Third Quarter Merger and Acquisition activity in Healh Care services reaches second-highest level ever According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
Third Quarter Merger and Acquisition activity in Healh Care services reaches second-highest level ever According to Irving Levin Associates, Inc.
(October 27, 1997 – New Canaan, Connecticut)—Irving Levin Associates, Inc. has just released the preliminary results of the Firm’s third quarter report on the merger and acquisition market in the health care services industry, available in November.
According to The Health Care Merger & Acquisition Report, there were 294 transactions which were publicly announced during the third quarter ended September 30, 1997, up 8.5% from the previous quarter’s 271 deals, and up 2.8% from the 286 deals announced in the third quarter of 1996. The third quarter’s M&A volume also represents the second most active quarter ever recorded. The breakout of transactions by sector and percentage change over the previous quarter are given in the table below:
SUMMARY OF HEALTH CARE TRANSACTIONS
(By Sector, Number of Transactions, Percentage Change)
Sector
Number of
Transactions
Percentage
Change
Physician Medical Groups
72
+18.0%
Hospitals
41
-19.6%
Laboratories/MRI/Dialysis
30
+42.9%
Long-term Care
28
+27.3%
Home Health Care
26
-23.5%
Rehabilitation
24
+ 9.1%
HMOs
13
-31.6%
Psychiatric
13
+30.0%
Other
47
+51.6%
Total
294
+ 8.5%
“The health care merger and acquisition market continues to flourish at levels that were established a year ago,” said Stephen M. Monroe, a partner at Irving Levin Associates, Inc. “At that time, the number of deals transacted each quarter rose to the range of 275 to 325. The market has never looked back.”
Despite a decline in the Hospital sector, due mainly to jitters about Medicare reimbursement, activity began to surge at the end of the quarter. “The one-year freeze on Medicare payment levels to hospitals simply underscores the need for them to achieve greater operating efficiencies. They will continue to pursue mergers as an important means of meeting these fiscal challenges,” noted Mr. Monroe.
“Mergers and acquisitions in the Laboratory sector, particularly among dialysis companies, have shot up. This may well stem from governmental decisions that would positively impact Medicare reimbursement to providers of dialysis services,” according to Mr. Monroe.
Activity in the HMO sector fell off as several managed care groups announced lower than expected earnings. “National managed care companies are focused on integrating their recent acquisitions, some of which are geographically diverse. These integration problems should serve to remind us that the delivery of health care is first and foremost a local affair,” stated Mr. Monroe.
“At the rate of consolidation we are witnessing, just over three deals each day, we may break the 1200 level by the end of the year,” predicted Mr. Monroe.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based financial services firm specializing in health care investments. The Firm has nearly 50 years experience in the health care acquisition market.
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