Health Care M&A Activity in Second Quarter Points to Record Year According to New Report from Irving Levin Associates, Inc.

NORWALK, Conn.--()--The dollar volume committed to merger and acquisition activity in the health care industry during the second quarter of 2011 surged over the comparable figures in the previous (Q1:11) and year-ago (Q2:10) quarters. Based on the numbers revealed to date, a total of $73.5 billion was spent to finance 243 mergers and acquisitions in the health care industry, up 44% from the $51.1 billion spent in Q1:11 and up 61% from the $45.7 billion spent in Q2:10. As far as dollar volume is concerned, M&A activity is on track to break all previous records in this market.

THE HEALTH CARE M&A MARKET SECOND QUARTER 2011

DOLLAR AMOUNTS BY SECTOR*

 
Sector   Dollar Amount

Second Quarter 2011

 

Percent of
Quarter

Medical Devices $ 33,194,000,000 45%
Pharmaceuticals 27,428,000,000 37%
Biotechnology 4,932,000,000 7%
E-Health 639,000,000 1%
Technology subtotal $ 66,193,000,000 90%
 
Hospitals $ 3,543,000,000 5%
Managed Care 1,690,000,000 2%
Long-Term Care 985,000,000 1%
Physician Medical Groups 416,000,000 >1%
Home Health 88,000,000 >1%
Behavioral Health
Laboratories, MRI & Dialysis
Rehabilitation
Other Services 620,000,000 1%
Services subtotal $ 7,342,000,000 10%
 
Total health care $ 73,535,000,000 100%

*Preliminary figures

 

THE HEALTH CARE M&A MARKET Q2:11 – DEAL VOLUME BY SECTOR

                   

Q2:11

Q1:11

 

%

 

Q2:10

%

 

Sector

Deals*

Deals

Change

Deals

Change

Services Segment:

Long-Term Care 38 36 6% 27 41%
Hospitals 32 24 33%

18

78%

 

Physician Groups 27 18 50% 9 200%
Home Health Care 7 6 17% 11 -36%
Labs, MRI, Dialysis 4 11

 

-64%

 

16

-75%

Managed Care 7 1 600%

3

 

133%

 

Behavioral Health Care 3 4

 

-25%

4

-25%

Rehabilitation 2 3 -33% 4 -50%
Other 19 26

-27%

 

18

6%

 

Services Subtotal 139 129

 

8%

110

26%

 

Technology Segment:

Medical Devices 36 43 -16% 44 -18%
Pharmaceuticals 32 21 52% 43 -26%
Biotechnology 20 24 -17% 25 -20%
e-Health 16 12 33% 11 45%
Technology Subtotal 104 100

 

4%

 

123

-15%

 

Grand Total

243

229

6%

233

4%

*Preliminary figures

Health care deal volume during Q2:11 posted modest increases over the figures recorded in both the previous and year-ago quarters. The chart above breaks out the percentage contribution of each sector to total deal volume along with comparisons to the previous and year-ago quarters.

The technology sectors, particularly Medical Devices, continue to attract the lion’s share of investor interest and dollars. “For two quarters running, the Medical Device industry has been the single most active sector in the health care M&A market. Investors believe that technological innovation in this sector is positioning it for growth,” observed Sanford Steever, editor of The Health Care M&A Report. “They also believe this growth can be accessed through the acquisition of the innovating companies by larger companies better able to bring new technologies and products to market.”

Among the services sectors, M&A activity remains robust in facility-based sectors, such as Hospitals and Long-Term Care, both of which led the services in deal volume. “Hospitals continue to digest the new health care reform law and to wrestle with its implications. One conclusion they have drawn is, come what may, there is strength in numbers. Accordingly, they are buying other hospitals and physician medical groups to build up local and regional systems, implement ACOs—accountable care organizations—and share financial risk and reward through a more diversified provider network,” noted Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes the Report.

For the first half of 2011, the health care M&A market has posted 472 deals worth a combined total of nearly $125.0 billion. Annualizing these figures supports the prediction that 2011 will end with approximately 950 deals worth $250.0 billion, which would set a new record in dollars spent on M&A in the health care industry.

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 sanford@levinassociates.com

Contacts

Irving Levin Associates, Inc.
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: 800-248-1668
Fax: 203-846-6800

Release Summary

Activity in the health care M&A market for the second quarter of 2011 supports the prediction that the full year will break all previous records in dollars committed to M&A.

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Contacts

Irving Levin Associates, Inc.
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: 800-248-1668
Fax: 203-846-6800