The long-term care sector has seen a significant increase in mergers and acquisitions (M&A) activity in the first half of 2024, outperforming other segments of the healthcare industry.
Despite a slow start to healthcare transactions overall, the number of publicly announced transactions in long-term care has risen compared to previous years. The second quarter of 2024 set a new quarterly record with 183 publicly announced transactions in long-term care, representing a 21% increase from the first quarter of 2024 and a 49% rise compared to the second quarter of 2023.
Assisted living communities accounted for 45% of these M&A transactions, while skilled nursing facilities made up 35%. The long-term care sector is facing financial pressures, leading to an increase in distressed sales. Operators are struggling with inadequate reimbursement rates in certain states and rising expenses, which has pushed some facilities to sell rather than continue operating independently. This trend is not limited to nursing homes but extends to various types of long-term care facilities.
In the not-for-profit sector, affiliations are becoming more common as organizations seek to combine resources and missions for sustainability. Small, stand-alone operators are finding it increasingly difficult to survive in the current market, leading to a trend of consolidation as they seek strategic affiliations with larger providers. This consolidation is expected to continue throughout the year as operators aim to improve their competitive positioning. The focus on sustainability and operational efficiency will shape the strategic decisions made by organizations in the coming months.