|
 January
2008
issue:
Health Care M&A Results For 2007--
$226.5 Billion Committed In Second-Largest Year Ever
2007 turned out to be second only to 2006 in the size of its health care
merger and acquisition market. Based on results, a total of 1,051 deals were
announced with a combined value of $226.5 billion.
...
Medical Device Deals Surge--
December Saw 27 Transactions Worth $7.9 Billion
The Medical Device sector ended the year as it
began it, with a spate of deal making. December produced 27 transactions
worth a combined total of $7.9 billion.
...
Fourth Quarter 2007 Health Care M&A Results
The fourth quarter of 2007 generated a total
of 292 mergers and acquisitions in the health care industry. Read the issue to
see which sectors led and which ones lagged.
...
In the Departments
Services
-Health Care Services
-Deal Summaries
-Additional Transactions
-Transaction Updates
Technology
-Health Care Technology
-Deal Summaries
-Additional Transactions
-Transaction Updates
Sign up for a trial subscription and get
the current issue!
Read more about
The Health Care M&A Monthly.
Articles Archive
Companies Mentioned in this issue:
January 2008
A
Abviva, Inc. p15
Accomplished Diagnostic Medical Inpatient Team, P. p7
Adams Respiratory Therapeutics p16
Adolor p15
Advance Home Care p4
Aegera Therapeutics p10
Ambulatory Services of America p4
American Capital Strategies p6
American Laser Centers p6
Arab Pharmaceutical Manufacturing p16
Argentum Capital Partners p7
Avista Capital Partners p9
B
Baptist Health System p7
BBI Holdings p10
Bio-Kinetic Clinical Applications p7
Boston Scientific Corporation p10
Bristol-Myers Squibb p9
Bruker BioSciences Corp. p9
Bruker BioSpin Group p9
C
Carlyle Seniors Housing p6
Code Hennessy & Simmons, LLC p6
Community Health Systems p4
E
Eastdil Secured p7
Efoora, Inc. p15
Eisai Co. Ltd. p16
Emdeon Business Services p15
F
First Analysis Corp. p7
G
GE Healthcare Financial Services p4
General Atlantic p15
Genesis Bioventures p15
GlaxoSmithKline p16
Golden Gate p6
Gottlieb Health Resources p4
H
HealthTalk p15
Hearthstone Senior Services p7
Hikma Pharmaceuticals p16
Human Genome Sciences p10
I
Idera Pharmaceuticals p10
Illumigen Biosciences p15
Informed Medical Communications p16
Inland Industrial Medical Group p7
Innovative Dialysis Systems p4
Inverness Medical Innovations p6
IPC—The Hospitalist p7
IXT Solutions p15
J
J.P. Morgan Securities p10
JPMorgan p16
L
Lehman Brothers p16
LHC Group p4
Loyola University Health System p4
M
Merck KGaA p10
Merrill Lynch p16
MGI Pharma p16
Morgan Stanley & Co. p9
MorphoSys AG p10
Mountain States Health Alliance p4
N
Nationwide Health Properties p7
Northwest Newborn & Pediatric Services p7
Novartis AG p10
O
OncoMed Pharmaceuticals p16
Optimum Readings p7
P
Pediatrix Medical Group p6
PerkinElmer p6
Pfizer p15
Pin Point Radiology p7
Prion Developmental Laboratories p15
Progenitor Cell Therapy, LLC p15
Q
QPS p7
R
RAI Care Center p4
Reckitt Benckiser p16
Redwood Toxicology Laboratory p6
Renal Advantage p4
Respironics p1
Revolution Health Group p15
Rock Creek Capital Partners p4
Royal Philips Electronics p1
Russell County Medical Center p4
S
Silver Creek p7
St. Mary’s Medical Center p4
StemCells p15
T
The Edgewater Funds p6
Triad Hospitals p4
U
U.S. HealthWorks p7
V
Vanguard Health Systems p7
Vintage Senior Housing, LLC p6
Visicu p9
W
Welsh, Carson, Anderson & Stowe p4 |
Health Care M&A Results For 2007--
$226.5 Billion Committed In Second-Largest Year Ever
Email this
article to a friend
Email Editor
Despite fears of impending collapse, 2007 proved to be a
very, very good year for the health care merger and acquisition market.
Based on transactions we have collected to date, 2007 saw the announcement
of 1,051 deals, the highest volume in the period from 2003 through 2007
(see the
table on page 16 of the January issue of The Health Care M&A
Monthly). This figure represents a 4% increase over the 1,009 mergers
and acquisitions announced in 2006. Deal volume steadily rose during 2007
with 238, 248, 273 and 292 transactions from the first through the fourth
quarter. The increase in deal volume was largely propelled by the four
health care technology sectors, which produced a combined total of 569
deals, a 19% increase over the 477 announced in the previous year. Health
care services, on the other hand, fell 9% from 532 in 2006 to 482 in 2007.
