FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Phone: (800) 248-1668
Fax: (203) 846-8300
Institutional Pharmacy Company Acquisitions Peaked In 1997 According to Irving Levin Associates, Inc.
(October 6, 1998 – New Canaan, Connecticut) Irving Levin Associates, Inc. has just released the preliminary results of a new report, The Institutional Pharmacy Acquisition Report, First Edition. The Report covers the acquisition market for institutional pharmacy companies from January 1, 1994 through September 30, 1998.
“Over the past few years there has been a tremendous level of consolidation among the institutional pharmacy providers, with almost 200 acquisitions since the beginning of 1994,” according to Stephen M. Monroe, a partner at Irving Levin Associates, Inc. In terms of number of transactions, the market peaked in 1997 with 61 publicly announced mergers and acquisitions. Although 1997 was a record year, three of the 10 largest transactions of the past five years were announced in the first four months of 1998.
It looked as if 1998 was going to be another record year after more than 20 transactions were announced in the first quarter, but the deal volume declined to just 11 in the following two quarters combined. “Concerns about the new Medicare prospective payment system for nursing homes definitely slowed the pace of acquisitions as the year progressed,” added Mr. Monroe.
*Through September 30, 1998
Other trends in the acquisition market for institutional pharmacy companies were revealed in the report as well. In the mid-1990’s large nursing home companies were major buyers of institutional pharmacy companies. Beginning in 1996, however, several of these companies, including Beverly Enterprises, GranCare (now part of Mariner Post-Acute Network), Integrated Health Services and Manor Care, began to divest their pharmacy businesses.
Also according to The Report, the prices being paid steadily increased from 1995 through the third quarter of 1998. The average price paid per bed served increased from $1,431 in 1995 to $2,653 in 1998. In addition, the average price to revenue multiple increased from 0.70x in 1995 to 1.00x in 1998. “The increase in prices paid was symptomatic of the high level of consolidation occurring in the marketplace. By the middle of 1998, about 75% of the institutional pharmacy business was concentrated in less than 15 companies,” according to Mr. Monroe.
The Institutional Pharmacy Acquisition Report, First Edition, with approximately 110 pages, provides summary statistical information on the institutional pharmacy acquisition market as well as details on the more than nearly 200 specific transactions that occurred from January 1, 1994 through September 30, 1998. Irving Levin Associates, Inc. is the premier research and publishing firm tracking the merger and acquisition activity in the health care and seniors housing market. To purchase The Institutional Pharmacy Acquisition Report, First Edition, at a cost of $395.00, please call 800-248-1668.
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FOR IMMEDIATE RELEASE