Value of healthcare mergers, acquisitions up dramatically

Mergers and acquisitions (M&A) in the healthcare sector rose quarter-over-quarter, with the value of deals exploding, according to Irving Levin & Associates, but the volume is lower compared to the second quarter of 2012, and hospital deals were down significantly.

According to Irving Levin, a Connecticut-based firm that tracks M&A activity, the number of deals in the healthcare sector was up 10 percent in the second quarter of 2013, compared to the first quarter of the year. Altogether, 223 deals were reached during the second quarter, compared to 203 that took place during the first quarter.

Mergers and acquisitions involving hospitals were down significantly, with 15 deals closed during the second quarter, compared to 22 in the first quarter of 2013. Volume is down even further compared to the second quarter of 2012, when 26 transactions were completed, a drop of 42 percent.

"What may be more promising is the significant jump in dollars committed," said Lisa Phillips, who edits the Irving Levin publication Health Care M&A Report. She noted that the value of all the deals transacted during the second quarter was $52.6 billion, up more than 250 percent from the $14.6 billion in deals that took place during the first quarter. Although the uncertainty surrounding the implementation of the Affordable Care Act could impact future deals, Phillips noted that the industry should expect larger-scale transactions in the coming months.

One example of a large deal in the healthcare sector was the announcement earlier this week that Community Health Systems agreed to acquire Health Management Associates in a $3.9 billion deal.

To learn more:
- read the Irving Levin & Associates report

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