Health Care M&A Broke Records in Q4 2014, and for the Full Year, According to Health Care M&A News

FOR IMMEDIATE RELEASE  
Lisa E. Phillips, Editor
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NORWALK, CT – Janaury 23, 2015 – Health care merger and acquisition activity exploded in the fourth quarter of 2014, and set new records for Q4 deal volume, as well as spending. At least 345 transactions were announced in Q4:14, up 1% compared with the previous quarter. Spending hit $138.3 billion, an increase of 119% compared with the $63.1 billion in Q3:14, according to Health Care M&A News.

The Health Care M&A Market – Deal Volume by Sector

 

Q4:14

Q3:14

 

Q4:13

 

Sector

Deals

Deals

Change

Deals

Change

Services

 

 

 

 

 

Behavioral Health Care

5

4

25%

3

67%

Home Health & Hospice

19

15

27%

18

6%

Hospitals

31

20

55%

17

82%

Labs, MRI & Dialysis

6

8

-25%

9

-33%

Long-Term Care

84

81

4%

65

29%

Managed Care

4

5

-20%

4

0%

Physician Medical Groups

16

14

14%

20

-20%

Rehabilitation

6

5

20%

7

-14%

Other

36

36

0%

15

140%

Services subtotal

207

188

10%

158

31%

Technology

       

 

Biotechnology

45

27

67%

32

41%

eHealth

31

38

-9%

24

29%

Medical Devices

27

26

4%

30

-10%

Pharmaceuticals

35

67

-48%

47

-26%

Technology subtotal

138

154

-10%

133

4%

Grand total

345

342

1%

291

19%

Source: Health Care M&A News, January 2015

The previous record for fourth-quarter deal volume was set in December 2012, at 318 transactions. The previous high-water mark for spending was for $82.2 billion, set in the fourth quarter of 2006

Full-year totals for 2014 also broke previous records for the number of deals and the dollars spent. At least 1,299 transactions were announced last year, an increase of 26% over 2013’s total of 1,035 transactions. The previous record for most transactions in a year was set in 1997, at 1,287.

Spending reached new heights, up to $387.4 billion in 2014, and an increase of 137% over 2013’s total of $163.7 billion. The new record far outstrips the prior one, set in 2006, of $268.5 billion.

2014 was the year of the drug deal, as the Pharmaceutical sector accounted for 55% of the year’s total spending ($213 billion) and 14% of the deal volume (188 transactions). The figures would be even higher if two transactions—Pfizer Inc.’s $118 billion bid for AstraZeneca and AbbVie’s $54.7 billion offer for Shire plc—had not terminated.

Long-Term Care also broke earlier records, with approximately 290 transactions and $25.7 billion in spending. This sector has been on a hot streak since late in 2013, when 225 deals were publicly announced. Last year’s combined total for spending easily surpassed the $22.6 billion record set in 2006.

“Uncertainty over the effects of the Affordable Care Act has been replaced by exuberance,” said Lisa E. Phillips, editor of Health Care M&A News. “The cost of debt remained cheap and equity was easy to raise. As growth slowed in other countries, health care became an attractive target for U.S. investors.”

M&A activity is likely to keep booming in the first half of 2015. “Americans continue to enroll in healthcare plans through the exchanges, which is good news for providers and payers,” Ms. Phillips said. “We see some uncertainty over when the Federal Reserve will raise interest rates, not if. And the U.S. Supreme Court will release its decision in King v. Burwell by the end of June, which could disrupt enrollments through Healthcare.gov. Again.”

For more information on The Health Care M&A Information Source or Health Care M&A News, or for a membership to any of Irving Levin Associates’ services, please call 800-248-1668. Irving Levin Associates, Inc., established in 1948, is headquartered in Norwalk, CT and is online at www.levinassociates.com.  This privately held corporation publishes annual and quarterly research reports, monthly and weekly newsletters, and maintains merger and acquisition databases on the health care and senior housing markets. If you would like to receive future releases, please email pressreleases@levinassociates.com.