IMMEDIATE RELEASE
Lisa E. Phillips, Editor
Stephen M. Monroe, Partner
800-248-1668
203-846-6800
Fax: 203-846-8300
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.”
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