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Health Care M&A Activity in Second Quarter Points to a Record Year, According to New Report From Irving Levin Associates, Inc.

 

FOR IMMEDIATE RELEASE Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
NORWALK, CT – July 14, 2011 – The dollar volume committed to merger and acquisition activity in the health care industry during the second quarter of 2011 surged over the comparable figures in the previous (Q1:11) and year-ago (Q2:10) quarters. Based on the numbers revealed to date, a total of $73.5 billion was spent to finance 243 mergers and acquisitions in the health care industry, up 44% from the $51.1 billion spent in Q1:11 and up 61% from the $45.7 billion spent in Q2:10. As far as dollar volume is concerned, M&A activity is on track to break all previous records in this market.
 
The Health Care M&A Market Second Quarter 2011
Dollar Amounts By Sector*
Sector
Dollar Amount
Second Quarter 2011
Percent of Quarter
Medical Devices
$ 33,194,000,000
45%
Pharmaceuticals
27,428,000,000
37%
Biotechnology
4,932,000,000
7%
E-Health
639,000,000
1%
   Technology subtotal
$ 66,193,000,000
90%
 
 
 
Hospitals
$ 3,543,000,000
5%
Managed Care
1,690,000,000
2%
Long-Term Care
985,000,000
1%
Physician Medical Groups
416,000,000
>1%
Home Health
88,000,000
>1%
Behavioral Health
Laboratories, MRI & Dialysis
Rehabilitation
Other Services
620,000,000
1%
Services subtotal
$ 7,342,000,000
10%
 
 
 
Total health care
$ 73,535,000,000
100%
*Preliminary figures
  
 
The Health Care M&A Market Q2:11 – Deal Volume By Sector
 
       
 
 
 
 
 
 Q2:11
 Q1:11      
%
Q2:10
%
Sector
 Deals*
Deals
Change
Deals
Change
Services Segment:
 
 
 
 
 
Long-Term Care
38
36
6%
27
41%
Hospitals
32
24
33%
18
78%
Physician Groups
27
18
50%
9
200%
Home Health Care
7
6
17%
11
-36%
Labs, MRI, Dialysis
4
11
-64%
16
-75%
Managed Care
7
1
600%
3
133%
Behavioral Health Care
3
4
-25%
4
-25%
Rehabilitation
2
3
-33%
4
-50%
Other
 19
 26
 -27%
18
 6%
   Services Subtotal
139
129
8%
110
26%
 
 
 
 
 
 
Technology Segment:
 
 
 
 
 
Medical Devices
36
43
-16%
44
-18%
Pharmaceuticals
32
21
52%
43
-26%
Biotechnology
20
24
-17%
25
-20%
e-Health
 16
 12
 33%
 11
 45%
   Technology Subtotal
 104
 100
 4%
123
-15%
 
 
 
 
 
 
Grand Total
243
229
6%
233
4%
*Preliminary figures
 
         
Health care deal volume during Q2:11 posted modest increases over the figures recorded in both the previous and year-ago quarters. The chart above breaks out the percentage contribution of each sector to total deal volume along with comparisons to the previous and year-ago quarters.
 
The technology sectors, particularly Medical Devices, continue to attract the lion’s share of investor interest and dollars. “For two quarters running, the Medical Device industry has been the single most active sector in the health care M&A market. Investors believe that technological innovation in this sector is positioning it for growth,” observed Sanford Steever, editor of The Health Care M&A Report. “They also believe this growth can be accessed through the acquisition of the innovating companies by larger companies better able to bring new technologies and products to market.”
 
Among the services sectors, M&A activity remains robust in facility-based sectors, such as Hospitals and Long-Term Care, both of which led the services in deal volume. “Hospitals continue to digest the new health care reform law and to wrestle with its implications. One conclusion they have drawn is, come what may, there is strength in numbers. Accordingly, they are buying other hospitals and physician medical groups to build up local and regional systems, implement ACOs—accountable care organizations—and share financial risk and reward through a more diversified provider network,” noted Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes the Report.
 
For the first half of 2011, the health care M&A market has posted 472 deals worth a combined total of nearly $125.0 billion. Annualizing these figures supports the prediction that 2011 will end with approximately 950 deals worth $250.0 billion, which would set a new record in dollars spent on M&A in the health care industry.
 
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 Norwalk, 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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