Dealmaking keeps up heady pace
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.