Deal­mak­ing keeps up heady pace

Modern Healthcare - - LEGAL - —Me­lanie Evans

Last year ended as fren­zied as it be­gan for health­care deal­mak­ers. The in­dus­try saw more than 300 merg­ers, ac­qui­si­tions, joint ven­tures and other trans­ac­tions in the fi­nal three months of the year, in­clud­ing another block­buster deal to re­lo­cate an Amer­i­can drug com­pany over­seas for the tax ben­e­fits. The quar­ter also saw fur­ther deal­mak­ing by health sys­tems and in­sur­ance com­pa­nies in a year that was no­table for con­sol­i­da­tion.

Glob­ally, merger and ac­qui­si­tion ac­tiv­ity reached record vol­ume in 2015, and the value of global health­care deals in­creased 66% last year to $723.7 bil­lion, ac­cord­ing to Dealogic. The soar­ing vol­ume was helped by Pfizer’s an­nounce­ment in Novem­ber that it would ac­quire Al­ler­gan for $160 bil­lion.

The fourth-quar­ter vol­ume recorded by Mod­ern Health­care in its Merg­ers & Ac­qui­si­tions data­base was on par with the pace seen through­out the year. The 309 deals spread across in­sur­ance, providers, ven­dors, and the phar­ma­ceu­ti­cal, biotech­nol­ogy and life sci­ence sec­tors was on pace with the 327 deals seen in the third quar­ter. To­tal deal value—at least for those where price tags were an­nounced—came to $255.6 bil­lion, up from the $158.6 bil­lion in deals with an­nounced val­ues struck in the third quar­ter.

The slow­est sec­tor was in­sur­ance, where Hu­mana’s deal for Aetna and Cigna’s deal for An­them are still await­ing reg­u­la­tory ap­proval. The sec­tor saw mar­ginal deal­mak­ing in the fourth quar­ter with only 11 deals.

Ac­qui­si­tion-hun­gry Molina Health­care was be­hind two of the fourth-quar­ter in­sur­ance trans­ac­tions. Molina, based in Long Beach, Calif., reached deals for the Med­i­caid busi­ness of Columbia United Providers, Van­cou­ver, Wash., and the Med­i­caid plans of Health Al­liance Plan, Detroit.

The two deals fol­lowed six oth­ers by Molina ear­lier in the year that ex­panded its reach in Florida and Illi­nois.

The fourth quar­ter saw steady deal­mak­ing among providers with nearly two dozen trans­ac­tions in­volv­ing hos­pi­tals. That in­cluded two di­vesti­tures by Tenet Health­care Corp. as the Dal­las-based chain con­tin­ues to shuf­fle its port­fo­lio fol­low­ing the 2013 ac­qui­si­tion of Van­guard Health Sys­tems.

Ven­dors were busy, with the largest re­ported price be­ing the ac­qui­si­tion of MedAs­sets by pri­vate eq­uity firm Pam­plona Cap­i­tal Man­age­ment. The deal was one of seven last quar­ter across the highly frag­mented rev­enue-cy­cle in­dus­try. More trans­ac­tions are ex­pected as Pam­plona seeks to be­come one of the ma­jor play­ers in the in­dus­try.

But life sciences was the most ac­tive sec­tor with Pfizer’s record deal for Al­ler­gan—the sec­ond-largest ac­qui­si­tion deal on record, ac­cord­ing to Dealogic— cap­ping a steady string of trans­ac­tions. Mod­ern Health­care tracked 67 life sci­ence deals in the fourth quar­ter with a to­tal value of $176.8 bil­lion. For the full year, the sec­tor recorded a stun­ning $434.2 bil­lion value in 295 deals.

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