FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Healthcare M&A In Second Quarter 2005, According To Irving Levin Associates, Inc.
NEW CANAAN, CT – July 12, 2005 – According to a new Report from Irving Levin Associates, a total of $18.4 billion was committed to finance the second quarter’s healthcare merger and acquisition activity, based on revealed prices. Four billion-dollar deals were announced, contributing $8.9 billion, or 48%, to the quarter’s total committed funds.
The Healthcare M&A Market Second Quarter 2005
Dollar Amounts By Sector*
Sector
Dollar Amount (Q2:05)
Percent of Quarter
Dollar Amount (Q1:05)
Percent of Quarter
Dollar Amount (Q2:04)
Percent of Quarter
Labs, MRI, Dialysis
$ 4.0 B
22%
$ 333.0 M
1%
$ 209.0 M
>1%
Hospitals
892.3 M
5%
179.0 M
>1%
2.1 B
8%
Long-Term Care
857.0 M
5%
877.7 M
3%
1.2 B
5%
Managed Care
720.0 M
4%
68.6 M
>1%
5.4 B
21%
Behavioral Health Care
41.0 M
>1%
694.5 M
2%
404.0 M
2%
Rehabilitation
40.4 M
>1%
—
—
—
—
Physician Groups
27.5 M
>1%
—
—
39.3 M
—
Home Health Care
6.5 M
>1%
23.6 M
>1%
264.0 M
1%
Other services
516.7 M
3%
2.8 B
8%
4.3 B
17%
Services subtotal
$ 7.1 B
39%
$ 4.8 B
14%
$ 13.9 B
54%
Biotechnology
$ 4.7 B
26%
$ 2.9 B
8%
$ 4.0 B
16%
Pharmaceuticals
3.4 B
18%
20.2 B
57%
3.3 B
13%
Medical Devices
2.8 B
15%
6.5 B
19%
4.6 B
18
e-Health
377.1 M
2%
733.0 M
2%
78.7 M
>1%
Technology subtotal
$ 11.3 B
61%
$ 30.3 B
86%
$ 11.9 B
46%
Total health care
$ 18.4 B
100%
$ 35.1 B
100%
$ 25.8 B
100%
*Preliminary figures
“With second quarter figures now in, the first half of 2005 saw $53.5 billion committed to finance healthcare M&A, including 10 billion-dollar deals worth $33.5 billion,” observed Stephen M. Monroe, Managing Editor at Irving Levin Associates. “Eight of those big deals, worth a combined $27 billion, are in health care technology sectors and account for half of all M&A dollars spent during the first six months of 2005.”
“In both the biotechnology and the pharmaceutical deals, the majority of buyers have been pharmaceutical companies, who paid 44% of all M&A dollars in the second quarter,” observed Sanford Steever, Ph.D., editor of the Report. “Big pharma companies are buying up late-stage biotechs to replace revenues from drugs going off patent while, further along the growth cycle, specialty and niche players are acquiring generic and OTC drugs and drug companies in response to the increased supply of, and demand for, lower-cost pharmaceuticals.”
Though the health care technology segment captured most of the dollars in the second quarter, health care services saw the lion’s share of deal volume. Acquisitions of health care facilities, particularly in the Hospital and Long-Term Care sectors, accounted for nearly one-fifth of all deals announced in the quarter. The contribution of each sector to the second quarter’s deal volume appears below, where each sector is assigned to the health care services or health care technology segment.
The Healthcare M&A Market Second Quarter 2005
Deal Volume By Sector*
Q2:05
Q1:05
%
Q2:04
%
Sector
Deals*
Deals
Change
Deals
Change
Services Segment:
Long-Term Care
25
28
-11%
21
+19%
Hospitals
15
9
+67%
9
+67%
Home Health Care
12
14
-14%
7
+71%
Laboratories, MRI, Dialysis
11
10
+10%
11
0%
Physician Medical Groups
8
11
-27%
9
-11%
Managed Care
6
7
-14%
9
-33%
Behavioral Health Care
5
5
0%
8
+38%
Rehabilitation
4
2
+100%
0
NA
Other
26
29
-10%
29
-10%
Services Subtotal
112
115
-3%
113
-1%
Technology Segment:
Medical Devices
38
43
-12%
35
+9%
Biotechnology
26
39
-33%
30
-13%
Pharmaceuticals
25
32
-22%
45
-44%
e-Health
10
23
-57%
8
+25%
Technology Subtotal
99
137
-28%
118
-16%
Grand Total
211
252
-16%
231
-9%
*Preliminary figures
“Investor interest in quality assisted and independent living has been growing through the year, and prices have been escalating to unprecedented levels,” observed Mr. Monroe. “Rural hospital operators remain bullish about their market niche and its ability to produce high returns for investors, translating into continued M&A activity in this part of the Hospital industry,” added Mr. Steever.
The broad availability of capital through the stock market and private equity firms will continue to fuel health care mergers and acquisitions throughout the remainder of 2005. “Dealmaking should remain fairly robust for the rest of the year, reaching over $100 billion, with Pharmaceuticals leading the technology segment and Hospitals and Long-Term Care leading services,” stated Mr. Monroe.
For more information on The Health Care M&A Report, or for a subscription to any Irving Levin publication, call 800-248-1668. Irving Levin Associates, Inc., established in 1948, has headquarters in New Canaan, CT and is online at www.levinassociates.com. This privately held corporation publishes research reports and newsletters, and maintains merger and acquisition databases, on the health care and senior housing markets.
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