Healthcare M&A for Third Quarter 2006

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Healthcare M&A For Third Quarter 2006, According To Irving Levin Associates, Inc.
NORWALK, CT – October 5, 2006 – According to a new Report from Irving Levin Associates, a total of 237 mergers and acquisitions were announced in the health care industry during the third quarter of 2006, a 13% decrease from the 273 deals announced in the prior quarter, Q2:06. Based on preliminary figures, however, a total of $74.2 billion was committed to fund the third quarter’s M&A activity, representing a 48% increase over the $50.3 billion spent in the year-ago quarter, Q3:05.

The Health Care M&A Market Third Quarter 2006
Dollar Amounts By Sector*
Sector
Dollar Amount
First Quarter 2006
Percent of  Quarter
Hospitals
$   33,500,000,000
45%
Long-Term Care
2,600,000,000
4%
Managed Care
390,000,000
<1%
Labs, MRI, Dialysis
280,000,000
<1%
Home Health Care
162,000,000
<1%
Behavioral Health Care
0

Physician Medical Groups
 0

Rehabilitation
0

Other Services
623,000,000
1%
   Services subtotal
$   37,600,000,000
51%

 

Biotechnology
$   16,400,000,000
22%
Pharmaceuticals
16,100,000,000
21%
e-Health
2,100,000,000
3%
Medical Devices
2,000,000,000
3%
   Technology subtotal
$   36,600,000,000
49%

 

Total health care
$   74,200,000,000
100%
*Preliminary figures


The number of deals announced in each sector of the health care industry appears in the chart below, along with comparisons to the prior quarter (Q2:06) and the year-ago quarter (Q3:05).
The Health Care M&A Market Q3:06 Deal Volume By Sector  
Sector
Q3:06
Deals*
Q2:06
Deals
%Change
Q3:05
Deals
%Change
Services:

 

 

Long-Term Care
38
27
41%
29
31%
Laboratories, MRI, Dialysis
15
9
67%
8
88%
Home Health
12
18
-33%
21
-43%
Hospitals
12
15
-20%
15
-20%
Behavioral Health
9
4
125%
4
125%
Managed Care
5
7
-29%
13
-62%
Physician Medical Groups
5
8
-38%
8
-38%
Rehabilitation
5
1
400%
1
400%
Other
35
36
-3%
44
-20%
Services Subtotal
136
125
-9%
143
-5%

Technology:

 

 

Medical Devices
34
47
-28%
33
3%
Pharmaceuticals
27
39
-31%
41
-34%
Biotechnology
25
33
-24%
22
14%
e-Health
15
29
-48%
14
7%
Technology Subtotal
101
148
-32%
110
-8%

 

 


Grand Total
237
273
-13%
253
-6%
*Preliminary figures
Two technology sectors, Biotechnology and Pharmaceuticals, rank among the strongest players in the health care M&A market, accounting for almost half of the dollars spent in this market and half of the billion-dollar deals announced year-to-date. “Big pharma and biotech are both acquiring companies with late-stage drug candidates to beef up their development pipelines,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “As their mature drugs, many of them blockbusters, lose exclusivity, these companies need promising, new candidates to replace the revenues that will be lost to competition, generic and otherwise,” added Sanford Steever, Ph.D., editor of the Report.
Deal volume in the Long-Term Care sector remains high, promoted by record-low cap rates and ready capital seeking investment. “Several of the larger deals in the third quarter involved acquisitions by real estate investment trusts, or REITs, who are rebalancing their portfolios and taking advantage of quality properties coming on to the market,” commented Mr. Monroe. “While industry insiders anticipate a decline in activity down the road, investor enthusiasm in the short term continues to buoy the Long-Term Care M&A market.”
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 Norwalk, 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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