HEALTHCARE M&A ACTIVITY FOR SECOND QUARTER

FOR IMMEDIATE RELEASE Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Second Quarter Health Care M&A Strongest In Years, According to New Report From Irving Levin Associates, Inc.

NORWALK, CT – July 9, 2008 – According to a new Report from Irving Levin Associates, a total of 265 mergers and acquisitions were announced in the health care industry during the second quarter of 2008, a 19% increase from the 223 deals announced in the prior quarter. Based on preliminary figures, a total of $85.5 billion was committed to fund the second quarter's M&A activity, a 209% increase over the prior quarter's $27.7 billion. It is also a 25% increase over the $68.3 billion spent in Q2:06 and a 39% increase over the $61.3 billion spent in Q2:07. Despite the slow-down in global M&A, activity in the health care industry is robust and on the rise.

The Health Care M&A Market Second Quarter 2008
Dollar Amounts By Sector*
Sector
Dollar Amount
Second Quarter 2008
Percent of  Quarter
Home Health Care
$   1,658,700,000
2%
Hospitals
644,000,000
<1%
Long-Term Care
361,750,000
<1%
Labs, MRI, Dialysis
29,587,000
<1%
Managed Care
14,500,000
<1%
Rehabilitation
9,500,000
<1%
Behavioral Health Care
0
—
Physician Medical Groups
0
—
Other Services
   2,118,558,000
3%
   Services subtotal
$    4,807,008,000
6%
 
 
 
Medical Devices
$  53,347,291,000
63%
Biotechnology
16,316,388,000
19%
Pharmaceuticals
8,207,938,000
9%
e-Health
2,817,300,000
3%
   Technology subtotal
$  80,688,917,000
94%
Total health care
$  85,495,925,000
100%
                        *Preliminary Figures
 
The health care technology segment attracted the largest amount of capital, capturing nearly 95 cents out of every dollar invested in health care M&A. This portion is up from the first quarter when 80 cents out of every health care M&A dollar was spent in the technology sectors.

The number of deals announced in each sector of the health care industry appears in the chart below, along with comparisons to the prior quarter (Q1:08) and the year-ago quarter (Q2:07).
 

The Health Care M&A Market Q2:08 – Deal Volume By Sector
 
 
 
 
 
 
 
 
 
 
 
 
Q2:08
Q1:08
%
Q2:07
%
Sector 
Deals*
Deals
Change
Deals
Change
 
 
 
 
 
 
 
 
Services Segment:
 
 
 
 
 
 
Long-Term Care
21
28
-25%
27
-22%
 
Physician Groups
12
12
0%
6
100%
 
Home Health Care
13
11
18%
18
-28%
 
Hospitals
12
10
20%
15
-20%
 
Labs, MRI, Dialysis
8
10
-20%
12
-33%
 
Managed Care
3
7
-57%
9
-67%
 
Rehabilitation
4
6
-33%
4
0%
 
Behavioral Health Care
3
3
0%
3
0%
 
Other
34
23
-48%
27
26%
 
   Services Subtotal
110
110
0%
121
-9%
 
Technology Segment:
 
 
 
 
 
 
Medical Devices  
61
35
46%
40
28%
 
Pharmaceuticals 
48
34
12%
39
-3%
 
Biotechnology
36
29
59%
37
24%
 
e-Health
20
15
33%
15
33%
 
   Technology Subtotal   
155
113
37%
131
18%
 
Grand Total  
265
223
19%
252
5%
 
      *Preliminary figures
 
 
 
 
 
 

These results point to a resurgence of interest in health care M&A despite a lackluster start at the beginning of the year. "After a lethargic first quarter, both deal and dollar volume in the health care M&A market surged in the second," stated Sanford Steever, Ph.D., editor of The Health Care M&A Report. "Given the relative absence of financial buyers from the market, a greater number of strategic buyers now feel more confident in entering the market," added Mr. Steever.


The Health Care industry continues to attract more interest from potential deal makers than other sectors of the economy. "The combination of health care and technology is proving irresistible for investors and operators looking to enter the M&A market," commented Stephen M. Monroe, managing editor at Irving Levin Associates. "While sectors such as Medical Devices and Biotechnology are obvious magnets for M&A dollars, so too are technologically-oriented services sectors such as Infusion Therapy and Contract Research Organizations."

"Though not completely insulated from the surrounding economy and its influence, the health care M&A market appears to run on an internal logic of its own and to have access to sufficient capital to make it happen," Mr. Steever summarized. "Deals in health care technology will likely drive the market for the remainder of the year."

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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