FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
Fax: 203-846-8300
pressreleases@levinassociates.com
HEALTH CARE M&A ACTIVITY WEAKENS IN THE FIRST QUARTER OF 2003 According to Irving Levin Associates, Inc.
NEW CANAAN , CT – April 25, 2003 – During the first quarter of 2003, all activity on Wall Street slowed down from previous years, as investors waited for the economy to turn around and for the war in Iraq to end, and health care merger and acquisition activity was no exception. With almost all segments reporting decreases in deal volume, there were a total of 218 publicly announced health care mergers and acquisitions in the first quarter 2003, representing a 24% decrease from the previous quarter but a 3% increase over the first quarter in 2002.
The Health Care M&A Market Q1:03 Deal Volume By Sector
Sector
Q1:03
Deals*
Q4:02
Deals
%Change
Q1:02
Deals
%Change
Services:
Long-Term Care
22
21
+5%
13
+69%
Home Health
11
9
+22%
2
+450%
Laboratories
7
17
-59%
10
-30%
Managed Care
6
7
-14%
7
-14%
Hospitals
4
15
-73%
14
-71%
Physician Medical Groups
5
6
-17%
9
-44%
Rehabilitation
3
3
0%
4
-25%
Behavioral Health
2
3
-33%
4
-50%
Other
26
55
-53%
24
+8%
Services Subtotal
86
136
-37%
87
-1%
Technology:
Pharmaceuticals
50
58
-14%
27
+85%
Medical Devices
40
46
-13%
52
-23%
Biotechnology
31
28
+11%
31
0%
e-Health
11
18
-39%
14
-21%
Technology Subtotal
132
150
-12%
124
+6%
Grand Total
218
286
-24%
211
+3%
*Preliminary figures
Based on those deals with disclosed prices, the dollar value of the transactions announced in the first quarter 2003 was $13.5 billion, or approximately 10% more than the $12.3 billion in the fourth quarter 2002 and 82% more than the $7.4 billion in the first quarter 2002. More than 90% of the dollars committed were in the health care technology segment, with the deal value evenly split among pharmaceuticals, medical devices and biotechnology. Just three transactions represented 51% of the total amount spent in the first quarter, including Johnson & Johnson’s $2.7 billion acquisition of Sunnyvale, California-based Scios, a biotechnology company that discovers, develops and manufactures human therapeutics based on the company’s strengths in protein-based and small-molecule drug discovery. The other two billion-dollar deals involved foreign entities as the selling company.
The health care services segment posted a 37% drop in M&A activity compared with the fourth quarter 2002, but just a 1% drop from the year-ago quarter. “This is the second lowest level of quarterly activity we have seen in nearly 10 years in the services segment, partly caused by an unprecedented plunge in hospital mergers and acquisitions,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “During 2002, there were an average of 15 hospital deals per quarter, compared with just four in this year’s first quarter, and it is still unclear whether the first quarter of this year is a fluke or represents a real change in the market,” added Sanford Steever, Ph.D., editor of the Report.
The long-term care sector led health care services in terms of number of transactions for the second quarter in a row with 22 deals, and the home health care sector, after floundering for several years, is seeing renewed interest from investors and companies seeking to expand. “Activity in the long-term care market has been strong in the past few quarters as financially distressed operators and lenders continue to shed properties that no longer have a strategic fit,” commented Mr. 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 New Canaan , 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.
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