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Health Care M&A Spending Rises 11% in 2011 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 – January 25, 2012 – During 2011, a total of $227.4 billion was committed to finance the year’s activity in the health care merger, acquisition and takeover market. This represents an 11% increase over the $205.6 billion spent in 2010. In dollars committed to M&A activity, 2011 is the fourth-largest year of the past 10 years. In terms of deals announced, 2011 saw a total of 980 transactions in 13 sectors of the health care industry, a 3% decrease from the 1,007 deals in 2010. However, deal volume is expected to increase to 1,000 and over as new information, such as annual 10-K filings, brings more transactions to light.

M&A Deal and Dollar Volume for 2011 and 2010*

 

Deal Volume

Dollar Volume

 

 

Sector

2011

2010

% Change

2011

 

2010

 

% Change

Behavioral Health

12

8

50%

$      274,000,000

 

$3,500,000,000

 

-92%

Home Health

28

44

-36%

286,000,000

 

1,433,000,000

 

-80%

Hospitals

86

77

12%

       7,868,000,000

 

10,793,000,000

 

-27%

Laboratories, MRI, Dialysis

29

42

-31%

  5,570,000,000

 

2,273,000,000

 

145%

Long-Term Care

161

116

39%

16,274,000,000

 

12,102,000,000

 

34%

Managed Care

20

14

43%

 7,855,000,000

 

4,225,000,000

 

87%

Physician Medical Groups

107

67

60%

465,000,000

 

425,000,000

 

9%

Rehabilitation

14

12

17%

1,340,000,000

 

237,000,000

 

465%

Other

88

97

-9%

  40,780,000,000

 

23,262,000,000

 

75%

   Services Subtotal

545

477

14%

$  80,712,000,000

 

$  56,250,000,000

 

43%

Biotechnology

79

130

-39%

$  32,722,000,000

 

$  60,950,000,000

 

-46%

E-Health

71

78

-9%

   5,995,000,000

 

6,955,000,000

 

-14%

Medical Devices

170

185

-8%

     63,465,000,000

 

41,672,000,000

 

52%

Pharmaceuticals

115

137

-16%

    44,477,000,000

 

39,847,000,000

 

  12%

   Technology Subtotal

435

530

-18%

$146,659,000,000

 

$149,424,000,000

 

-2%

Grand Total

980

1,007

-3%

$227,371,000,000

 

$205,647,000,000

 

11%

*2011 Preliminary Figures

 

 

 

 

 

 

 

 

 
 
As the table illustrates, four services sectors posted notable growth in 2011: Hospitals, Long-Term Care, Managed Care and Physician Medical Groups. Overall, the 2011 services sectors posted gains in deal and dollar volume over 2010 while the corresponding technology sectors saw declines.
 
For the past five years, the health care M&A market has generated on average 1,000 deals worth in the neighborhood of $230.0 million each year. “We predict that the dynamics of the 2011 market will forge ahead into 2012,” stated Sanford B. Steever, Ph.D., editor of The Health Care M&A Report. “In particular, we expect to see strong deal making in the four technology sectors as well as in facility-based service sectors, such as Hospitals and Long-Term Care. Despite the rhetoric of repeal, hospitals and other providers will keep pursuing mergers and acquisitions to assemble the component parts for building accountable care organizations.”
 
The pace of health care M&A may be influenced by external factors. “Election-year wrangling will tend to lengthen the period of due diligence in deal making as buyers and sellers attempt to see which way the political winds are blowing. Deals in provider sectors dependent on government payments will be particularly vulnerable as changes to reimbursement protocols, real or threatened, are bandied about,” observed Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes the Report. Jitters over Europe’s debt and economy will likely distract some deal making in 2012. “Deal makers clearly prefer non-volatile markets, which afford them greater confidence in projecting financial results and proposing valuations for companies they wish to buy or sell. With the ongoing uncertainty in Europe, American companies will be leading the Health Care M&A market,” added Mr. Monroe.
 
Despite the potential influence of external factors on activity, the merger and acquisition market for the health care industry is expected to remain robust for 2012. “The fundamental forces driving the M&A market for health care remain firmly in place,” noted Mr. Steever. “Companies will undertake M&A to grow their businesses, gain market share, create operational and financial synergies, and overcome a fragmented delivery system, among others.”
 
For more information on The Health Care M&A Information Source, The Health Care Services Acquisition Report or for a subscription to any Irving Levin publication, 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 seniors housing market.