A two-hospital acquisition by Iasis Healthcare announced on Sept. 10 capped a busy week of healthcare mergers and acquisitions.
Deals heat up in September
Franklin, Tenn.-based Iasis Healthcare said it is acquiring Brim Holdings and the two hospitals it owns, but not the company's hospital-management and healthcare technology solutions businesses, for $95 million in cash. Iasis said it expects to close the deal by year-end.
In the broad healthcare market, biotechnology provided two potential deals last week. Bristol-Myers Squibb Co. said it will acquire ZymoGenetics for $885 million, while French drugmaker Sanofi-Aventis made an unsolicited bid worth more than $18 billion for Genzyme Corp., according to Genzyme.
In equipment and devices, 3M announced that it had agreed to acquire Arizant, which makes patient-warming devices primarily used in surgical settings, for $810 million, and St. Jude Medical said it has agreed to pay $60 million for a 19% stake in CardioMEMS, a cardiovascular device manufacturer.
Healthcare reform's passage, and the implication that more money will be spent on healthcare nationwide, has fueled deals, with medical technology sectors being particularly strong, said Sandy Steever, editor of the healthcare mergers and acquisitions information service for Irving Levin Associates. Companies are still exercising more caution than four or five years ago, focusing on strategic acquisitions that they must do for competitive reasons and passing on deals that might be desirable but aren't critical, he said.
Through Aug. 31, Levin Associates has recorded 593 deal announcements in all healthcare sectors, equal to last year's total during the same period, he said. Last year's deals were worth nearly $171 billion in total, compared with $129.2 billion for this year's deals, but Steever noted that two huge pharmaceutical deals accounted for more than $100 billion of the value of last year's deals.
Hospitals also have been a strong market for deals, Steever said. The last hospital acquisition by Iasis was a 10-bed surgical hospital in 2008, but the company signaled its heightened interest in acquisitions when it hired a new business development officer in June. In this latest deal, Iasis is acquiring 150-bed Wadley Regional Medical Center, Texarkana, Texas, and 15-bed Pikes Peak Regional Hospital, Woodland Park, Colo. Wadley Regional is a joint venture with a local multispecialty physician group, and Brim holds a long-term lease to operate Pikes Peak Regional, according to Brim.
Brim's current majority owner, Altaris Capital Partners, will retain the hospital-management and healthcare technology solutions businesses. Brim, which is based in Brentwood, Tenn., and operates as Brim Healthcare, manages more than 30 hospitals. Brim is one of four systems to submit a proposal to partner with tax-exempt Beaufort Regional Health System, Washington, N.C., according to Beaufort.
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