The Health Care M&A Monthly: Fourth Quarter Ends Strong--

223 Deals Announced Worth $60.4 Billion


Last month we observed that the period between Thanksgiving and New Years rarely sees much in the way of new M&A activity, with most of the news revolving around closing deals that were previously announced. So, December’s robust deal making caught us by surprise. December accounted for one-third of the fourth quarter’s deal volume, but nearly 60% of its dollar volume. As if to emphasize the 24/7/365 nature of the market, the last day of 2010 ended with a billion-dollar deal, one of 13 announced during the quarter.

Based on data collected so far, a total of 223 deals were announced during the fourth quarter of 2010.  The nine health care services sectors produced a combined total of 118 deals while the four corresponding technology sectors produced just 105, a reversal of the usual results between the services and technology segments. The top three sectors combined—an unusual trio of Medical Devices (36), Physician Medical Groups (26) and Long-Term Care (25)—accounted for 40% of the quarter’s deal making. One thing that hasn’t changed, however, is that the laggards continue to be drawn from the services segment: Behavioral Health Care and Managed Care managed to eke out just one deal apiece. The contribution of each sector to the overall M&A market appears in the table opposite along with comparisons to the previous (Q3:10) and year-ago (Q4:09) quarters.

According to prices revealed to date, a total of $60.4 billion was committed to M&A activity during Q4:10. This figure represents an 11% drop from the $68.1 billion spent in the previous quarter but a 58% jump over the $38.3 billion spent in the year-ago quarter, Q4:09.

In Q4:10, the technology segment accounted for $34.9 billion, or 58% of the total spent on health care M&A, with the services segment accounting for the remaining 42%. The services segment, particularly the facility-based Hospital and Long-Term Care sectors, reported stronger-than-usual results for the quarter, posting $7.8 billion and $9.5 billion, respectively. 

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