THIRD QUARTER HEALTH CARE M&A ACTIVITY DECLINES, DEAL VALUE TOTALS NEARLY $8 BILLION According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
Fax: 203-846-8300
pressreleases@levinassociates.com
THIRD QUARTER HEALTH CARE M&A ACTIVITY DECLINES, DEAL VALUE TOTALS NEARLY $8 BILLION According to Irving Levin Associates, Inc.
NEW CANAAN, CT – October 26, 2001 – The health care merger and acquisition market saw approximately $7.9 billion dollars spent on 174 transactions during third quarter 2001, a sharp 68% drop in total value and 16% decline in deal volume, from $24.4 billion spent on 208 transactions during the previous quarter, according to Irving Levin Associates, Inc. in its third quarter, 2001, Health Care M&A Report.
The Health Care M&A Market Q3:01 Deal Volume By Sector  
Sector
Q3:01
Deals*
Q2:01
Deals
%Change
Q3:00
Deals
%Change
Services:

 

 

Hospitals
18
18
0%
15
+20%
Laboratories
13
17
-24%
16
-19%
Long-Term Care
11
10
+10%
13
-15%
Physician Medical Groups
7
9
-22%
22
-68%
Home Health
6
11
-45%
12
-50%
Behavioral Health
4
5
-20%
5
-20%
Managed Care
4
13
-69%
10
-60%
Rehabilitation
1
4
-75%
4
-75%
Other
14
26
-46%
32
-56%
Services Subtotal
78
113
-31%
129
-40%

Technology:

 

 

Biotechnology
29
21
+38%


Medical Devices
26
29
-10%


Pharmaceuticals
25
20
+25%


e-Health
16
25
-36%


Technology Subtotal
96
95
+1%

 

 

 


Grand Total
174
208
-16%


*Preliminary figures
Of total health care M&A dollars spent, 71% or $5.68 billion, was in the technology segment, which fell from its second quarter value of $22.4 billion; $2.26 billion was spent in health care services, which rose slightly from $2 billion spent during second quarter. "The decline in transactions was expected as the economy weakened and equity values dropped," according to Stephen M. Monroe, Partner. "However, the plunge in dollar value was unusual and due to a sharp decline in large deals, with only 15 deals priced at over $100 million." Reversing the past two quarters' trend, more third quarter transactions were recorded in the health care technology segment than in the health care services segment; of 96 technology deals, the most deals were made in Biotechnology (29) and of 78 services deals, the most were made in Hospitals (18). 

The overall quarter-to-quarter decline may be partially attributed to an economy near recession and the suspension of capital markets following September 11th events. Although the Long-Term Care, Laboratories and Hospitals sectors maintained their recent level of activity this quarter, other services sectors such as Home Health, Managed Care, and Physician Medical Groups declined and have shown little indication of investor interest. "The publicly traded hospital chains were active during the third quarter with eight different companies announcing 12 transactions," according to Sanford Steever, Ph.D., Editor of the Report. The Biotechnology, Pharmaceutical and Medical Devices sectors performed well this quarter and investors may be finding the health care technology segment to be more stable than its services counterpart. For the remainder of this year, the majority of health care merger and acquisition activity is expected to continue in this quarter's leading sectors.
For more information on The Health Care M&A Report, or for a subscription to any Irving Levin publications, call 800-248-1668. Irving Levin Associates, Inc., established in 1948, has headquarters in New Canaan, CT and is online at www.levinassociates.com. This privately held corporation publishes research reports and newsletters, and maintains merger and acquisition databases on the health care and senior housing markets.
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