Despite Fourth Quarter Decline, 1996 ends as a Record Year for Health Care Mergers and Acquisitions According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Despite Fourth Quarter Decline, 1996 ends as a Record Year for Health Care Mergers and Acquisitions According to Irving Levin Associates, Inc.
(January 17, 1997 – New Canaan, Connecticut)—Irving Levin Associates, Inc. has just released the preliminary results of the Firm’s fourth quarter report on the merger and acquisition market in the health care services industry, available in February.
According to The Health Care Merger & Acquisition Report, there were 234 transactions which were publicly announced during the fourth quarter ended December 31, 1996, down 18.2% from the previous quarter’s record 286 deals, but up 43.6% from the 163 deals announced in the fourth quarter of 1995. It still represents the third largest number of transactions recorded in a single quarter. The physician medical group and home health sectors together account for 37.6% of the total deals. 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
Transactions
Change
Phyysician Medical Groups
59
-3.3%
Home Health
29
-6.5%
Hospitals
26
-55.9%
Long-Term Care
23
-36.1%
HMOs
16
-11.1%
Laboratories/MRI/Dialysis
15
-42.3%
Rehabilitation
14
0.0%
Psychiatric
13
+44.4%
Other
39
+21.9%
Total
234
-18.2%
“After breaking records for three successive quarters, the health care merger and acquisition market has fallen off a bit,” said Stephen M. Monroe, a partner at Irving Levin Associates, Inc. “It is not uncommon to see a down-turn in activity during the fourth quarter of a year, and the post-Holiday activity suggests a resumption of the market’s previous levels.”
Activity in the Physician Medical Group sector continues to be brisk, despite the small drop. The Hospital sector witnessed a large drop. “Deals are taking longer to hammer out. The proposed conversion of a nonprofit hospital and the subsequent disposition of its assets now attracts greater regulatory and community scrutiny. Even so, the underlying fragmentation of the industry, the drive to control costs and the maturing of managed care will keep driving consolidation,” stated Mr. Monroe.
Despite the fourth quarter decline, the approximately 970 publicly announced transactions during 1996 represent a 55% increase over the volume in 1995, itself a record year. “It was an unprecedented year, and we expect 1997 to be similar,” stated 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. To purchase The Health Care Merger & Acquisition Report, please contact (800) 248-1668.
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