Health Care M&A Deal Volume in Q1 2015 Surpasses Q4 2014, According to Health Care M&A News

IMMEDIATE RELEASE  
Lisa E. Phillips, Editor
Stephen M. Monroe, Partner
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NORWALK, CT – April 17, 2015 – Health care merger and acquisition activity continued to grow in the first quarter of 2015, after setting new records in 2014. Compared with the fourth quarter of 2014, deal volume increased 1%, to 355 transactions. The combined spending total in the first quarter was $104.9 billion, a decrease of 24% compared with the $138.4 billion spent in the previous quarter, according to Health Care M&A News.

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

  Q1:15 Q4:14   Q1:14  
Sector
Services
Deals Deals %
Changed
Deals

%
Changed

Behavioral Health Care 8 6 33% 1 700%
Home Health & Hospice 16 20 -20% 19 -16%
Hospitals 23 32 -28% 25 -8%
Laboratories, MRI & Dialysis 4 6 -33% 12 -67%
Long-Term Care 65 84 -23% 65 0%
Managed Care 10 4 150% 5 100%
Physician Medical Groups 21 17 24% 13 62%
Rehabilitation 8 6 33% 2 300%
Other 48 37 30% 29 66%
     Services subtotal 203 212 -4% 171 19%
Technology          
Biotechnology 61 35 36% 29 110%
eHealth 26 32 -19% 22 19%
Medical Devices 23 27 -15% 27 -15%
Pharmaceuticals 42 35 20% 36 17%
      Technology subtotal 152 139 9% 133 33%
Grand Total 355 351 1% 285 25%

Source: The Health Care M&A Report, April 2015
 

The previous record for first-quarter deal volume, at 298 transactions, was set in 2012. Spending in the first quarter of 2015, while very strong, did not surpass the current record total, which was set in 2009, at $127.4 billion.

 

Health care services represented 57% of the first quarter’s transaction total, slightly lower than in the previous quarter and even the first quarter of 2014 (60% in each of those quarters). The decline is due in part to a slow-down in some services sectors, from Home Health & Hospice to Long-Term Care, resulting in an overall 4% decline in deal volume in Q1:15 on the services side. Other sectors, such as Behavioral Health Care and Managed Care, saw higher deal-making activity, as new acquirers entered the market.

 

On the technology side, transaction growth in the Biotechnology and Pharmaceutical sectors continued, up 36% and 20%, respectively, over the previous quarter, and up 110% and 17%, respectively, compared with the first quarter in 2014.

 

“The growth in deal volume in the first quarter of 2015 was largely driven by momentum carried over from 2014,” said Lisa E. Phillips, editor of Health Care M&A News. “With Big Pharma companies pursuing so many clinical-stage biotechnology companies, and selling off non-core businesses, we may see this momentum continue through the second quarter.”

 

M&A activity is likely to stay strong in the coming quarter. “Capital is still easy to come by, and debt is still cheap,” Ms. Phillips said. “The Federal Reserve has signaled that interest rates could rise in the next few months, so some deal makers may try to close deals before that happens. We’re still waiting for the Supreme Court’s decision in King v. Burwell by the end of June, which could depress health care M&A, if the plaintiffs’ argument prevails.”

 

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