Senior Care Sector Posts 7% M&A Growth Despite Fewer Blockbuster Deals

Despite fewer blockbuster deals, the Long-Term Care sector was one of only two healthcare sectors to experience positive merger and acquisition growth in the first quarter of 2013 compared to the previous year, according to an Irving Levin report on the Health Care M&A Market.

The sector saw a 28% drop in the number of long-term care related M&A deals from the fourth quarter of 2012, but still marked a 7% increase in the first quarter of 2013 from one year prior.

While overall healthcare M&A activity declined for the quarter, the long-term care sector recorded 44 announced deals, compared to the fourth quarter’s 61 and the first quarter of 2012’s 41 deals.


The rise in deals toward the end of 2012 have largely been attributed toward concentrated efforts to close transactions prior to the new year, when the tax rate for capital gains was raised.

“In long-term care, the fourth quarter is usually the most active quarter of the year, so it was no surprise to see a drop off in the first quarter of 2013,” according to Stephen M. Monroe, a partner at Irving Levin Associates. “That said, where we have seen a decline is in the large, over $100 million transactions. But there has been a decline in the mega deals across most of the health care segments, so long-term care is no exception.”

The only other sector with positive growth was Laboratories, MRI & Dialysis, with 8 deals up from 5 one year ago. Two sectors remained flat on a year-over-year basis, while the remaining 10 sectors Irving Levin tracks experienced less M&A growth.


Overall, healthcare merger and acquisition activity deal volume was down 33% compared to the previous quarter, with 204 deals announced, says Irving Levin, and 31% compared to one year previously when 295 deals were announced.

M&A spending in the healthcare industry fell by 50% in the first quarter of 2013 from the first quarter of 2012. The value for M&A deals also fell 39% when compared to the fourth quarter of 2012, coming in at $14.6 billion during the first quarter of 2013.

Rehabilitation and managed care saw the biggest quarterly declines, dropping by 86% and 67%, respectively during the first quarter of 2013.

“Overall, the health care merger and acquisition market is doing smaller, more strategic deals while it waits for the economy to improve and the results of the sequester to settle in,” said Lisa E. Phillips, editor of The Heath Care M&A Report, in a statement. “Deal-making activity seemed to be picking up towards the end of the quarter, so we expect more positive results in the second quarter.”

The number of announced healthcare M&A transactions in 2012 (1,063) was the highest since 2007, notes Irving Levin, but the dollar value of those deals was the lowest since 2003, coming in at $143.3 billion.

Written by Jason Oliva