Health Care M&A Fourth Quarter 2007

FOR IMMEDIATE RELEASE Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com

Health Care M&A Dollars Reach Second Highest Level Ever In 2007, According to New Report From Irving Levin Associates, Inc.

NORWALK, CT – January 10, 2008 – During 2007 and based on preliminary results, a total of 1,051 mergers and acquisitions were announced in 13 sectors of the health care industry, a 4% increase over the 1,009 transactions announced in 2006. Based on prices revealed to date, a combined total of $226.5 billion was committed to finance the year’s 1,051 deals. This is a 16% decrease from the $268.4 billion in 2006, the largest year ever in health care M&A, but still a 38% increase over the $164.3 billion in 2004, now the third-largest year in terms of dollars spent.

 

M&A Deal and Dollar Volume for 2007 and 2006*

Deal Volume     Dollar Volume     
Sector 2007 2006 % Change 2007 2006 % Change
Behavioral Health  13 24 -46% $58,000,000 $1,771,000,000  -97%
Home Health 48 55 -13%   1,485,000,000 842,000,000  76%
Hospitals 57 56 1% 8,416,000,000 35,738,000,000 -76%
Laboratories, MRI, Dialysis 52 46 13% 5,303,000,000 2,537,000,000 109%
Long-Term Care        125 146  -14%  14,719,000,000  22,629,000,000  -35%
Managed Care 28   28  0%  8,804,000,000  1,254,000,000  602%
 Physician Medical Groups  41  32  28%  98,000,000  237,000,000  -59%
 Rehabilitation                        14  9  56%  432,000,000  153,000,000  182%
 Other    104  136  -24%  14,245,000,000  30,888,000,000  -214%
 Services Subtotal 482 532 -9% $53,560,000,000  $96,049,000,000  -44%
             
 Biotechnology                 142 115 23% $40,632,000,000 $36,407,000,000 12%
 E-Health   59 74 -20% 1,505,000,000 4,863,000,000 -69%
 Medical Devices      191 150 27% 57,936,000,000 53,268,000,000 9%
 Pharmaceuticals                    177 138 28% 72,862,000,000 77,851,000,000 -6%
 Technology Subtotal 569 477 19% $172,935,000,000 $172,389,000,000 0%
 Grand Total      1,051  1,009 4% $226,495,000,000 $268,438,000,000 -16%


 
*Preliminary Figures

“Health care M&A activity remained robust in 2007 even with the contraction in the credit markets due to the midsummer subprime mortgage meltdown,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “Even with private equity groups pulling back, thanks to the preponderance of strategic buyers in the market, the year produced a total of 50 billion-dollar deals, worth a combined total of over $153.6 billion, at the brisk rate of almost one a week.”

The four sectors of the health care technology segment, including Biotechnology, e-Health, Medical Devices and Pharmaceuticals, posted 569 deals, or 54% of the year’s deal volume. A combined total of $172.9 billion, virtually the same amount as was spent in 2006, was committed to the technology sector in 2007. “Three stalwart sectors, Pharmaceuticals, Medical Devices and Biotechnology combined, garnered 76% of all the dollars committed to health care M&A in 2007,” observed Sanford Steever, Ph.D., editor of the Report. “The average acquisition premium in the health care industry for 2007 was 27%, which is 35% greater than the corresponding average across all industries. This signals continuing investor faith in the health care industry.”

Despite the year beginning with a number of uncertainties, merger and acquisition activity in the health care industry is expected to be strong in 2008. “Many players are waiting for valuations to settle down and stabilize before jumping back into the market,” Mr. Monroe indicated. “The backlog of capital waiting to be invested, as well as competitive pressures on strategic buyers, guarantees the continuation of a robust M&A market.”

The fourth quarter of 2007 witnessed 292 mergers and acquisitions worth $51.4 billion. “With the highest level of M&A activity in 2007 reached during the fourth quarter, the signs are auspicious for health care mergers and acquisitions in the coming year,” Mr. Steever concluded.

For more information on The Health Care M&A Information Service, The Health Care Acquisition Report or for a subscription to any Irving Levin publication, 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 and venture capital databases, on the health care and senior housing markets.

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