FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com
Health Care Merger and Acquisition Activity Strong In Third Quarter 2007,
Year Already Second-Largest Ever in Health Care M&A, According To New Report From Irving Levin Associates, Inc.
NORWALK, CT – October 9, 2007 – According to a new Report from Irving Levin Associates, a total of 245 mergers and acquisitions were announced in the health care industry during the third quarter of 2007, a 1% increase over the 242 deals announced in the second quarter. Based on preliminary figures, a total of $48.1 billion was committed to fund the third quarter’s M&A activity, representing a 21% decrease from the $60.6 billion spent during Q2:07. But while the $172.0 billion spent in the first nine months of 2007 represents an 8% decrease from the $186.0 billion spent in the corresponding period of 2006, 2007 is already the second-largest year in terms of dollars committed to M&A activity.
The Health Care M&A Market Third Quarter 2007
Dollar Amounts By Sector*
Sector
Dollar Amount
Third Quarter 2007
Percent of Quarter
Long-Term Care
$ 8,971,875,000
19%
Managed Care
1,658,700,000
3%
Home Health
929,500,000
2%
Labs, MRI, Dialysis
716,360,000
1%
Hospitals
260,500,000
<1%
Physician Medical Groups
31,300,000
<1%
Rehabilitation
23,000,000
<1%
Behavioral Health Care
0
<1%
Other Services
3,188,200,000
7%
Services subtotal
$ 15,779,435,000
33%
Medical Devices
$ 16,752,800,000
35%
Pharmaceuticals
1,338,500,000
24%
Biotechnology
4,076,700,000
8%
e-Health
135,000,000
<1%
Technology subtotal
$ 32,303,000,000
67%
Total health care
$ 48,082,435,000
100%
*Preliminary figures
The health care technology segment attracted the largest amount of capital, capturing two dollars out of every three invested in health care M&A. The third quarter also posted 12 billion-dollar deals across all sectors, worth a combined total of $31.0 billion, or 64% of all M&A dollars in Q3:07.
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 (Q2:07) and the year-ago quarter (Q3:06).
The Health Care M&A Market Q3:07
Deal Volume By Sector
Sector
Q3:07
Deals*
Q2:07
Deals
%
Change
Q3:06
Deals
%
Change
Services Segment:
Long-Term Care
28
26
8%
42
-33%
Other
24
24
0%
38
-37%
Hospitals
19
15
27%
11
73%
Physician Groups
12
6
100%
5
140%
Home Health Care
10
14
-29%
15
-33%
Labs, MRI, Dialysis
9
11
-18%
18
-50%
Managed Care
8
9
-11%
5
60%
Rehabilitation
4
4
0%
5
-20%
Behavioral Health
3
3
0%
11
-73%
Services Subtotal
117
112
6%
150
-22%
Technology Segment:
Pharmaceuticals
51
38
34%
27
89%
Medical Devices
41
40
3%
35
17%
Biotechnology
22
37
-41%
25
-12%
e-Health
14
15
-7%
15
-7%
Technology Subtotal
128
130
-2%
102
25%
Grand Total
245
242
1%
252
-%
*Preliminary figures
Despite the subprime mortgage market meltdown and ensuing credit crunch in the third quarter, the health care M&A market remained robust. “While financial buyers such as private equity funds captured the lion’s share of media attention, strategic buyers dominated the market and remain well motivated to pursue further health care M&A activity,” stated
Sanford Steever, Ph.D., editor of the Health Care M&A Report. “With health care growing as a percentage of GDP,
increased demand for services and products from baby boomers and a highly fragmented landscape, the health care industry is poised for continuing consolidation,” added Mr. Steever.
The recent absence of large private equity deals from the market has put the brakes on escalating valuations, as may be seen in the Long-Term Care market. “With valuations in flux, buyers not wanting to pay too much and sellers not wanting to sell too low, dealmakers are taking a more cautious approach until the market corrects and stabilizes,” commented Stephen M. Monroe, managing editor at Irving Levin Associates.
“Even if M&A activity stopped dead in its tracks at the end of the third quarter, something we do not expect to happen, 2007 will still emerge as the second-largest year ever, after 2006, in terms of dollars committed to the health care merger and acquisition market,” Mr. Steever summarized.
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 and venture capital databases, on the health care and senior housing markets.
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