Healthcare & Life Sciences Industry Overview
There have been a little over 180 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2019, worth roughly $106.9 billion, compared to $241.7 billion for all of 2018. Forty seven of these deals were executed by private equity groups.
Notable transactions include the acquisition of Spark Therapeutics by Roche Holding AG, the acquisition of Pernix Therapeutics Holdings by Highbridge Capital Management and JP Morgan Asset Management, and the acquisition of Immune Design Corp. by Merck & Co.
Public Company Performance1
Stock prices declined for many HCLS companies during the past three months. In fact, the Harris Williams HCLS Composite Index declined 7.5%, while the S&P rose 1.5%. Notable exceptions to this trend include behavioral health / management (increased 21.6%), acute-care hospitals (increased 11.5%), durable medical equipment (increased 9.6%), medical devices and products (increased 8.4%), and diagnostic imaging (increased 7.1%).
Over the past 12 months industry-wide stock prices have remained relatively flat, with the HCLS Composite Index showing a mild increase of 0.2%. At the category level, provider-based services stock prices grew by 19.1% on average over the past 12 months, followed by products and devices at 11.2% and payor, provider and pharmacy support services at 7.9%. Specific stock price growth leaders over the past year include home care, hospice and home infusion (64.8%), long-term care (62.0%), specialty managed care (37.5%), and contract research organizations (25.4%).
President Trump announced his 2020 fiscal spending budget which included a $12.5 billion cut in HHS funding and a $1.5 trillion cut to Medicaid spending. The budget, which is expected to be contested by a Democratic House, also proposes legislation to repeal the Affordable Care Act. In an effort to increase transparency, the Senate Finance Committee has invited five major pharmacy benefit managers, including CVS, Cigna, and Humana, to testify before Congress regarding high prescription drug costs across the U.S. The Committee previously heard from pharmaceutical executives who blame the PBMs of withholding discounts instead of passing them along to patients. Read the article.
In addition, a merger between two Blue Cross Blue Shield insurance group members, Cambia and Blue Cross Blue Shield of North Carolina, marks the first major merger among Blue insurers in recent years. The combined entities will generate $16 billion in revenue and cover 6 million people. Read the article.
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
What We’ve Been Reading
Policy | White House Proposes Deep Cuts to HHS and Medicaid in New Budget
The White House’s proposed budget would cut HHS funding by 12% in fiscal 2020 and slash Medicaid spending by $1.5 trillion from 2020 through 2029. The budget would also give states the flexibility to alter Medicaid benefits, extend current reductions to Medicaid’s disproportionate-share hospital payments, and call for an improvement in the 340B drug discount program. Similar to the 2019 budget, the 2020 budget, which is expected to largely be contested by a Democratic controlled House of Representatives, endorses legislation to repeal the Affordable Care Act. Opponents to the budget believe it would have a devastating impact on care for seniors, reduce resources to care for low-income Americans, and inhibit efforts to deter the eventual physician shortage.
Pharmacy | Senate Panel Asks CVS and Four Other Pharmacy Middlemen to Testify About Drug Prices
The Senate Finance Committee has invited five major pharmacy benefit managers, including CVS, Cigna, and Humana, to testify before congress about high prescription drug cost across the U.S. Chairman Chuck Grassley, R-Iowa., and Ron Wyden, D-Ore., have been critical of PBMs as have pharma executives who claim the PBMS, which negotiate drug benefits with manufacturers for insurance plans, pocket the discounts instead of passing them along to the patient. Spending on prescription drugs increased to $333.4 billion in 2017 according to the latest data from the Centers for Medicare and Medicaid Services. The Senate Committee previously heard from pharmaceutical executives and are now hoping they will have an opportunity to hear from PBMs in regards their role in the health care supply chain.
M&A | Major Blue Health Insurers to Combine
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina, both members of the Blue Cross Blue Shield group of insurers, will merge in a combined structure that will retain the Cambia name. The two not-for-profits combined represent $16 billion in revenue and cover 6 million people. The deal will be structured in a way to give both entities flexibility and allow them to combine resources to bolster investments and speed progress in developing new health-data approaches and consumer tools, amongst other initiatives. Moves to combine Blue insurers have been rare in recent years, and can prove to be challenging for reasons including local political sensitivities and legal structures of not-for-profits. Collectively, the Blue Cross Blue Shield group of insurers cover more than 100 million Americans and are a unique and powerful force in the industry, but have largely sidestepped the industry consolidation that has created some of the larger players like UnitedHealth Group and Aetna.
Payor, Provider, & Pharmacy Support Services1
Products & Devices1
2. Company Filings
4. PNC Debt Capital Markets
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