NEWLY PUBLISHED REPORT: 2013 HEALTH CARE SERVICES M&A MARKET REBOUNDS SLIGHTLY WITH SMALL INCREASE IN DOLLAR VALUE OF TRANSACTIONS, ACCORDING TO IRVING LEVIN ASSOCIATES, INC.
|FOR IMMEDIATE RELEASE||
NORWALK, CT – May 8, 2014 – Merger and acquisition activity in the health care industry’s services sectors increased slightly in 2013 as the dollar value of transactions in the nine sectors increased by 1.8% to $52.7 billion, according to the 2014 Health Care Services Acquisition Report, Twentieth Edition. Even though the dollars spent increased, the number of transactions declined by 5.8% to 598 publicly announced health care services mergers and acquisitions in 2013. In terms of number of M&A transactions, all but the long-term care and home health/hospice sectors posted declines in 2013 compared with 2012. “Without the strong performance of the long-term care sector, which had a 20% increase in transaction volume in 2013, health care services would have had a less robust year,” concluded Lisa Phillips, editor of the 2014 Health Care Services Acquisition Report.
The Managed Care sector posted the largest contraction in deal volume, with a 46% plunge in the number of publicly announced mergers or acquisitions, from 28 deals in 2012 to just 15 in 2013. The dollar volume plunged as well, from $18.9 billion in 2012 to $58.2 million in 2013 (2013 consisted of small transactions, and few had disclosed prices). “After the robust year in 2012 with the three largest Managed Care acquisitions of the past five years, combined with the uncertainty of the healthcare.gov rollout, there was little to warrant investor interest,” commented Phillips. “That said, the low Managed Care transaction volume in 2013 was still a bit of a surprise.”
The Hospital sector also posted a decline in 2013, down 21.5% in deal volume to 84 announced acquisitions, which includes one large transaction in Germany. In the U.S. market, even though the number of transactions declined, the number of hospitals and hospital beds involved in those transactions hit a five-year high on the strength of the acquisition of Health Management Associates by Community Health Systems for $7.6 billion and the sale of Vanguard Health Systems to Tenet Healthcare for $4.3 billion, the year’s two largest Hospital sector deals. “Those two acquisitions alone accounted for more than one-third of the hospitals sold in the U.S. in 2013,” stated Phillips. Usually, beds owned by not-for-profits dominate the hospital M&A market, but because of those two billion-dollar deals last year, 78% of the target hospitals in 2013 were for-profit, compared with between 25% and 30% in a more typical year.
In other highlights, merger and acquisition activity in both the Behavioral Health and Physician Medical Group sectors were very similar from 2012 to 2013, but there is the possibility that Behavioral Health will pick up as more reimbursement becomes available. The 2014 Health Care Services Acquisition Report, Twentieth Edition, contains more than 200 pages of hard-to-find information on all publicly announced hospital, managed care, laboratory services, physician medical group, behavioral health, home health and hospice care, rehabilitation and other services mergers and acquisitions in 2013. One other services sector, Long-Term Care, is treated separately in The Senior Care Acquisition Report, Nineteenth Edition. Irving Levin Associates is a Norwalk, Connecticut-based research and publishing firm specializing in health care investments. The firm has more than 50 years experience in the health care and seniors housing M&A market. The Health Care Services Acquisition Report may be purchased for $595 by calling 800-248-1668.
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