A trends¹

The long-term health care sector has seen heightened interest from strategic and financial acquirers. M&A drivers include:

  • Strong long-term care industry tailwinds: Health care acquirers are seeking stable growth investments supported by long-term, secular trends, in particular, the aging US population and prevalence of chronic diseases requiring long-term patient care. The $334 billion US long-term care market is estimated to reach nearly $550 billion by 2024, representing a compound annual growth rate (CAGR) of 6.4 percent2.
  • Expansion of alternative long-term care models: Increasingly the American public is transitioning away from the traditional skilled nursing facility (SNF) model and moved toward alternative long-term care models, such as home health care, adult day care, and long-term acute platforms, which can offer patients a greater degree of autonomy over a traditional SNF. As a result, many portfolio operators are looking to divest their SNF assets and acquire these alternative long-term care models.
  • Increased demand for beds driving higher prices: As the US population continues to age and the number of SNFs has remained relatively constant, demand for beds at traditional long-term care facilities has surged and will continue to provide the potential for strong growth. The higher demand for beds has led the average SNF price per bed per year to soar to a new record of $99,200 in 2016, representing a 15 percent price increase over 20153.

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1 Continuing care retirement community discussion,” Deloitte Financial Advisory Services. September 2017.

2 “US long-term care market analysis,” Grand View Research. August 2017.

3 “The skilled nursing facility price per bed soars to record, assisted living price per unit beats last year's record,” Long Term Care Provider. February 2017.

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