The Health Care M&A Monthly: Second Quarter M&A Results

Steady As She Goes...But The Third Quarter Starts Slowly

As markets continue to react to the tremendous amount of changes occurring as a result of health care reform legislation, the consolidation of the health care industry continued on a fairly steady trajectory throughout the second quarter of 2012. Preliminary data indicates that the health-care M&A market posted strong gains in dollar volume during the period; in fact, it was the most active quarter in terms of dollar volume since the corresponding quarter in 2011. Based on current data, the $61.2 billion in announced deals for Q2:12 nearly doubled the $34.0 billion volume attributed to Q1:12 and approached the nearly $75 billion spent on health care M&A transactions in the year-ago quarter.

The overall number of transactions in Q2:12, however, declined compared to those announced in the previous quarter—251 announced deals compared to the 288 deals announced in Q1:12, a 13% decline—but the number virtually equals the 250 deals announced in the year-ago quarter. The contribution of each sector, along with comparisons to the previous and year-ago quarters, appears in the table on page 10.

As was the case last quarter, the nine health-care services sectors attracted 133 transactions, or 53% of the total, according to the preliminary data, while the four health-care technology sectors again represented the higher dollar volume—$38.1 billion, or 62% of the total dollar volume for the quarter and an 87% jump compared to the dollar volume in the previous quarter. The $23.1 billion in health care services acquisitions during the second quarter was almost triple the dollar volume in the first quarter.

Within the four health care technology sectors, the data indicates that Medical Devices accounted for the most transactions (43), followed by Pharmaceuticals (29), e-Health (24), and Biotechnology (22). Pharmaceuticals, however, garnered 34% of the total dollar volume among the technology sectors ($20.7 billion), followed by Medical Devices ($11.5 billion, or 19%), Biotechnology ($4.8 billion, or 8%), and e-Health ($1.0 billion, or 2%).  This is based on disclosed prices.

Medical Devices was also the most active technology sector in both the previous and the year-ago quarters, while Biotechnology activity was down 31% from the first quarter. For e-Health, which logged slightly fewer deals compared to the previous quarter, Q2:12 activity was a whopping 50% higher than a year ago. It appears that e-Health is a growing category, as health care market participants ramp up for the influx of accountable care organizations and other health-reform requirements.

Within the nine health care services sectors, the data indicates that Long-Term Care accounted for the most transactions (35), followed by Hospitals (22), Physician Groups (21), Labs/MRI/Dialysis (10), Managed Care (9), Home Health Care (5), Behavioral Health Care (4), and Rehabilitation (2)..........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today