First Quarter 1997 sets a new record for Health Care mergers and acquisitions According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
First Quarter 1997 sets a new record for Health Care mergers and acquisitions According to Irving Levin Associates, Inc.
(May 9, 1997 - New Canaan, Connecticut) Irving Levin Associates, Inc. has just released the preliminary results of the Firm’s first quarter report on the merger and acquisition market in the health care services industry, available at the end of May.
According to The Health Care Merger & Acquisition Report, there were 298 transactions that were publicly announced during the first quarter ended March 31, 1997. This figure is up 17.3% from the previous quarter’s 254 deals and up 4.9% from the previous record of 284 deals set in the third quarter of 1996. The physician medical group, hospital and home health sectors together account for 48.3% 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 Deals, Percentage Change)
Sector
Number of Deals
Percentage Change
Physician Medical Group
61
-15.3%
Hospital
43
+72.0%
Home Health
40
+37.9%
Laoratories/MRI?Dialysis
29
+81.3%
Long-Term Care
26
+4.0%
Psychiatric
23
+76.9%
Rehabilitation
19
+26.7%
HMOs
12
-29.4%
Other
45
+7.1%
Total
298
+17.3%

"Despite the recent turbulence in the stock market, the health care merger and acquisition market has reached the highest level we have ever recorded since we began tracking it," said Stephen M. Monroe, a partner at Irving Levin Associates, Inc. "The market’s impact on the acquirers appears to be shifting their acquisition currency from stock to cash so that companies with a healthy cash flow will be better positioned to make deals."
Activity in the HMO and Physician Medical Group sectors both declined. "These industry segments are taking a bit of a breather to digest the extraordinarily large deals that have taken place during the past six months," explained Mr. Monroe. Merger and acquisition activity in the hospital and psychiatric sectors, on the other hand, surged over 70%. "Consolidation in all sectors is being driven by the need to develop integrated delivery systems and contain costs. This in turn allows providers to negotiate more favorable contracts with payors."
At the present rate of activity, as many as 1,100 deals are projected for all of 1997, a 10% increase over last year’s volume. "This year begins by shattering a record and has all the earmarks of being the third record year in a row," 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 of experience in the health care acquisition market. To subscribe to The Health Care Merger & Acquisition Report, please call (800) 248-1668.
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