The number of healthcare mergers and acquisitions continued to soar during the first quarter of this year, according to a report by Irving Levin Associates, New Canaan, Conn.
Healthcare companies reported 308 transactions for the quarter ended March 31, up 5.1% from the fourth quarter's 293, the report said.
The industry's consolidation rate is on its way to meeting or exceeding last year's record of 1,264 transactions, said Stephen Monroe, a partner with Levin. "(The industry is) starting off with a bang," he said.
The first quarter's activity marks the third-highest level of quarterly activity recorded since Levin began its reports in the third quarter of 1993. It is only the fourth time the number of deals in a quarter has exceeded 300. The first quarter of 1997 recorded the highest level of transactions with 338 deals (See chart).
Not only has the number of mergers and acquisitions remained high, but deals are getting more pricey, said Sanford Steever, editor of Levin's Health Care M&A Monthly.
For example, one transaction in the fourth quarter of 1997 and one in this year's first quarter were valued at more than $1 billion. So far in the second quarter, Steever said he has noted three deals worth more than $1 billion.
The medical-groups sector continues to lead the activity with 79 transactions during the first quarter. Hospitals conducted 34 transactions, and HMOs had 10.
The hospital sector was conservative during the first quarter, but it is rebounding during the second quarter, Steever said. "I think people were wondering how (Columbia/HCA Healthcare Corp.) was going to do and how that would affect the market," he said. "In this past month alone, we've seen about 22 deals involving over 70 hospitals."