Marc Cabrera Sees Continued Middle-Market Healthcare Consolidation in 2012

Marc Cabrera, head of healthcare investment at Morgan Joseph TriArtisan, said continued consolidation across all subsectors of healthcare can be expected for the remainder of the year, in an interview with Elizabeth Krutoholow. He expects the majority of activity will be middle market deals with high premiums for the best companies.

Q: How would you characterize the healthcare M&A environment this year? What themes/trends have you observed?

A: Some of the trends seen in 2012 have been developing for the past two to three years and are not a result of the recent Supreme Court decision or the current capital markets environment. The prospect of cuts to the Medical Advantage program, which enrolls one of every four seniors, espoused a few years ago by the presidential candidates followed by actual cuts and legislated profit margins with healthcare reform have had a ripple effect on the industry.

Insurers like UnitedHealth, Humana and Wellpoint waited for reform to pass so not much happened between 2008 and 2010. Once reform passed and the economy stabilized, we entered a 24 month period when large payers and providers reformed their strategies and began to execute with a heavy reliance on M&A.

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