Fourth Quarter Merger and Acquisition Acquisition activity in health Care services slumps; year-end total reaches 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
Fourth Quarter Merger and Acquisition Acquisition activity in health Care services slumps; year-end total reaches highest level ever According to Irving Levin Associates, Inc.
(January 23, 1998-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 late February.
According to The Health Care Merger & Acquisition Report, there were 236 transactions which were publicly announced during the fourth quarter ended December 31, 1997, down 22.9% from the previous quarter’s 306 deals, and down 7.1% from the 254 deals announced in the fourth quarter of 1996. The quarterly M&A volume has not been this low since the first quarter of 1996. 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
62
+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
10
-28.6%
Psychiatric
13
+8.35
Other
49
0.9%
Total
236
-22.9%

"Given the recent heavy volume of merger activity, the health care services industry took a breather in the fourth quarter to absorb the record number of deals this year," said Stephen M. Monroe, a partner at Irving Levin Associates, Inc.
Despite disappointing earnings reports, a volatile stock market, regulatory concerns and the holiday break, which have all impacted the merger and acquisition market, the fundamentals for consolidation remain in place. "Rumors of the imminent demise of the health care services merger and acquisition market are, we feel, somewhat premature," noted Mr. Monroe.
"One quarter does not make a trend. We believe that the players in this market need some time to integrate their acquisitions," according to Mr. Monroe.
Even with this slump, 1997 ended as a record year with 1,183 deals, up 18.7% over 1996’s 997 deals and up 86.9% over 1995’s 633. "We have to keep in mind that, in the short term, not every quarter or every year can be a record breaker. We have to look at the basic features that drive this market," stated Mr. Monroe.
"The unique characteristics of this industry, including a high degree of fragmentation and the presence of managed care, will continue to foster consolidation activity," predicted Mr. Monroe.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based financial services firm specializing in health care investments. The Firm has 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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