FIRST QUARTER HEALTH CARE M&A ACTIVITYSHOWS INITIAL SIGNS OF IMPROVEMENT IN MONTHS According to Irving Levin Associates, Inc.
FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
FIRST QUARTER HEALTH CARE M&A ACTIVITY
SHOWS INITIAL SIGNS OF IMPROVEMENT IN MONTHS According to Irving Levin Associates, Inc.
NEW CANAAN, CT - May 10, 2000 - Mergers and acquisitions in the U.S. health care market continued to decline in the first quarter of this year, down 22 percent from the fourth quarter 1999, and the lowest level since 1993, according to The Health Care M&A Report (www.healthcaremanda.com). Some sectors of the market, however, show signs of improvement, with managed care M&A activity up 20 percent over the first quarter of 1999.
The report records 118 deals from January through March 2000, in nine health care sectors: behavioral health; home health; hospitals; laboratories, MRI and dialysis; long-term care; managed care; physician medical groups; rehabilitation and other. The report is produced by Irving Levin Associates, Inc., a research and health information firm based in New Canaan, Connecticut.
According to The Health Care M&A Report, there were 118 transactions which were publicly announced during the first quarter of 2000, down 41 percent from the same quarter of 1999. The managed care, hospital and physician medical group sectors continue to perform reasonably well, accounting for 50 percent of all mergers and acquisitions this quarter.
"The effects of the Balanced Budget Act of 1997 continue to drag down the entire health care M&A market,” said Stephen M. Monroe, managing editor at Irving Levin Associates, Inc. But the firm is hopeful that market activity will pick up. "We've seen some signs since the end of the first quarter that financing is loosening up," said Sanford Steever, editor of the report, and that should be positive for the market. Activity has been up in several sectors of the market, according to Steever, including managed care; hospitals; physician medical groups; and laboratory, MRI and dialysis.
Highlights of the report include:
• HOSPITAL SECTOR: There was a 10 percent increase in activity over the first quarter of 1999. With 22 deals announced this quarter, the number lagged behind last quarter's 31 deals. States in the south and midwest witnessed the greatest amount of consolidation.
• LABORATORY, MRI AND DIALYSIS SECTOR: This sector showed signs of improvement. Up 8 percent from last quarter, this sector had 13 deals in the first quarter of 2000. The largest transaction is Fresenius' acquisition of Total Renal Care's noncontinental U.S. dialysis operations for $161 million.
• MANAGED CARE: This market was up 20 percent from last quarter. The 18 deals affected as many as 3.1 million plan enrollees, as compared to 4.9 million in the fourth quarter of 1999. The largest deal of the first quarter – and the largest of the past 12 months -- was BCE Emergis’ $580 million acquisition of United Payors & United Providers.
• PHYSICIAN MEDICAL GROUP SECTOR: This market witnessed 6 percent more deals than last quarter, with 19 transactions recorded in the first three months of this year. In terms of purchase price, the largest transaction this quarter was OptiCare’s $81 million acquisition of Vision Twenty-One.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care investments. The Firm has 50 years experience in the health care acquisition market. To purchase The Health Care M&A Report, consisting of 12 monthly newsletters, four quarterly supplements and 50 weekly e-mails, please call at (800) 248-1668. The annual subscription is $1,495. For more information on the web, go to www.healthcaremanda.com.
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