Market Overview

Health Care Mergers and Acquisitions Decline in the Third Quarter 2012, According to New Report from Irving Levin Associates, Inc.

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NORWALK, Conn.--(BUSINESS WIRE)--

Based on preliminary figures, the number of merger and acquisition transactions in the health care industry declined by nearly 10% in the third quarter of 2012 compared with the third quarter of 2011. It was the second straight quarterly decline in the number of publicly announced health care transactions. The dollar volume of health care mergers and acquisitions in the third quarter of 2012 dropped by 35% from the second quarter of 2012 and by 36% from the third quarter of 2011.

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

 

Sector

       

Q3:12
Deals*

     

Q2:12
Deals

     

%
Change

     

Q3:11
Deals

     

%
Change

Services Segment:

Long-Term Care 52 36 44 % 43 21 %
Hospitals 11 23 -52 % 16 -31 %
Physician Groups 8 21 -62 % 28 -71 %
Labs, MRI, Dialysis 21 10 110 % 6 250 %
Managed Care 6 9 -33 % 5 20 %
Home Health Care 9 6 50 % 6 50 %
Behavioral Health Care 3 4 -25 % 1 200 %
Rehabilitation 3 3 0 % 6 -50 %
Other

22

24

-8

%

21

5

%

Services Subtotal 135

136

-1 % 132 2 %

 

Technology Segment:

Medical Devices 19 44 -57 % 50 -62 %
Pharmaceuticals 19 29 -34 % 24 -21 %
e-Health

25

24 4 % 21 19 %
Biotechnology

18

22

-18

%

12

50

%

Technology Subtotal 81 119 -32 % 107 -24 %
 

Grand Total

216

255

-15

%

239

-10

%

*Preliminary figures

The table above presents the number of M&A deals posted in each of 13 sectors of the health care industry during Q3:12, as well as the prior and year-ago quarters and the percentage change from those quarters. “Historically, the third quarter is usually the slowest quarter of the year, but with the continued economic turmoil in Europe combined with the uncertainty of the 2012 presidential election in the U.S., there has been more caution in the health care market,” commented Stephen M. Monroe, Partner at Irving Levin Associates and editor of The Health Care M&A Report.

 

THE HEALTH CARE M&A MARKET THIRD QUARTER 2012

DOLLAR AMOUNTS BY SECTOR*

 
Sector        

Dollar Amount

Third Quarter 2012

     

Percent of

Quarter

Pharmaceuticals $ 9,341,902,400 24%
E-Health 3,210,550,000 8%
Medical Devices 2,575,100,000 7%
Biotechnology

392,086,000

1%

Technology subtotal

$ 15,519,638,400

41%
 
Managed Care $ 12,200,000,000 32%
Home Health & Hospice 4,676,500,000 12%
Long-term Care 2,713,512,000 7%
Labs, MRI & Dialysis 1,364,117,500 4%
Hospitals 121,900,000

<1%

Behavioral Health 90,000,000

<1%

Physician Medical Groups 75,400,000

<1%

Rehabilitation
Other Services

1,424,500,000

4%
Services subtotal $ 22,662,929,500 59%
 
Total health care $ 38,182,567,900 100%

*Preliminary figures

 

The table above lists the dollar amount that each sector of the health care industry captured in Q3:12, along with the percentage contribution of each to the $38.2 billion total committed during the quarter.

The decrease in merger and acquisition activity was really centered in the technology segment, with medical devices, pharmaceuticals and biotechnology all posting declines in transaction volume as well as dollar volume. E-health was the one technology sector that posted increases in number of M&A deals as well as dollars invested. The health services segment had almost the same number of transactions in the third quarter 2012 as in both the second quarter and the third quarter 2011. Even though the mix changed, long-term care acquisitions continue to dominate the services segment, with 38% of the transactions in the third quarter. In addition, the dollar volume of health services transactions increased in the third quarter to $22.7 billion, up from an adjusted $19.2 billion in the second quarter (the adjustment was after a terminated $3.9 billion acquisition of a German hospital chain). “Two large managed care acquisitions made up more than half of the total dollars spent in the health services M&A market in the third quarter, and there really were no other dominant deals like that in any of the other sectors, whether technology or services,” according to Mr. 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 pressreleases@levinassociates.com

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

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