There were fewer healthcare merger and acquisitions in the first quarter this year than in fourth quarter 2015, but the value of the deals soared, according to new data from Health Care M&A News published by Norwalk-based Irving Levin Associates Inc.
There were 351 transactions last quarter, down 7 percent from the fourth quarter and also down 7 percent from first quarter a year ago. But spending on the first quarter 2016 deals hit $79.5 billion, an 87 percent increase from the fourth quarter, Health Care & News said.
“The slowdown in deal volume in the first quarter of 2016 might simply be fatigue setting in after a record-setting year in 2015,” said Lisa E. Phillips, editor of Health Care M&A News. “Also, some buyers are still figuring out where the best opportunities are, as the shift to value-based reimbursements gains momentum.”
M&A activity in the current second quarter also may decline.
“A lot of private equity firms that made big exits last year now have a lot of cash that they’d like to put to work,” Phillips said. “That said, valuations are still too high for many buyers. They’re going to wait and see if prices start to come down.”
Deals involving healthcare services – comprising behavioral health care; home health and hospice; hospitals; laboratories, MRI and dialysis; long-term care; managed care; physician medical groups; and rehabilitation – accounted for 62 percent of total first-quarter transactions, down from 67 percent in the fourth quarter. Nearly all the service sectors had fewer deals, resulting in a 14 percent decline in service-side deals.
Home health and hospice, and rehabilitation sectors, however, had more deals, up 50 percent and 43 percent, respectively.
On the technology side – comprising biotechnology; e-health; medical devices; and pharmaceuticals – transaction growth in the e-health and medical devices sectors continued, up 17 percent and 7 percent, respectively, over the previous quarter, and both rose 35 percent compared with first quarter 2015.
