Decade in Review: Hospital M&A Continues Recent Rebound

 

FOR IMMEDIATE RELEASE Sanford B. Steever, Editor
Steve Monroe, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com

NORWALK, CT – February 3, 2011 – Forty-eight hospital mergers and acquisitions transactions were announced during just the second half of 2010, which represents 62% of the 77 deals announced in the full year.  There were 9 first quarter deals, 20 second quarter deals, 24 third quarter deals and 24 fourth quarter deals.  2010’s 77 deals marked a 33% increase in number of hospital M&A deals from last year’s 52.  Not since 2001, when 82 deals were reported, have there been this many hospital transactions in a single year. In 2010 $12.6 billion was committed to hospital M&A in, an 86% increase from the $1.8 billion committed to the sector in 2009.  Additionally 2010 allowed for the second most dollars committed in the hospital sector in ten years, behind 2006’s $35.5 billion grand total.

The five largest hospital transactions reported in 2010, according to Deal Search Online, are listed in the table below. 
 

                     Five Largest Hospital Deals of 2010

Acquirer

Target

Value

Quarter

Community Health Systems

Tenet Healthcare

$7.3 billion

Q4:10

Vanguard Health Systems

Detroit Medical Center

$1.3 billion

Q2:10

Cerberus Capital Management

Caritas Christi Health Care

$830 million

Q2:10

Prospect Medical Holdings

Management buyout

$363 million

Q3:10

University Community Health

Adventist Health Systems

$355 million

Q3:10

 

 

Community Health Systems’ proposed takeover of Tenet Healthcare Corp. for $7.3 billion signals a willingness of companies to put to use the large amounts of capital they’ve been sitting on since the recent and ongoing financial crisis.  This indicates a recovery in M&A activity since the generational low in March 2009.

Over $83.1 billion was committed to fund the 589 hospital takeovers that were announced during the 10-year period ended December 31, 2010, according to Deal Search Online.  Earlier in the decade activity was sluggish due to a recession but the market rebounded and grew to the level of $35.5 billion in 2006.  We’re seeing a similar response now as the M&A market continues to recover from the wake of damage left by the Great Recession.  If the second half of 2010 is any indication, it seems the hospital sector is heading for an active 2011. 
 

                               Hospital Mergers and Acquisitions, 2001 to 2010

Year

Number of Deals

Dollars Committed

2001

82

$3,108,119,000

2002

56

$3,403,681,000

2003

37

$2,341,550,000

2004

59

$9,706,390,000

2005

50

$2,905,729,000

2006

55

$35,533,500,000

2007

61

$9,257,130,000

2008

60

$2,580,600,000

2009

52

$1,678,800,000

2010

77

$12,611,395,000

Total

589

$83,126,894,000

 


For more information on DealSearchOnline.com or for a subscription to any Irving Levin publication, call 800-248-1668 or go to www.levinassociates.com. Irving Levin Associates, Inc. was established in 1948 and is based in Norwalk, CT. This privately held corporation publishes research reports and newsletters, and maintains health care and seniors housing M&A databases. 
 
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