Three technology sectors, Biotechnology, Medical Devices and
Pharmaceuticals, experienced the most robust year-over-year growth with
increases of 23%, 27% and 28%, respectively.
Based on prices revealed so far, a total of $226.5 billion was committed
in 2007 to fund the year’s M&A activity. This represents a 16% decrease
from the record-setting $268.4 billion spent in 2006, but viewed in
perspective, it is still the second-largest dollar volume we have ever
recorded and stands 38% ahead of the next-largest amount recorded, the
$164.3 billion spent in 2004 (see
chart on page 3 of the January issue). Of the $226.5 billion committed
in 2007, $172.9 billion, or 76% of the year’s total, was in the health
care technology segment. The actual dollar amount committed to health care
technology was virtually the same for both 2006 and 2007; however, in 2006
technology was just 64% of the total health care M&A dollars. The decline
thus came from the health care services segment, which saw dollar volume
fall off by 44% from 2006 to 2007. The percentage contribution of each
sector to 2007’s total amount appears in the
chart on page 2 of the January issue; the figures have been aggregated
for the Behavioral Health Care, Rehabilitation and Physician Medical Group
sectors because their individual results are so meager.
Big Players And Big Plays
The year 2007 saw the announcement of 50 billion-dollar deals, at a pace
of roughly one per week, worth a total of $153.6 billion. The
chart on page 16 shows that this is the highest volume for
billion-dollar deals during the period from 2003 through 2007, even though
the dollar value comes in second to 2006. It’s true that a billion dollars
doesn’t quite buy what it once did, but high deal volume at this level
suggests that the health care M&A market now has a broader base of buyers
with greater access to capital for deal making. Financial buyers, such as
private equity groups and real estate investment trusts, announced 51
deals in 2007 worth a combined total of $37.4 billion, or 17% of the
year’s total. Despite the bad rap private equity has gotten in the media
over the last half-year or so, we believe that it will continue to be one
of several drivers in the health care M&A market. True, their investments
may be more modest in size, and they may now make partial investments in
target companies rather than outright acquisitions of them, but private
equity will adjust to the changing business environment and find ways to
spend the impressive backlog of capital in their war chests. But in spite
of all the press the PEGs have garnered, our figures confirm that the M&A
market for health care continues to be dominated by strategic buyers. And
for them, the various rationales for deal making—greater market share,
diversification, competitive advantage, access to new technologies and new
products—continue to persist even though the economic environment is
coming to resemble more and more what the ancient Chinese curse called
“living in interesting times.”
What’s In Store For 2008
2008 begins with a number of uncertainties, including the lingering
headache in the credit markets from the subprime mortgage meltdown. And
the politics of an election year will surely impact the health care
industry since a number of candidates are nailing the issue(s) of health
care into their platforms. We half suspect that some managed care
companies, who actually deal with the complexities of the health care
system, may direct dollars to campaign coffers rather than to deal making.
Credit from other sources may contract somewhat as debt incurred from the
Iraq War, as well as rising energy prices, are felt more deeply in the
economy. Consequently, the deals that are made will not be as leveraged as
before. The falling value of the dollar against other major currencies
portends two related trends for the health care M&A market. First, more
American companies will be in reach of foreign buyers, so expect more
deals to originate from Europe, Japan and India. Second, with the dollar
not buying as much abroad as before, American buyers will concentrate on
acquiring domestic targets rather than looking overseas. Deals in the
Biotechnology, Medical Device and Pharmaceutical sectors will continue to
thrive. We also expect to see growth in the “Other Services” sector. These
alternative-site and peripheral services, because they are not on the
front line of patient care, are not as liable to as many layers of
regulation as core services are, and they are more amenable to retail
models. In general, we expect to see strong M&A activity for 2008, not
because of any Pollyanna complex, but because of what we have been told by
bankers, brokers, executives and managers throughout the year. Whenever
asked what the prospects are for a company confronting a challenge in the
changing business or regulatory environment, the men and women on the
front line have responded that smart management finds ways to anticipate
and overcome these challenges and make money in new conditions. Faith (and
hard work) finds a way in M&A.
|
|
FREE TRIAL
TO THE
HEALTH CARE M&A INFORMATION SERVICE!
If you like this article, there’s lots more
waiting for you in The Healthcare M&A Information Service. It’s the
bible of what's going on in health care M&A today.
Sign up for two free months right now! There’s no
obligation, no writing “cancel” on a bill. Happy reading!
|
|
|
|
|
|
