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

Posted on: Thursday, 5 October 2006, 18:00 CDT

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/

Source: PRNewswire

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