Hospital M&A Struggling to Maintain Recent Surge, According to New Report from Irving Levin Associates

FOR IMMEDIATE RELEASE  Stephen M. Monroe, Editor
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NORWALK, CT – October 26, 2012 – The Hospital M&A market was continuing its post- recession rebound, but lately it has been slumping in terms of dollars committed.  During the five-and-a-half year period between January 1, 2007 and June 30, 2012, the Hospital M&A market accounted for 386 transactions. Initially indicating a recent surge, 2010, 2011 and the first half of 2012 account for 56% of all transactions during the five-year period, according to Irving Levin Associates’ new report, The Hospital M&A Market Report, Third Edition, 2012. Those deals involved more than 96,000 acute-care beds and generated combined net patient revenue of approximately $62.5 billion (based on transactions for which prices were revealed). Based on disclosed prices, a total of $30 billion were committed to fund Hospital mergers and acquisitions from 2007 through June 2012. This number is not representative of the whole, however, as only 50% of the prices were revealed.

The number of transactions each year and respective annual dollar volume, according to The Hospital M&A Market Report, Third Edition, 2012, are listed in the table below.
 

Hospital Mergers and Acquisitions January 1, 2007 – June 30, 2012

Year

Number of Transactions

Dollar Volume of Transactions

2007 60 $9,172,000,000
2008 60 $2,502,000,000

2009

50

$3,777,000,000

2010

76

$4,289,000,000

2011

90

$9,905,000,000

2012 First 6 Months

47

$812,500,000

Though the number of Hospital M&A deals from 2007 to 2008 was static, activity fell 17% from 2008 to 2009—a decline that largely can be attributed to the economic recession that began in fall 2008. In 2009, only 50 deals were transacted in the Hospital sector, the lowest in the five years covered in the new Report. Reflecting the beginnings of economic recovery, 2010 resulted in 76 hospital acquisitions, a 52% increase in the number of deals compared to the previous year. The trend continued the following year, 2011, in which 90 deals were announced.

The year 2012, having already accounted for 47 deals in the first six-month period, is on track with 2011 in terms of number of deals, but is not on pace to match the nearly $10 billion in dollar volume from last year. An analysis of the first six months of 2012 indicates that there has already been a more than 10% increase in activity within the Hospital M&A sector. A recently terminated $3.9 billion acquisition of a German hospital chain, however, has left the dollar volume for this year much less than originally anticipated.

The Hospital M&A Market Report, Third Edition, 2012 is published by Irving Levin Associates, Inc. The new 2012 edition includes hard-to-find details on Hospital M&A transactions such as price/revenue ratios, price/EBITDA ratios, price/bed ratios, single vs. multiple facility deals and more. The report was recently published and can be purchased at http://www.levinassociates.com/hospital-description.

For more information on The Hospital M&A Market Report, Third Edition, 2012 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.