M&A Activity in ARM Industry Picks Up in 2Q

After a fairly slow start to 2019, merger & acquisition activity in the accounts receivable management space picked up in the second quarter, according to data released by Corporate Advisory Solutions.

There were 14 deals in the second quarter, with a total enterprise value of $957 million. That compares with six deals with a value of $161 million in the first quarter, and 11 deals worth $1.16 billion in the second quarter of 2018.

Similar to activity in other recent quarters, smaller companies in the ARM industry are still feeling pressure from rising compliance costs while larger companies are seeking to diversify their portfolios and revenue streams, according to CAS.

“As the debt market is growing, new market entrants have been noticed too,” CAS wrote in its recently published quarterly newsletter. “With consistently active consolidations expected to take place over the next five years, the number of large ARM service providers are also expected to rise.”

On the revenue cycle management side of the industry, there were 20 deals with an enterprise value of $3.7 billion completed in the second quarter, compared with five deals worth $987 million in the same period a year ago.

Activity has been driven by “strong” healthcare companies that are seeking to expand their geographic footprint strategically, CAS said, and less by healthcare networks that were seeking to divest themselves of non-core businesses.

“Outsourcing is particularly popular in small and midsized practices like clinics, acute care hospitals and physician groups as they face difficulty collecting reimbursements while costs continue to rise,” CAS wrote. “This drives demand in the outsourced market and is expected to continue to grow.”

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