Hospital Mergers Dip to a 12-Year Low in 2021

While strategic M&A in the medical diagnostics space was robust in 2021, hospital mergers dropped to their lowest level in over a decade. That’s the finding of a new report from health care finance consulting firm Ponder & Co.

Long-Term Decline in Hospital Mergers 

This is the fourth consecutive year that the number of announced hospital merger deals has fallen. In 2021, there were only 71 such deals, the lowest total since 2009. Part of the reason, of course, is that the ongoing pandemic has forced hospital executives to put deals on a back burner or scrap them altogether. Perhaps the most notable example is the proposed merger between Advocate Aurora Health and Beaumont Health to form what would have been a $17 billion health system across Illinois, Michigan, and Wisconsin that fell apart in the early days of the crisis. While the decline in hospital merger activity isn’t new, the move from the business-friendly to a more active regulatory regime has fueled the trend. On July 9, President Biden issued an executive order (EO) on the Department of Justice, Federal Trade Commission, and other federal government agencies to vigorously enforce the antitrust laws across all markets, including health care. The EO specifically identifies hospital consolidation as a priority area for enforcement. Other factors for the decline include telehealth, high valuations, and the simple fact that the previous tidal wave of consolidations has reduced the number of quality merger targets available. However, look for merger activity to rebound as pandemic financial stresses generate new opportunities for hospitals and health systems. Here’s a summary of the key new M&A diagnostic deals that were announced or closed in January 2022:

MERGERS, ACQUISITIONS, & ASSET SALES

Acquiring Company	Target(s)	Deal Summary
Sema4	GeneDx (from Opko Health)	Price: $623 million total, including $150 million cash and 80 million shares of Sema4 stock upfront, plus up to $150 million in revenue-based milestone payments to GeneDx over next 2 years Status: Expected to close in Q2 Acquisition of GeneDx’s comprehensive genomics datasets and assets expands Sema4’s precision medicine capabilities
Quest Diagnostics	Pack Health	Price: All-cash equity deal at undisclosed price Status: Expected to close in Q1 acquisition of patient engagement builds on 2018 acquisition of MedXM (now Quest HealthConnect) in-person home-based risk assessment and monitoring provider and is expected to lead to new services offerings
Ginkgo Bioworks	Project Beacon COVID-19	Price: Undisclosed Status: Closed Acquisition of Boston-based coronavirus testing organization to be integrated into Gingko’s Concentric COVID-19 testing division
Exact Sciences	PreventionGenetics	Price: $190 million—50% in cash and 50% in Exact Sciences common stock Status: Closed Acquisition of testing lab expands Exact Sciences’ position in hereditary cancer testing
Co-Diagnostics	Idaho Molecular and Advanced Conceptions	Price: Roughly $50 million for about 4.72 million shares of newly issued common stock and 465,000 common stock warrants Closed Co-Diagnostics has been collaborating with 2 private biotech firms to develop YourTest, an at-home/point-of-care diagnostic device, based on Co-Diagnostics’ Eikon PCR platform Co-Diagnostics acquires rights to all existing and future assets and intellectual property related to the technology as it begins principle and large-scale manufacturing of the device
Prolight Diagnostics	Psyros Diagnostics	Price: SEK 65 million ($7.1 million) via issuance of new shares, with 30% to be paid within four weeks of acquisition completion and remaining 70% to be paid upon achievement of milestones over next 2 years  Status: Expected to close in Q1 Sweden-based Prolight and UK-based Psyros to develop point-of-care tests for cardiac biomarkers, such as high sensitivity troponin, as well as multiplex applications testing several biomarkers simultaneously from the same sample
CliniSys	Horizon Lab Systems	Price: Undisclosed Status: Closed CliniSys to combine with Sunquest Information Systems to create diagnostics and lab informatics organization with over 1,300 employees in 12 countries
Nightingale Health	Negen	Price: Undisclosed Status: Expected to close by end of Jan. Acquisition of Finnish genetic testing and analysis company gives Nightingale core functionality in direct-to-consumer DNA testing, a genomic data processing pipeline, and polygenic risk algorithms for cardiovascular disease, type 2 diabetes, and other diseases
Insightful Science	Omiq	Price: Undisclosed Status: Closed Acquisition of data science company offering software solutions for high-dimensional flow cytometry and quantitative multiomics data
Calibre Scientific	BrightBox Quantitation	Price: Undisclosed Status: Closed Acquisition of California-based sequencing sample prep reagent manufacturer bolsters Calibre’s position in DNA sequencing sector
SQI Diagnostics	Precision Biomonitoring	Price: $6.825 million, including $6.145 million cash and 4,171,779 SQI shares, at $0.163 per share Status: Expected to close Feb. 14 SQI acquires Precision’s SARS-CoV-2 testing business, including Canadian distribution rights for SARS-CoV-2 Real-Time RT-PCR Test and Rapid Mobile Testing devices that Precision acquired from Biomeme in 2020
Synlab	Sistemas Genómicos of the Ascires Group	Price: Undisclosed Status: Closed Acquisition of Spanish firm’s expertise in bioinformatics, sequencing, molecular biology, and molecular genetics will strategically complement German company’s own genetics services offerings
Calibre Scientific	AmpliTech	Price: Undisclosed Status: Closed Acquisition of French life science reagent and instrument distributor specializing in molecular pathology, cytogenetics, and prenatal, postnatal, and cancer molecular genetics boosts Calibre Scientific’s position in European market