Health Care M&A Deal Volume and Value Exploded in 2015

IMMEDIATE RELEASE  
Lisa E. Phillips, Editor
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NORWALK, CT - January 27, 2016 - Health care merger and acquisition activity grew by 14% in 2015, to 1,498 transactions, setting a new record for health care M&A deal volume. In 2014, which held the previous record, 1,318 deals were announced across 13 health care sectors. Spending in 2015 reached $563.1 billion, another new record. That total represents a 45% increase over the $387.7 billion spent in all of 2014, according to Health Care M&A News
                        The Health Care M&A Market – Deal Volume by Sector

  2015 2014 Change,
Sector
Services
Deals Deals Y-o-Y
Behavioral Health Care 38 24 58%
Home Health & Hospice 47 70 -33%
Hospitals 102 99 3%
Laboratories, MRI & Dialysis 52 33 58%
Long-Term Care 356 302 18%
Managed Care 45 22 105%
Physician Medical Groups 88 60 47%
Rehabilitation 30 19 58%
Other 177 136 30%
     Services subtotal 935 765 22%
Technology      
Biotechnology 158 136 16%
eHealth 123 118 4%
Medical Devices 113 111 2%
Pharmaceuticals 169 188 -10%
      Technology subtotal 563 553 2%
Grand Total 1,498 1,318 14%

Source: Health Care M&A News, January 2016

 

Health care services made up 62% of 2015’s deal volume, due to increased investor interest in post-acute health care sectors such as Long-Term Care and Rehabilitation. The Behavioral Health Care sector also gained more attention. Physician medical groups, both primary care and specialty physicians, were back in the limelight, as hospitals and health systems moved closer to a value-based reimbursement system.

The health care technology sectors were dominated once again by deal volume and spending in the Pharmaceutical sector, even though deal volume declined 10% in 2015. Spending in the Pharma sector was $297.4 billion, thanks in large part to the $160 billion pending acquisition of Allergan plc by Pfizer Inc., announced in the fourth quarter of 2015.

“Health care mergers and acquisitions benefited from a perfect storm of low interest rates and the building effects of the Affordable Care Act,” said Lisa E. Phillips, editor of Health Care M&A News. “Three years into the ACA, more consumers have health insurance and the shift to bundled payments is under way. Health care providers, health insurers and pharmaceutical companies are all looking for greater scale and cost efficiencies. We’ll see if 2016 can deliver the same level of growth.”

“The fourth quarter of 2015 helped those full-year results,” Phillips noted. Although deal volume declined about 10%, to 370 transactions, compared with the third quarter’s 409 transactions, Q3:15 was a record-breaker. Deal volume was also higher than Q4:14, up 4%. Spending in Q4:15 grew 1%, to $202 billion, compared with $199.5 billion in the third quarter, and was 46% higher than the same quarter in 2014, which posted $138.5 billion.

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