Despite the sector-wide slide, sub sectors like labs, MRI & dialysis, and other services as well as long-term care grew year-over-year.
Deal volumes in the health services sector during the first half of 2020 slipped to the lowest level since 2015 amid the ongoing coronavirus disease 2019 (COVID-19) pandemic, according to a PricewaterhouseCoopers (PwC) report released Thursday morning.
PwC noted that volumes were 3% short of the historical average of 500 deals by the halfway mark of the year but added that the change was not unprecedented.
Still, the total value of deals for the first half of the year was down 52% year-over-year and the largest deal, Thermo Fisher Scientific's purchase of QIAGEN N.V. for $11.5 billion, was almost $6 billion less than the largest deal during the first half of 2019.
Despite the sector-wide slide, sub sectors like labs, MRI & dialysis, and other services as well as long-term care grew year-over-year.
Additionally, three sub sectors: hospitals, managed care, and other services recorded "near-identical absolute volumes" in Q2 2020 compared to Q2 2019.
PwC stated that the three main factors likely to affect deal activity going forward are the liquidity positions of health services companies, the short-term and long-term needs created by COVID-19, and pre-existing market dynamics.
"In each case, deals can be a resilience strategy: a way to add strategic assets or relationships that preserve growth, profitability, or operational excellence; and/or a way to free up needed capital by shedding non-core assets," the report read.
Related: Medical Cost Trend Could Hit 10% in 2021
The report noted that initial public offerings remain a rare sight in the sector but acknowledged the one major occurrence this year was the Wall Street debut of One Medical, a San Francisco-based primary care startup, in January.
PwC's report was released three weeks after a Kaufman Hall report found that provider M&A activity experienced a "much less dramatic decline" than expected in Q2.
Despite the COVID-19 outbreak, the average size of seller by revenue was $800 million, near record highs according to Kaufman Hall, and the total transacted revenue for the quarter topped $12 billion, despite the lack of deals.
Related: During Q2, COVID-19 Generated a 'Much Less Dramatic Decline' in Provider M&A Activity
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.