The Health Care M&A Monthly: Deal Volume Remains Steady, But Dollar Amounts Drop

A total of 67 transactions were announced in the health care M&A market during the past four weeks, just two deals shy of last month’s total of 69. The nine sectors of the health care services segment accounted for 37 deals, or 55%, of the total while the four sectors of the technology segment brought up the rear with 30 transactions.
In terms of greatest deal volume, the Pharmaceuticals sector led with 13 transactions, followed by Long-Term Care and Medical Devices, both of which posted eight deals apiece. As has become a worrisome refrain this year, no deals were announced in the Rehabilitation sector.
Based on prices revealed so far, a total of $2.6 billion was committed to finance these 67 deals, down notably from the $13.7 billion spent in the prior four-week period. The health care technology segment accounted for $1.67 billion, or 64% of the total committed in September. The largest deal, however, was announced in the Managed Care sector.
Perhaps the most striking feature of this month’s M&A market is not something that happened, but something that didn’t happen. For the first time in 2004, we went four weeks without hearing of a single deal that broke the $1 billion mark. There are plenty of explanations to go around. You could blame it on three big hurricanes in a row, which have certainly pounded hospital and long-term care operators in the Southeast.
Or perhaps you could point the finger at the mixed signals now emanating from politicians this election year over their commitment to reform health care, which is giving health care insurers, among others, the jitters. But in the end, the statistical likelihood is that the M&A market could not, month after month, sustain an unbroken string of billion-dollar deals, and if one month out of nine fails to produce such a deal, there is probably little significance to that isolated fact.
When we sort through the numbers early next year, this year will still stand out as one of the richest in terms of dollar volume. To date, we have 607 transactions whose combined value is $138.3 billion. And of those 607 deals, 21 are billion-dollar transactions.