The Health Care M&A Monthly: Second Quarter 2007 M&A Results 231 Deals Announced in Q2:07 Worth $59.1 Billion

The three months from April through
June, 2007 saw the announcement
of 231 mergers and acquisitions in the health care industry. The health care technology segment’s four sectors posted a total of 124 transactions, or 54% of the quarter’s deal volume. The health care services segment’s nine sectors brought in the remaining 107 transactions.

This volume represents a 3% increase over the 224 transactions posted in the previous quarter, but a 16% decrease from the 276 deals announced in the year-ago quarter, Q2:06. The percentage contribution of each sector and each segment to overall deal volume, along with comparisons to the prior and year-ago quarters, appears in the table on page 9 of this month's issue.

The technology segment boasted the top three sectors in terms of deal volume: Medical Devices posted 40 transactions, followed by Biotechnology with 36 and Pharmaceuticals with 35. Within the services segment, the Long-Term Care sector claimed top honors with 23 deals announced. Bringing up the rear were Rehabilitation, and Behavioral Health, which posted four and three deals, respectively.
Based on prices revealed to date, a total of $59.1 billion was committed to finance this M&A activity. The technology segment raised $48.6 billion, or 82% of the quarter’s total dollars, while the services segment accounted for the remaining $10.5 billion.

The percentage contribution of each sector to the total number of dollars spent appears in the chart on page 3 of the issue. Biotechnology captured the highest percentage of M&A dollars, with 39.8% of the total, followed by Medical Devices with 23.5% and Pharmaceuticals with 18.6%. At the other end of the scale, due to such minuscule results, the Behavioral Health, Physician Medical Group and Rehabilitation sectors had to be combined.

Prices in Q2:07 ranged from a low of $285,505 (Labs, MRI & Dialysis) to a high of $15.2 billion (Biotechnology). The average price per deal was $408.0 million (Q2:06, $366.0 million), the median price $30.0 million (Q2:06, $20.0 million). Ten transactions came with a price tag of $1.0 billion or more. Their combined value is $43.6 billion, or nearly three-quarters of all M&A dollars in Q2:07. Not surprisingly, eight of the billion-dollar deals were in the technology segment and just two in the services segment.

The First Half of 2007

The first six months of 2007 generated a total of 455 deals in the health care M&A market. This represents a 12% decrease from the first half of 2006 when a total of 517 deals were announced in the health care industry. However, the combined value of the deals in H1:07, based on revealed prices, is $131.5 billion. This amount represents an 18% increase over the $111.7 billion committed during the corresponding period of 2006.

With deal volume lower and dollar volume higher than the prior period’s, the median price per deal has risen. The median price per deal in H1:07 was $29.1 million, up 25% from the $23.3 million median posted in H1:06. Among the deals for H1:07 are 23 billion-dollar deals worth a total of $99.4 billion (H1:06, 17 worth $83.4 billion). If the dollars (pounds, euros and yen) keep flowing at this pace for the rest of the year, 2007 will emerge as a record-breaker in terms of dollar volume.
 

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