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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