The Health Care M&A Monthly Jan 2004

	The Health Care M&A Monthly
In the January 2004 issue: Health Care M&A Results for The Fourth Quarter of 2003 The fourth quarter posted 221 deals, roughly one-quarter of the year’s total volume. However, those deals were financed with $43.7 billion, or 47% of the year’s total amount. See page 1 ... The Month in Deals With 76 deals announced during over the past four weeks, 2003 closed with a steady volume. Based on revealed prices, a total of $5.64 billion was committed to fund these deals. See page 2 ... 2003 M&A Results The year finished with a total of 906 deals. On the basis of revealed prices, a total of $92.8 billion was paid to finance this activity. Kudos go the Pharmaceutical and Managed Care sectors. See page 14 ... In The Departments Deal Summaries Page 5 Additional Deals Page 10 Transaction Updates Page 11 Sign up for a trial subscription and get the current issue! Read more about The Health Care M&A Monthly. Read the past headlines.	Health Care M&A Results for The Fourth Quarter of 2003 Merger and acquisition activity in the health care industry remained relatively steady during the fourth quarter of 2003. With a total of 221 deals announced, Q4:03 registered just a 4% dip against the 230 transactions announced in the previous quarter (Q3:03). Deal volume was down 23% from the 287 transactions announced in the year-ago quarter (Q4:02). However, in the four quarters since, M&A activity has proceeded at a remarkably regular pace, averaging 227 deals per quarter. The table below breaks out the percentage contribution of the 13 sectors we cover to the quarter’s overall deal volume. As in recent quarters, the four sectors of the health care technology segment outperformed the nine sectors of the traditional services segment; the 131 deals of the technology segment in Q4:03 accounted for 59% of all the quarter’s deals, up from both the previous quarter and year-ago quarters when it accounted for just over half of all deals announced. For the fifth quarter running, the three most active sectors were Pharmaceuticals, Medical Devices and Biotechnology, which together accounted for 53% of Q4:03’s deal volume. In the previous quarter, Q3:04, they represented 45% of that period’s M&A activity. Within the services segment, the Long-Term Care sector continued its five-quarter run as the single most active sector, accounting for 22% of that segment’s 90 deals in Q4:03. Meanwhile, the usual suspects, Behavioral Health, Home Health and Rehabilitation, all languished at the bottom of the heap. What They Paid A cursory inspection of transactions in 2003 would reveal that health care M&A activity was evenly distributed over the year’s four quarters. But while Q4:03 accounted for 24% of the deal volume, it took the lion’s share in terms of dollars spent to fund the year’s M&A activity. Based on prices revealed to date, a total of $43.7 billion was committed to fund Q4:03’s 221 deals. That amount constitutes 47%, or nearly half, of the $92.8 billion committed during 2003 to finance a total of 906 deals. The chart opposite breaks out the percentage of total funding that each sector received during Q4:03. Thanks in large part to the $16 billion merger of WellPoint Health Networks (NYSE: WLP) with Anthem, Inc. (NYSE: ATH), as well as UnitedHealth Group’s $2.95 billion acquisition of Mid Atlantic Medical Services (NYSE: MME), Managed Care led the remaining 12 sectors, capturing 44.4% of all dollars spent. This is the first time in many a quarter that we have seen a health care services sector emerge so decisively as the front runner. Accordingly, the health care services segment accounted for nearly 52% of the total funds committed to fund M&A activity during Q4:03. For a related story on the M&A results for the entire calendar year, see page 12.
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