Healthcare mergers and acquisitions (M&A) plummeted in the first quarter of 2013 compared both with the previous quarter and the year-ago period, according to a report released Thursday by Irving Levin Associates. Inc., which publishes M&A data.
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The total number of healthcare deals in the first quarter dropped 33 percent to 204 from the fourth quarter 2012 and 31 percent from the first quarter 2012, when 295 deals were announced, said the publisher in The Health Care M&A Report.
The value of M&A deals also sunk, with first quarter 2013 activity worth just $14.6 billion, down 39 percent from the fourth quarter 2012 and off by 50 percent from last year’s first quarter.
The drop in M&A activity was described by Stephen Monroe, partner at Irving Levin, as “fairly broad” across both the health services sector as well as the healthcare technology sector, which includes pharmaceuticals and medical devices.
The exception was behavioral health, which saw deals jump by 133 percent, or seven deals in the first quarter of 2013 compared to three deals in the final 2012 quarter. But the behavioral health sector showed no change in M&A activity compared with the first quarter of 2012, according to the report. Also, excluding the home health and hospice sector, which experienced no change, all other sectors fell by double digits in percentage terms in the first quarter of this year.
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Fourth-quarter deal volume tends to be higher because there is typically a push to get transactions completed before the year-end, whether for tax, reporting or retail reasons, Monroe said. But worldwide M&A activity in general was down in the first quarter of this year based on the number of announced deals, not just in healthcare.
“Our guess is that there was a bit of burnout from end-of-year activity combined with the sequestration problems, and the continuing logjam in Washington regarding budget deficits and entitlement reform,” Monroe said in a recorded webcast accompanying the news release. M&A activity will pick up as the year progresses, but “more of the acquisitions will be strategic and smaller than in past years,” he noted.
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