Health Care M&A Deal Volume Grows in Second Quarter According to New Report from Irving Levin Associates, Inc.

NORWALK, Conn.--(Business Wire)--
According to a new Report from Irving Levin Associates, a total of 228 mergers
and acquisitions were announced in the health care industry during the second
quarter of 2009, a 12% increase over the 203 deals announced in the prior
quarter. This increase marks the first time in over a year that M&A deal volume
has risen against the previous quarter`s level, suggesting that the market hit
bottom in the first quarter of the year and is now growing again.

THE HEALTH CARE M&A MARKET SECOND QUARTER 2009
DOLLAR AMOUNTS BY SECTOR*
Sector Dollar Amount Percent of
First Quarter 2009 Quarter
Biotechnology $ 10,068,000,000 36%
Pharmaceuticals 9,500,000,000 34%
Medical Devices 1,750,600,000 6%
e-Health 1,348,100,000 5%
Technology subtotal $ 22,666,700,000 81%

Hospitals $ 151,000,000 <1%
Long-Term Care 136,200,000 <1%
Managed Care 125,000,000 <1%
Physician Medical Groups 11,900,000 <1%
Home Health Care 8,600,000 <1%
Labs, MRI, Dialysis 6,400,000 <1%
Behavioral Health Care - -
Rehabilitation - -
Other Services 4,800,000,000 17%
Services subtotal $ 5,239,100,000 19%

Total health care $ 27,905,800,000 100%

*Preliminary figures

Based on preliminary figures, a total of $27.9 billion was committed to fund the
second quarter`s M&A activity. This comes after the record-breaking $127.5
billion spent in the first quarter; however, that figure included two mega-deals
in the pharmaceutical industry with a combined value of $109.1 billion.
Eliminate those two blockbusters, and the amount committed to second quarter
health care M&A rose by 52% over the adjusted first quarter figure. The health
care technology segment attracted the largest amount of capital, capturing
nearly 81 cents out of every dollar invested in health care M&A (first quarter,
99 cents).

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 (Q1:09) and the
year-ago quarter (Q2:08).

THE HEALTH CARE M&A MARKET Q2:09 - DEAL VOLUME BY SECTOR

Q2:09 Q1:09 % Q2:08 %
Sector Deals* Deals Change Deals Change
Services Segment:
Hospitals 15 12 33% 18 -11%
Long-Term Care 13 15 -13% 23 -43%
Home Health Care 13 7 86% 13 0%
Physician Groups 10 8 25% 14 -29%
Labs, MRI, Dialysis 5 10 -50% 11 -55%
Managed Care 3 1 200% 3 0%
Rehabilitation 2 3 -33% 4 -50%
Behavioral Health Care 0 5 -500% 3 -300%
Other 23 16 44% 34 -32%
Services Subtotal 84 77 9% 123 -33%

Technology Segment:
Medical Devices 49 35 40% 53 -8%
Biotechnology 42 45 -7% 43 -2%
Pharmaceuticals 34 37 -8% 39 -13%
e-Health 19 9 111% 21 -10%
Technology Subtotal 144 126 15% 156 -7%

Grand Total 228 203 12% 279 -18%

*Preliminary figures

Health care technology captured the lion`s share of M&A activity. The four
technology sectors posted 144 deals, or 63% of total deal volume, with the nine
services sectors accounting for the remaining 37%. Sanford Steever, Ph.D.,
editor of The Health Care M&A Reportobserved, "The lopsided proportion of
63%-37% between technology and services deals is a marked departure from the
55%-45% split that was typically found between the two for several years before
last summer`s market plunge." While the current dearth of capital to fund
acquisitions in the services sectors, particularly those with a real estate
component such as hospitals or long-term care, may account in part for this
skewed result, we also believe that uncertainty over the shape that health care
reform will ultimately take is causing queasiness and extra caution in the
investment community. "The threat of possible changes to government
reimbursement protocols makes it difficult to estimate the revenue and cash flow
of businesses that are dependent on Medicare and Medicaid, which in turn makes
it more difficult for potential buyers and sellers to agree on a satisfactory
valuation of these businesses," continued Mr. Steever.

Dealmakers are therefore more deliberative and focused, taking more time to see
a deal through, in no small part because of the challenges of putting together a
financing package. In targeting companies or products, buyers are not straying
too far from their core competencies. On the other hand, some sellers are
motivated by financial pressure: to streamline operations, raise cash or stave
off the specter of bankruptcy. "The second quarter results are promising and
should be given their due when considering a deal, but they do not suggest an
imminent return to the go-go days of deal making in the 2005-07 period," stated
Stephen M. Monroe, managing editor at Irving Levin Associates. "Dealmakers are
setting their sights on more focused transactions in the middle market,
generally avoiding grand, transformative deals," he concluded.

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 and venture
capital 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
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300

Copyright Business Wire 2009