Health Care M&A Spending Rises 11% in 2011 According to New Report from Irving Levin Associates, Inc.

NORWALK, Conn.--(BUSINESS WIRE)-- During 2011, a total of $227.4 billion was committed to finance the year’s activity in the health care merger, acquisition and takeover market. This represents an 11% increase over the $205.6 billion spent in 2010. In dollars committed to M&A activity, 2011 is the fourth-largest year of the past 10 years. In terms of deals announced, 2011 saw a total of 980 transactions in 13 sectors of the health care industry, a 3% decrease from the 1,007 deals in 2010. However, deal volume is expected to increase to 1,000 and over as new information, such as annual 10-K filings, brings more transactions to light.

M&A DEAL AND DOLLAR VOLUME FOR 2011 AND 2010*

      DEAL VOLUME          

 

 DOLLAR VOLUME

     
Sector 2011       2010       % Change 2011       2010 % Change
Behavioral Health 12 8 50 % $ 274,000,000 $ 3,500,000,000 -92 %
Home Health 28 44 -36 % 286,000,000 1,433,000,000 -80 %
Hospitals 86 77 12 % 7,868,000,000 10,793,000,000 -27 %
Laboratories, MRI, Dialysis 29 42 -31 % 5,570,000,000 2,273,000,000 145 %
Long-Term Care 161 116 39 % 16,274,000,000 12,102,000,000 34 %
Managed Care 20 14 43 % 7,855,000,000 4,225,000,000 87 %
Physician Medical Groups 107 67 60 % 465,000,000 425,000,000 9 %
Rehabilitation 14 12 17 % 1,340,000,000 237,000,000 465 %
Other

88

97

-9

%

  40,780,000,000   23,262,000,000

75

%

Services Subtotal 545 477 14 % $ 80,712,000,000 $ 56,250,000,000 43 %
Biotechnology 79 130 -39 % $ 32,722,000,000 $ 60,950,000,000 -46 %
E-Health 71 78 -9 % 5,995,000,000 6,955,000,000 -14 %
Medical Devices 170 185 -8 % 63,465,000,000 41,672,000,000 52 %
Pharmaceuticals

115

137

-16

%

  44,477,000,000   39,847,000,000

12

%

Technology Subtotal 435 530 -18 % $ 146,659,000,000 $ 149,424,000,000 -2 %
Grand Total 980 1,007 -3 % $ 227,371,000,000 $ 205,647,000,000 11 %
*2011 Preliminary Figures
 

As the table illustrates, four services sectors posted notable growth in 2011: Hospitals, Long-Term Care, Managed Care and Physician Medical Groups. Overall, the 2011 services sectors posted gains in deal and dollar volume over 2010 while the corresponding technology sectors saw declines.

For the past five years, the health care M&A market has generated on average 1,000 deals worth in the neighborhood of $230.0 million each year. “We predict that the dynamics of the 2011 market will forge ahead into 2012,” stated Sanford B. Steever, Ph.D., editor of The Health Care M&A Report. “In particular, we expect to see strong deal making in the four technology sectors as well as in facility-based service sectors, such as Hospitals and Long-Term Care. Despite the rhetoric of repeal, hospitals and other providers will keep pursuing mergers and acquisitions to assemble the component parts for building accountable care organizations.”

The pace of health care M&A may be influenced by external factors. “Election-year wrangling will tend to lengthen the period of due diligence in deal making as buyers and sellers attempt to see which way the political winds are blowing. Deals in provider sectors dependent on government payments will be particularly vulnerable as changes to reimbursement protocols, real or threatened, are bandied about,” observed Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes the Report. Jitters over Europe’s debt and economy will likely distract some deal making in 2012. “Deal makers clearly prefer non-volatile markets, which afford them greater confidence in projecting financial results and proposing valuations for companies they wish to buy or sell. With the ongoing uncertainty in Europe, American companies will be leading the Health Care M&A market,” added Mr. Monroe.

Despite the potential influence of external factors on activity, the merger and acquisition market for the health care industry is expected to remain robust for 2012. “The fundamental forces driving the M&A market for health care remain firmly in place,” noted Mr. Steever. “Companies will undertake M&A to grow their businesses, gain market share, create operational and financial synergies, and overcome a fragmented delivery system, among others.”

For more information on The Health Care M&A Information Source, The Health Care Services Acquisition Report or for a subscription to any Irving Levin publication, 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 health care merger and acquisition and venture capital databases, as well as the senior housing market.

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CONTACT:

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

KEYWORDS:   United States  North America  Connecticut

INDUSTRY KEYWORDS:   Practice Management  Health  Hospitals  Other Health  Professional Services  Consulting  Finance  Other Professional Services  Managed Care

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