Health Care M&A Deal Volume in Q1 2015 Surpasses Q4 2014, According to Health Care M&A News

IMMEDIATE RELEASE  
Lisa E. Phillips, Editor
Stephen M. Monroe, Partner
 800-248-1668
 203-846-6800
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 pressreleases@levinassociates.com

NORWALK, CT – April 17, 2015 – Health care merger and acquisition activity continued to grow in the first quarter of 2015, after setting new records in 2014. Compared with the fourth quarter of 2014, deal volume increased 1%, to 355 transactions. The combined spending total in the first quarter was $104.9 billion, a decrease of 24% compared with the $138.4 billion spent in the previous quarter, according to Health Care M&A News.

                        The Health Care M&A Market – Deal Volume by Sector

 

Q1:15

Q4:14

 

Q1:14

 

Sector
Services

Deals

Deals

%
Changed

Deals

%
Changed

Behavioral Health Care

8

6

33%

1

700%

Home Health & Hospice

16

20

-20%

19

-16%

Hospitals

23

32

-28%

25

-8%

Laboratories, MRI & Dialysis

4

6

-33%

12

-67%

Long-Term Care

65

84

-23%

65

0%

Managed Care

10

4

150%

5

100%

Physician Medical Groups

21

17

24%

13

62%

Rehabilitation

8

6

33%

2

300%

Other

48

37

30%

29

66%

     Services subtotal

203

212

-4%

171

19%

Technology

 

 

 

 

 

Biotechnology

61

35

36%

29

110%

eHealth

26

32

-19%

22

19%

Medical Devices

23

27

-15%

27

-15%

Pharmaceuticals

42

35

20%

36

17%

      Technology subtotal

152

139

9%

133

33%

Grand Total

355

351

1%

285

25%

Source: The Health Care M&A Report, April 2015
 
The previous record for first-quarter deal volume, at 298 transactions, was set in 2012. Spending in the first quarter of 2015, while very strong, did not surpass the current record total, which was set in 2009, at $127.4 billion.
 
Health care services represented 57% of the first quarter’s transaction total, slightly lower than in the previous quarter and even the first quarter of 2014 (60% in each of those quarters). The decline is due in part to a slow-down in some services sectors, from Home Health & Hospice to Long-Term Care, resulting in an overall 4% decline in deal volume in Q1:15 on the services side. Other sectors, such as Behavioral Health Care and Managed Care, saw higher deal-making activity, as new acquirers entered the market.
 
On the technology side, transaction growth in the Biotechnology and Pharmaceutical sectors continued, up 36% and 20%, respectively, over the previous quarter, and up 110% and 17%, respectively, compared with the first quarter in 2014.
 
“The growth in deal volume in the first quarter of 2015 was largely driven by momentum carried over from 2014,” said Lisa E. Phillips, editor of Health Care M&A News. “With Big Pharma companies pursuing so many clinical-stage biotechnology companies, and selling off non-core businesses, we may see this momentum continue through the second quarter.”
 
M&A activity is likely to stay strong in the coming quarter. “Capital is still easy to come by, and debt is still cheap,” Ms. Phillips said. “The Federal Reserve has signaled that interest rates could rise in the next few months, so some deal makers may try to close deals before that happens. We’re still waiting for the Supreme Court’s decision in King v. Burwell by the end of June, which could depress health care M&A, if the plaintiffs’ argument prevails.”
 
For more information on The Health Care M&A Information Source or Health Care M&A News, or for a membership to any of Irving Levin Associates’ services, please call 800-248-1668. Irving Levin Associates, Inc., established in 1948, is headquartered in Norwalk, Connecticut and is online at www.levinassociates.com.  This privately held corporation publishes annual and quarterly research reports, monthly and weekly newsletters, and maintains merger and acquisition databases on the health care and senior housing markets. If you would like to receive future releases, please email pressreleases@levinassociates.com.

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