FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Second Quarter Health Care M&A Strongest In Years, According to New Report From Irving Levin Associates, Inc.
NORWALK, CT – July 9, 2008 – According to a new Report from Irving Levin Associates, a total of 265 mergers and acquisitions were announced in the health care industry during the second quarter of 2008, a 19% increase from the 223 deals announced in the prior quarter. Based on preliminary figures, a total of $85.5 billion was committed to fund the second quarter’s M&A activity, a 209% increase over the prior quarter’s $27.7 billion. It is also a 25% increase over the $68.3 billion spent in Q2:06 and a 39% increase over the $61.3 billion spent in Q2:07. Despite the slow-down in global M&A, activity in the health care industry is robust and on the rise.
The Health Care M&A Market Second Quarter 2008
Dollar Amounts By Sector*
Second Quarter 2008
Percent of Quarter
Home Health Care
<1% Long-Term Care 361,750,000 <1% Labs, MRI, Dialysis 29,587,000 <1% Managed Care 14,500,000 <1% Rehabilitation 9,500,000 <1% Behavioral Health Care 0 — Physician Medical Groups 0 — Other Services 2,118,558,000 3% Services subtotal $ 4,807,008,000 6% Medical Devices $ 53,347,291,000 63% Biotechnology 16,316,388,000 19% Pharmaceuticals 8,207,938,000 9% e-Health 2,817,300,000 3% Technology subtotal $ 80,688,917,000 94% Total health care $ 85,495,925,000 100% *Preliminary Figures The health care technology segment attracted the largest amount of capital, capturing nearly 95 cents out of every dollar invested in health care M&A. This portion is up from the first quarter when 80 cents out of every health care M&A dollar was spent in the technology sectors. The number of deals announced in each sector of the health care industry appears in the chart below, along with comparisons to the prior quarter (Q1:08) and the year-ago quarter (Q2:07). The Health Care M&A Market Q2:08 – Deal Volume By Sector Q2:08 Q1:08 % Q2:07 % Sector Deals* Deals Change Deals Change Services Segment: Long-Term Care 21 28 -25% 27 -22% Physician Groups 12 12 0% 6 100% Home Health Care 13 11 18% 18 -28% Hospitals 12 10 20% 15 -20% Labs, MRI, Dialysis 8 10 -20% 12 -33% Managed Care 3 7 -57% 9 -67% Rehabilitation 4 6 -33% 4 0% Behavioral Health Care 3 3 0% 3 0% Other 34 23 -48% 27 26% Services Subtotal 110 110 0% 121 -9% Technology Segment: Medical Devices 61 35 46% 40 28% Pharmaceuticals 48 34 12% 39 -3% Biotechnology 36 29 59% 37 24% e-Health 20 15 33% 15 33% Technology Subtotal 155 113 37% 131 18% Grand Total 265 223 19% 252 5% *Preliminary figures These results point to a resurgence of interest in health care M&A despite a lackluster start at the beginning of the year. "After a lethargic first quarter, both deal and dollar volume in the health care M&A market surged in the second," stated Sanford Steever, Ph.D., editor of The Health Care M&A Report. "Given the relative absence of financial buyers from the market, a greater number of strategic buyers now feel more confident in entering the market," added Mr. Steever. The Health Care industry continues to attract more interest from potential deal makers than other sectors of the economy. "The combination of health care and technology is proving irresistible for investors and operators looking to enter the M&A market," commented Stephen M. Monroe, managing editor at Irving Levin Associates. "While sectors such as Medical Devices and Biotechnology are obvious magnets for M&A dollars, so too are technologically-oriented services sectors such as Infusion Therapy and Contract Research Organizations." "Though not completely insulated from the surrounding economy and its influence, the health care M&A market appears to run on an internal logic of its own and to have access to sufficient capital to make it happen," Mr. Steever summarized. "Deals in health care technology will likely drive the market for the remainder of the year." 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. Click here to get more information on any of our Publications.