Dollar Volume of Health Care Mergers and Acquisitions Doubles in Second Quarter 2012 According to New Report from Irving Levin Associates, Inc.

NORWALK, Conn.--(BUSINESS WIRE)--Jul 19, 2012 - The dollar volume of merger and acquisition activity in the health care industry more than doubled in the second quarter of 2012 compared with the previous quarter, despite a decline in the number of transactions announced. In fact, with $61.2 billion in announced mergers and acquisitions in the second quarter, it was the most active quarter since the second quarter of 2011 when nearly $75 billion of health care M&A deals were announced. The 251 announced mergers and acquisitions equaled the year-ago number.

                         
 

 

THE HEALTH CARE M&A MARKET Q2:12 – DEAL VOLUME BY SECTOR

 

                         
        Q2:12

 

  Q1:12

 

  %

 

  Q2:11

 

  %

 

  Sector

 

    Deals*

 

  Deals

 

  Change

 

  Deals

 

  Change

 

  Services Segment:

 

                     
  Long-Term Care     35   41   -15%   45   -22%
  Hospitals     22   26   -15%   32   -31%
  Physician Groups     21   21   0%   28   -25%
  Labs, MRI, Dialysis     10   5   100%   4   150%
  Managed Care     9   6   50%   4   125%
  Home Health Care     5   11   -55%   7   -29%
  Behavioral Health Care     4   7   -43%   3   33%
  Rehabilitation     2   5   -60%   2   0%
  Other     25   38   -34%   19   32%
  Services Subtotal     133   160   -17%   144   -8%
     
  Technology Segment:

 

                     
  Medical Devices     43   45   -4%   36   -19%
  Pharmaceuticals     29   23   26%   34   -15%
  e-Health     24   28   -14%   16   50%
  Biotechnology     22   32   -31%   20   10%
  Technology Subtotal     118   128   11%   106   11%
     
  Grand Total

 

    251   288   5%   250   0%
                         
*Preliminary figures

 

                     
                         
The table above presents the number of M&A deals posted in each of 13 sectors of the health care industry during Q2:12, as well as the prior and year-ago quarters and the percentage change from those quarters. “The health care M&A market has been fairly steady, averaging just above 250 transactions a quarter, but it has been the dollar volume, impacted by the number of mega-deals, that fluctuates so much,” commented Stephen M. Monroe, Partner at Irving Levin Associates and editor of The Health Care M&A Report.
   
  THE HEALTH CARE M&A MARKET SECOND QUARTER 2012

 

  DOLLAR AMOUNTS BY SECTOR*

 

  Sector   Dollar Amount   Percent of
      Second Quarter 2012   Quarter
  Pharmaceuticals   $ 20,702,580,000   34%
  Medical Devices   11,582,645,000   19%
  Biotechnology   4,841,041,000   8%
  E-Health   1,004,463,000   2%
  Technology subtotal   $ 38,130,729,000   62%
           
  Hospitals   $ 4,533,000,000   7%
  Physician Medical Groups   4,222,817,000   7%
  Long-term Care   1,889,081,000   3%
  Managed Care   730,000,000   1%
  Behavioral Health Care   517,000,000   <1%

 

  Labs, MRI & Dialysis   348,900,000   <1%

 

  Rehabilitation   6,340,000   <1%

 

  Home Health Care    
  Other Services   10,827,350,000   18%
  Services subtotal   $ 23,074,488,000   38%
           
  Total health care   $ 61,205,217,000   100%
*Preliminary figures

 

       
         
The table above lists the dollar amount that each sector of the health care industry captured in Q2:12, along with the percentage contribution of each to the $61.2 billion total committed during the quarter.

The increase in M&A activity was spread across both the technology and services segments of health care. The $38.1 billion in health care technology transactions represented an 87% jump from the first quarter, while the $23.1 billion in health care services acquisitions was almost triple the dollar volume in the first quarter. In the health care services segment, long-term care and hospital acquisitions continue to dominate both the number of transactions and the dollar volume, with physician medical group acquisitions also very active as health care market participants try to get ready for the increase in Accountable Care Organizations. In the technology M&A segment, the number of e-health transactions has been growing and has averaged over 20 acquisitions per quarter for the past four quarters. “The fact that the Supreme Court decision validated most aspects of the Affordable Care Act means that providers and payers will be consolidating to be stronger players in the new market. Coincidence or not, there was a flurry of announced M&A transactions in the week after the decision,” stated Stephen Monroe.

For more information on The Health Care M&A Report, or for a subscription to any Irving Levin publications, 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 databases, on the health care and senior housing markets.

Note: If you would like to receive this via email, please send your email address to reeves@levinassociates.com

Contact: Irving Levin Associates, Inc.
Stephen M. Monroe, Partner, 800-248-1668
Fax: 203-846-8300

 

Posted: July 2012

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