DOLLAR VOLUME OF HEALTH CARE MERGERS AND ACQUISITIONS DOUBLES IN THE SECOND QUARTER OF 2012, ACCORDING TO NEW REPORT FROM IRVING LEVIN ASSOCIATES, INC.

FOR IMMEDIATE RELEASE  Stephen M. Monroe, Editor
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NORWALK, CT – July 19, 2012– The dollar volume of merger and acquisition activity in the health care industry more than doubled in the second quarter of 2012 compared with the previous quarter, despite a decline in the number of transactions announced.  In fact, with $61.2 billion in announced mergers and acquisitions in the second quarter, it was the most active quarter since the second quarter of 2011 when nearly $75 billion of health care M&A deals were announced. The 251 announced mergers and acquisitions equaled the year-ago number.

                     
 
    The Health Care M&A Market Q2:12– Deal Volume By Sector

                                                       

                                                    Q2:12      Q1:12         %       Q2:11        %

Sector                                          Deals*       Deals    Change   Deals    Change

                                              Services Segment:

Long-Term Care                             35              41       -15%          45       -22%

Hospitals                                       22              26       -15%          32       -31%

Physician Groups                            21              21           0%          28       -25%

Labs, MRI, Dialysis                          10                5       100%            4      150%

Managed Care                                9                6         50%            4      125%

Home Health Care                          5              11       -55%            7       -29%

Behavioral Health Care                     4                7       -43%            3        33%

Rehabilitation                                 2                5       -60%            2          0%

Other                                           25              38      -34%          19       32%

Services Subtotal                          133            160       -17%        144         -8%

                                                                                                                        

Technology Segment:                                                                                   

Medical Devices                             43              45         -4%          36       -19%

Pharmaceuticals                             29              23         26%          34       -15%

e-Health                                       24              28       -14%          16        50%

Biotechnology                                22              32      -31%          20        10%

Technology Subtotal                   118            128         11%        106        11%

                                                                                                                       

Grand Total                                251            288           5%        250          0%

                                      *Preliminary figures
 

The table above presents the number of M&A deals posted in each of 13 sectors of the health care industry during Q2:12, as well as the prior and year-ago quarters and the percentage change from those quarters.  “The health care M&A market has been fairly steady, averaging just above 250 transactions a quarter, but it has been the dollar volume, impacted by the number of mega-deals, that fluctuates so much,” commented Stephen M. Monroe, Partner at Irving Levin Associates and editor of The Health Care M&A Report.

 

The Health Care M&A Market Second Quarter 2012
Dollar Amounts By Sector*

Sector

Dollar Amount

Second Quarter 2012

Percent of  Quarter

Pharmaceuticals

  $  20,702,580,000

34%

Medical Devices

11,582,645,000

19%

Biotechnology

  4,841,041,000

8%

E-Health

1,004,463,000

2

Technology subtotal

$  38,130,729,000

62%

 

 

 

Hospitals

$    4,533,000,000

7%

Physician Medical Groups

4,222,817,000

7%

Long-term Care

1,889,081,000

3%

Managed Care

730,000,000

1%

Behavioral Health Care

      517,000,000

˂1%

Labs, MRI & Dialysis

 348,900,000

˂1%

Rehabilitation

6,340,000

˂1%

Home Health Care

Other Services

10,827,350,000

18%

Services subtotal

$    23,074,488,000

38%

 

 

 

Total health care

$  61,205,217,000

100%

                                    *Preliminary figures

 

The table above lists the dollar amount that each sector of the health care industry captured in Q2:12, along with the percentage contribution of each to the $61.2 billion total committed during the quarter.

 

The increase in M&A activity was spread across both the technology and services segments of health care.  The $38.1 billion in health care technology transactions represented an 87% jump from the first quarter, while the $23.1 billion in health care services acquisitions was almost triple the dollar volume in the first quarter.  In the health care services segment, long-term care and hospital acquisitions continue to dominate both the number of transactions and the dollar volume, with physician medical group acquisitions also very active as health care market participants try to get ready for the increase in Accountable Care Organizations. In the technology M&A segment, the number of e-health transactions has been growing and has averaged over 20 acquisitions per quarter for the past four quarters.  “The fact that the Supreme Court decision validated most aspects of the Affordable Care Act means that providers and payers will be consolidating to be stronger players in the new market.  Coincidence or not, there was a flurry of announced M&A transactions in the week after the decision,” stated Stephen Monroe.

 

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.