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Health Care M&A Overshadowed by Reform Efforts in First Quarter According to New Report from Irving Levin Associates, Inc

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					Health Care M&A Overshadowed by Reform
Efforts in First Quarter According to New Report
from Irving Levin Associates, Inc.
April 13, 2010 01:59 PM Eastern Daylight Time  

NORWALK, Conn.--(EON: Enhanced Online News)--According to a new Report from Irving Levin Associates, a
total of 211 mergers and acquisitions were announced in the health care industry during the first quarter of 2010,
down 21% from the 268 deals announced in the prior quarter. A total of $25.5 billion was committed to fund this
M&A activity, the lowest level since the fourth quarter of 2008 when only $21.8 billion flowed into health care deals.

THE HEALTH CARE M&A MARKET FIRST QUARTER 2010
DOLLAR AMOUNTS BY SECTOR*
                         Dollar Amount      Percent of
Sector
                         Third Quarter 2009 Quarter
Pharmaceuticals          $ 10,100,000,000   40%
Biotechnology              6,570,000,000    26%
Medical Devices            2,271,000,000    9%
e-Health                   739,000,000      3%
Technology subtotal      $ 19,680,000,000   77%
Hospitals                $ 2,191,000,000    9%
Long-Term Care             1,419,000,000    6%
Physician Medical Groups   250,000,000      1%
Labs, MRI, Dialysis        110,000,000      <1%
Rehabilitation             9,000,000        <1%
Behavioral Health Care     —                <1%
Home Health Care           —                —
Managed Care               —                —
Other Services             1,858,000,000    7%
Services subtotal        $ 5,837,000,000    23%
Total health care        $ 25,517,000,000   100%

*Preliminary figures

The decrease in deal and dollar volume from previous quarters may be attributed in large part to the attention
focused on national politics leading up to the passage of health care reform in early March. Deal makers appeared
reluctant to announce new transactions until the outcome of this fierce debate became clear.

The number of deals announced in each sector of the health care industry appears in the table below, along with
comparisons to the prior quarter (Q4:09) and the year-ago quarter (Q1:09).

THE HEALTH CARE M&A MARKET Q1:10 – DEAL VOLUME BY SECTOR
                   Q1:10  Q4:09 %          Q1:09 %
Sector             Deals* Deals Change     Deals Change
Services Segment:
Long-Term Care     16     40     -60     % 15    7      %
Home Health Care   14     12     17      % 7     100    %
Physician Groups   11     13     -15     % 9     22     %
Hospitals                        7          4         75          % 12        -42         %
Labs, MRI, Dialysis              5          7         -29         % 10        -50         %
Managed Care                     2          3         -33         % 1         100         %
Rehabilitation                   2          6         -67         % 3         -33         %
Behavioral Health Care           0          1         NA            5         NA
Other                            24         21        14          % 16        50          %
Services Subtotal                81         107       -24         % 78        4           %
Technology Segment:
Medical Devices                  39         49        -20         %    34     15          %
Pharmaceuticals                  39         30        30          %    37     5           %
Biotechnology                    30         62        -52         %    45     -33         %
e-Health                         22         20        10          %    9      144         %
Technology Subtotal              130        161       -19         %    125    4           %
Grand Total                      211        268       -21         %    203    4           %
*Preliminary figures

Approximately half the dollars spent on health care M&A came in March after the health care reform legislation was
passed in Congress. Sanford Steever, Ph.D., editor of The Health Care M&A Report observed, “Once deal
makers understand the effects of the bill on the health care industry, they can make reasonable projections of their
revenue and cash flows. This in turn allows them to more accurately negotiate valuations and channel their resources
to making deals.” Not all sectors of the health care industry will be impacted by the effects of the recently enacted
legislation in the same way. “Going forward, Hospitals will likely ramp up their acquisition initiatives to capture new
revenue from the addition of 32 million to the health insurance rolls while many mom-and-pop Home Health Care
providers will be squeezed by reduced Medicare billing rates and end up selling to industry consolidators,” continued
Mr. Steever.

The combined value of the six billion-dollar deals in Q1:10 was $11.4 billion, a sharp plunge from the $113.0 billion
from four deals in the year-ago quarter, Q1:09. However, deals in the middle market—those ranging in size from
$100.0 million to $1.0 billion—accounted for $11.9 billion in Q1:10, only a slight decline from the $12.4 billion
posted by middle market deals in the year-ago quarter. “As the credit markets and the economy improve, much of
the merger and acquisition activity in the health care industry will continue to originate in the middle market,”stated
Stephen M. Monroe, managing editor at Irving Levin Associates. “If we take the media-grabbing mega-deals out of
the picture, we still have strong and broad-based M&A activity in the middle market,” Mr. Monroe concluded.

Cross-border transactions in the health care technology sectors also figured prominently in the M&A market during
the first quarter. Approximately $15.3 billion, or 60% of the quarter’s total M&A dollars, involved cross-border
deals in Biotechnology, Medical Devices and Pharmaceuticals. “As the global economy expands and cross-border
flows of capital continue to grow, health care technology companies will continue to pursue acquisition opportunities
in new and emerging markets such as Brazil, India and China,” stated Mr. Steever.

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
pressreleases@levinassociates.com.

Contacts
Irving Levin Associates, Inc.
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300

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Description: NORWALK, Conn.--(EON: Enhanced Online News)--According to a new Report from Irving Levin Associates, a total of 211 mergers and acquisitions were announced in the health care industry during the first quarter of 2010, down 21% from the 268 deals announced in the prior quarter. A total of $25.5 billion was committed to fund this M&amp;A activity, the lowest level since the fourth quarter of 2008 when only $21.8 billion flowed into health care deals. THE HEALTH CARE M&amp;A MARKET FIRST QUARTER 20 a style='font-size: 10px; color: maroon;' href
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