Healthcare & Life Sciences Industry Overview
There have been a little over 100 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2019, worth roughly $101.8 billion, compared to $241.7 billion for all of 2018. 27 of these deals were executed by private equity groups.
Notable transactions include the acquisition of Celgene Corp. by Bristol-Myers Squibb, the acquisition of Loxo Oncology by Eli Lilly, and the acquisition of Verity Health System of California by The KPC Group.
Public Company Performance1
Stock prices declined for many HCLS companies during the past three months, more so than the S&P 500 over the same period. In fact, the Harris Williams HCLS Composite Index declined 3.6%, while the S&P declined 0.3%. Notable exceptions to this trend include dental products (increased 13.2%), home care, hospice, and home infusion (increased 9.8%), long-term care (increased 9.3%), healthcare staffing (increased 9.1%), and life science tools (increased 8.2%).
Over the past 12 months industry-wide growth also saw declining prices, with the HCLS Composite Index showing a 3.2% decrease. At the category level, provider-based services stock prices grew by 15.2% on average over the past 12 months, followed by payor, provider and pharmacy support services at 7.2% and products and devices at 0.4%. Specific stock price growth leaders over the past year include home care, hospice and home infusion (71.5%), long-term care (59.0%), contract research organizations (21.5%), and specialty managed care (20.9%).
The Urban Institute recently found that Medicaid and Medicare are more successful at limiting costs per-beneficiary than private insurers over the past ten years. Total spend for Medicaid and Medicare increased more than private insurance as the number of Medicaid and Medicare enrollments increased drastically. The Centers for Disease Control and Prevention recently announced that e-cigarettes were the primary driver of a 38% increase in the number of high school students using tobacco. E-cigarette use surpassed cigarette use among high school students in 2013 and the FDA is exploring new ways to limit sales to young people. Johnson & Johnson, a large health products manufacturer, announced that it would acquire Auris, a robotics surgery firm, for $3.4 billion. The deal is expected to close by the end of Q2 2019.
Announced Healthcare & Life Sciences M&A
Healthcare & Life Sciences M&A Trends
Announced Private Equity M&A Activity
Debt Markets Overview
Key Credit Statistics3
Select Healthcare & Life Sciences Debt Offerings4
(by deal amount)
Public Markets Overview1
Key Trading Statistics
Public Company Sector Performance
(12-month % change in stock price)
Equity Markets Overview
Healthcare & Life Sciences Industry Stock Performance1
Top Equity Offerings2
Announced U.S. Healthcare & Life Sciences M&A1
What We’ve Been Reading
Insurance | Medicare, Medicaid Contain Costs Better than Private Insurers, Study Says
A recent study by the Urban Institute found that Medicare and Medicaid are more successful at keeping spending per-beneficiary low. Over the last ten years, spending per-beneficiary for Medicaid and Medicare increased 2.4% and 2.1%, respectively, while spending increased 4.4% annually for private plans. However, because enrollment in Medicaid and Medicare increased drastically, overall spend for these programs increased more than the spend of commercial plans. The primary drivers of the increases were also different between Medicare and commercial plans. Spending on drugs was the primary driver of Medicare spend growth, while hospital care was the primary driver for commercial insurance.
Health and Science | CDC Blames Spike in Teen Tobacco Use on Vaping
The Centers for Disease Control and Prevention recently announced that the number of high school students using tobacco increased 38% over the past year and e-cigarettes were the primary driver of the increase. The use of e-cigarettes among high school students increased by 78%, while other tobacco products, such as cigarettes, remained flat. The use of e-cigarettes by high school students has grown sharply since 2011, and surpassed cigarettes in 2013. Surgeon General, Jerome Adams, declared the use of e-cigarettes an epidemic. The FDA is exploring new ways to address the problem and limit sales to young people. Potential regulations include penalties for manufacturers and retailers that violate sales and marketing policies and the FDA is also exploring limiting sales of e-cigarette products to age-restricted stores.
M&A | Johnson & Johnson to Buy Auris Health for $3.4 Billion
Johnson & Johnson, one of the world’s largest health products manufacturers, announced in February that it would acquire Auris Health for $3.4 billion cash. The acquisition of Auris, a robotics surgery firm, is part of a concerted strategy by J&J to improve performance through acquisitions and divestitures. J&J divested its LifeScan diabetes business in 2018 for $2.1 billion. The Company’s medical device business unit has underperformed recently, with sales down 4% to $6.7 billion in Q4 2018. The acquisition is part of an effort by J&J to build a digital ecosystem to guide surgeons and improve patient outcomes. The acquisition is expected to close by the end of the Q2 2019.
Payor, Provider, & Pharmacy Support Services1
Products & Devices1
2. Company Filings
4. PNC Debt Capital Markets
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