Health Care M&A Dollar Volume Surges in the Third Quarter of 2006 According to New Report From Irving Levin Associates, Inc.

NORWALK, Conn., Oct. 5 /PRNewswire/ — According to a new Report from Irving Levin Associates, a total of 237 mergers and acquisitions were announced in the health care industry during the third quarter of 2006, a 13% decrease from the 273 deals announced in the prior quarter, Q2:06. Based on preliminary figures, however, a total of $74.2 billion was committed to fund the third quarter’s M&A activity, representing a 48% increase over the $50.3 billion spent in the year-ago quarter, Q3:05.

               The Health Care M&A Market Third Quarter 2006                         Dollar Amounts By Sector*    Sector                                   Dollar Amount          Percent of                                         First Quarter 2006          Quarter   Hospitals                                $33,500,000,000             45 %   Long-Term Care                             2,600,000,000              4 %   Managed Care                                 390,000,000             <1 %   Labs, MRI, Dialysis                          280,000,000             <1 %   Home Health Care                             162,000,000             <1 %   Behavioral Health Care                                 0              -   Physician Medical Groups                               0              -   Rehabilitation                                         0              -   Other Services                               623,000,000              1 %      Services subtotal                     $37,600,000,000             51 %    Biotechnology                            $16,400,000,000             22 %   Pharmaceuticals                           16,100,000,000             21 %   e-Health                                   2,100,000,000              3 %   Medical Devices                            2,000,000,000              3 %      Technology subtotal                   $36,600,000,000             49 %    Total health care                        $74,200,000,000            100 %    * Preliminary figures   

The health care services segment attracted the largest amount of capital, thanks in large part to the $33 billion deal to privatize industry-leading hospital operator HCA. The quarter saw seven billion-dollar deals across all sectors, at a rate of better than one every other week, worth a combined total of $62.4 billion.

The number of deals announced in each sector of the health care industry appears in the chart below, along with comparisons to the prior quarter (Q2:06) and the year-ago quarter (Q3:05).

          The Health Care M&A Market Q3:06 – Deal Volume By Sector                                 Q3:06    Q2:06    %     Q3:05     %   Sector                       Deals*   Deals  Change  Deals  Change   Services Segment:   Long-Term Care                38        27     41%     29      31%   Laboratories, MRI, Dialysis   15         9     67%      8      88%   Home Health                   12        18    -33%     21     -43%   Hospitals                     12        15    -20%     15     -20%   Behavioral Health              9         4    125%      4     125%   Managed Care                   5         7    -29%     13     -62%   Physician Medical Groups       5         8    -38%      8     -38%   Rehabilitation                 5         1    400%      1     400%   Other                         35        36     -3%     44     -20%       Services Subtotal        136       125      9%    143      -5%   Technology Segment:   Medical Devices               34        47    -28%     33       3%   Pharmaceuticals               27        39    -31%     41     -34%   Biotechnology                 25        33    -24%     22      14%   e-Health                      15        29    -48%     14       7%       Technology Subtotal      101       148    -32%    110      -8%   Grand Total                  237       273    -13%    253      -6%    *Preliminary figures   

Two technology sectors, Biotechnology and Pharmaceuticals, rank among the strongest players in the health care M&A market, accounting for almost half of the dollars spent in this market and half of the billion dollar deals announced year-to-date. “Big pharma and biotech are both acquiring companies with late-stage drug candidates to beef up their development pipelines,” stated Stephen M. Monroe, managing editor at Irving Levin Associates, Inc., which publishes The Health Care M&A Report. “As their mature drugs, many of them blockbusters, lose exclusivity, these companies need promising, new candidates to replace the revenues that will be lost to competition, generic and otherwise,” added Sanford Steever, Ph.D., editor of the Report.

Deal volume in the Long-Term Care sector remains high, promoted by record- low cap rates and ready capital seeking investment. “Several of the larger deals in the third quarter involved acquisitions by real estate investment trusts, or REITs, who are rebalancing their portfolios and taking advantage of quality properties coming on to the market,” commented Mr. Monroe. “While industry insiders anticipate a decline in activity down the road, investor enthusiasm in the short term continues to buoy the Long-Term Care M&A market.”

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 http://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.

Irving Levin Associates, Inc.

CONTACT: Stephen M. Monroe, Partner, or Sanford B. Steever, Editor, 1-800-248-1668, Fax: +1-203-846-8300

Web site: http://www.levinassociates.com/