HEALTH CARE SERVICES MERGER AND ACQUISITION VOLUME NOW LEVELING OFF According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
HEALTH CARE SERVICES MERGER AND ACQUISITION VOLUME NOW LEVELING OFF According to Irving Levin Associates, Inc.
(New Canaan, Connecticut–July 26, 1999)—Irving Levin Associates, Inc. has just released the preliminary results of the Firm’s 1999 second quarter report on the merger and acquisition market in the health care services industry, available in mid-August.
According to The Health Care Merger & Acquisition Report, there were 190 transactions which were publicly announced during the second quarter ended June 30, 1999, down 5% from the previous quarter’s 200 deals. Compared to the second quarter of 1998, however, the number of transactions declined dramatically by 42%. Three sectors, Hospital, Physician Medical Group and Home Health, together account for just over half (52%) of all deals transacted. The breakout of transactions by sector and the percentage change from the previous quarter and the second quarter of 1998 are given in the table below:
SUMMARY OF HEALTH CARE TRANSACTIONS
(By Sector, Number of Transactions, Percentage Change)
Number of
Percentage Change
Sector
Transactions
Q1:99
Q2:98
Hospitals
41
+33%
-15%
Physician Medical Groups
38
0%
-51%
Home Health
20
+33%
-29%
HMOs
14
-30%
+7%
Rehabilitation
11
0%
-27%
Laboratories/MRI/Dialysis
10
-33%
-64%
Long-Term Care
10
-58%
-76%
Psychiatric
9
-31%
-31%
Other
37
-8%
-38%
Total
190
-5%
-42%
“The first two quarters of 1999 have witnessed the lowest level of health care merger and acquisition activity since the end of 1995, when 163 deals were announced. However, after the precipitous quarter-to-quarter drops in deal volume during the latter half of 1998, the market appears to be stabilizing in the range of 185 to 215 deals per quarter”, said Stephen M. Monroe, a partner at Irving Levin Associates, Inc.
“Even though the deal volume declined 42% against the year-ago quarter, we must remember that the 325 deals announced in the second quarter of 1998 represent an all-time record,” noted Sanford Steever, editor of the Report. “And while the market does not currently have the pizzazz to break that record, it continues to promote a healthy, significant flow of deals,” added Mr. Steever.
“Market resources are now focused on primary providers, such as hospitals—and payors—at the expense of ancillary services and long-term care providers, which have suffered financial setbacks as a result of the Balanced Budget Act of 1997 and changes in Medicare reimbursement,” stated Mr. Monroe. “Hospitals and HMOs, for example, still command the attention of buyers,” observed Mr. Monroe. “This interest and activity should generate approximately 800 deals, or more than two a day, for 1999.”
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in health care investments. The Firm has 50 years experience in the health care acquisition market. To purchase The Health Care Merger & Acquisition Report, consisting of 12 monthly newsletters and four quarterly supplements, please call (800) 248-1668.
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