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Medical Device Deals Stay Strong in 2016

by | Dec 30, 2016 4:02 pm | Medical Devices

Medical Devices is finishing the year on a high note. In fact, as of December 29, 2016, deal volume reached 113 transactions, equal to 2015’s total. Deal value topped off at $61.3 billion, a 111% increase from last year’s total of $29.1 billion. However, one deal accounted for 50% of 2016’s total, and that is Abbott’s (NYSE: ABT) $30.7 billion purchase of St. Jude Medical, Inc. (NYSE: STJ), a developer, manufacturer and distributor of cardiovascular medical devices for cardiac rhythm management. When that mega deal is subtracted, we get a dollar value of $30.6 billion, still a 5% climb since last year. A handful of acquirers made a name for themselves this year, such as Stryker Corporation... Read More »

Rehabilitation Attracted Private Equity and REITs in 2016

by | Dec 21, 2016 9:57 pm | Private Equity, Rehabilitation

The Rehabilitation sector is still fairly fragmented, but consolidation is coming. Some 40 deals have been announced in 2016, a 21% increase compared with 2015’s then-record of 33 deals. This year saw a ramp-up in the number of deals announced by REITs and private equity firms, too. Spending in this sector is generally lower than other sectors, because so many transactions are made by local or regional buyers who want to keep deals private. Many targets are privately owned, and sellers don’t wish to disclose prices, either. In 2016, deal value was approximately $712 million, down 11% compared with 2015’s $799 million. For this sector, those figures represent healthy... Read More »

Managed Care Deals Deflate in 2016

by | Dec 21, 2016 8:00 am | Managed Care

As the end of the year approaches, the Managed Care sector hasn’t changed its sluggish pace. Just 20 deals have been announced through mid-December, a 56% drop from 2015’s total of 45 transactions. Spending is another matter. As of this writing, nearly $1.7 billion has been committed to financing the 20 deals. There is no way to match last year’s outrageous total of $100.4 billion, courtesy of the two super-mega-deals from Aetna (NYSE: AET) and Anthem (NYSE: ANTM), made for Humana (NYSE: HUM, $37 billion) and Cigna (NYSE: CI, $54 billion), respectively. You’ve been living under a rock if you haven’t heard that the Justice Department challenged those mergers back in... Read More »

Home Health Sector Closes 2016 in ‘Epic’ Deal

by | Dec 20, 2016 8:23 pm | Home Health & Hospice, Private Equity

The year is ending on a high note for mergers and acquisitions in the Home Health & Hospice sector. Deal volume reached 54 transactions by mid-December, and could go higher as we finish up the year. Last year ended with 51 transactions. Consolidation continued, as buyers such as Kindred Healthcare (NYSE: KND) and Epic Health Services announced four acquisitions apiece. Three other companies, Almost Family (NASDAQ: AFAM), Jordan Health Services and PSA Healthcare, each made three acquisitions. Eight private equity firms made nine deals. Blue Wolf Capital Partners was the sole firm to announce two in this sector. Deal value wasn’t as impressive in 2016, but that is because some of... Read More »

The Hospital Market in the UAE Heats Up

by | Dec 16, 2016 9:44 pm | Hospitals

Healthcare deals, particularly for hospitals, are heating up in the United Arab Emirates. On December 14, NMC Health, the country’s largest private healthcare company, announced its acquisition of Al Zahra Hospital in Sharja. Al Zahra is one of the largest private hospitals in the UAE, operating 137 active inpatient beds. It serves approximately 400,000 outpatients and 23,000 inpatient bed days per year. Its owner, Gulf Medical Projects Company, agreed to a purchase price of Dhiram2.1 billion, or approximately $571.7 million. That works out to nearly $4.2 million per bed, but if the claim that the hospital had $130 million in revenue in 2015, the revenue multiple of 4.4x... Read More »

Behavioral Health Deals Set to Top 2015

by | Dec 15, 2016 9:22 pm | Behavioral Health Care, Private Equity

Behavioral health care has been a hot sector for investors in recent years. After slumping to just eight announced transactions in 2010, deal volume soared steadily to 40 transactions in 2015. As of this writing, the sector has recorded 40 transactions in 2016, with two weeks left in the year. Even if no new deals surface before January 1, we expect the deal momentum to keep building through 2017, thanks to the tailwinds provided by the passage this month of the 21st Century Cures Act. The bipartisan bill, signed by President Obama, authorizes $1 billion in state grants over the next two years to address opioid abuse and other addictions. Most of that money goes to treatment facilities,... Read More »

Abbott to Alere: It’s You, Not Me

by | Dec 14, 2016 8:46 pm | Laboratories, MRI & Dialysis, Pharmaceuticals

The party’s about over for the $5.8 billion Abbott (NYSE: ABT) acquisition of Alere Inc. (NYSE: ALR). Everything was bright and rosy when Abbott agreed to pay $56.00 per share for the point-of-care diagnostics and services company. Now, the $177 million termination fee Abbott faces to get out of the deal looks pretty cheap. In April, Abbott reportedly offered Alere $50 million to terminate the deal, but got no takers. The trouble began almost immediately. The day of the announcement, February 1, Alere’s stock price shot up nearly 46%, to $54.11. But later that month,  it announced would delay filing its 2015 financial results with securities regulators due to revenue recognition... Read More »

Biotechnology Deals Will Surpass 2015’s Record

by | Dec 13, 2016 7:29 pm | Biotechnology, Pharmaceuticals

Deal volume in the Biotechnology sector is poised to surpass last year’s record-setting 160 transactions. With two weeks left in 2016, deal volume has reached 159 transactions. The activity in this sector shows no signs of abating, and will probably carry through the first half of 2017, at least. Big Pharma companies are driving the M&A activity, as they actively compete for promising drug candidates to bolster their aging pipelines. A case in point is a deal that hasn’t been announced yet, but that the industry is watching with interest. French pharma company Sanofi (NYSE: SNY) is reported to be deep into acquisition talks with Swiss... Read More »

What Private Equity Firms Are Buying in 2016

by | Dec 9, 2016 6:16 pm | Behavioral Health Care, Biotechnology, eHealth, Other Services, Physician Medical Groups, Private Equity

Private equity’s success relies upon forward-looking expectations about which firms are best positioned to capitalize on market conditions. The healthcare market poses unique challenges. Although healthcare targets may have the profit opportunities that appeal to PE firms, the volatile legislative and reimbursement environment can turn a “smart bet” into an albatross. A recent report from McKinsey & Company on private equity and healthcare showed that healthcare investments returned the highest global total returns to shareholders (15% between 2010 and 2015). The consumer staples category came closest to that return, with 13% in the same time period. Within the healthcare market,... Read More »