Daily News: July 18, 2014

Healthcare M&A Spending Jumps 171% in Q2/14

Spending on healthcare mergers and acquisitions hit a new record for second quarter spending, according to the July 2014 issue of Health Care M&A News .

Deal volume also increased substantially in the second quarter, up 13% versus the previous quarter, to 297 transactions. The quarter also gained (20%) in comparison with the second quarter a year ago, when 248 deals were announced. Services transactions accounted for 52% of the Q2/14 deal total, and Technology transactions made up 48%.

Deal volume surged on the Technology side, to 143 deals, an increase of 31% compared with the previous quarter. Dollar volume exploded by 229%, to nearly $123 billion. While multi-billion-dollar pharmaceutical deals made headlines in Q2:14, the Medical Device sector actually turned in the highest dollar volume among the Technology segments, thanks to the $42.9 billion acquisition of Covidien plc by Medtronic Inc., which made up the majority of the total $59.1 billion spent in that sector. Pharmaceuticals had a combined total spending of $56.4 billion for the quarter.

On the Services side, deal volume remained flat at 154 deals, down 1% compared with the previous quarter. Dollar volume was also stagnant at $12.3 billion, representing a 3% drop in the same period, although this segment typically has fewer prices disclosed. Long-Term Care transactions led this category, with 60 deals and $5.2 billion in combined spending. The Physician Medical Group sector posted 15 transactions for the quarter (up 15% vs. Q1:14), but reported an unusually large deal for this sector, at $2.35 billion, as Amsurg Corp. acquired Sheridan Healthcare Inc. from private equity firm Hellman & Friedman.

“Now that the health information exchanges are functioning, investors have decided that health care is a good place to be,” said Lisa E. Phillips, editor of Health Care M&A News . “The equity markets are still rewarding the big-deal makers, as well. At this point, it looks as if this momentum could carry well into the third quarter.”