What We've Been Doing

HW&Co.’s Healthcare & Life Sciences group was very active in the first quarter of 2018, closing seven transactions.  The team continues to see activity across the healthcare landscape and anticipates strong deal flow for the remainder of the year as buyers look for more ways to get creative and effect “needle-moving” transactions.  In particular, the Group generated significant momentum from January through March, and anticipates continued momentum, both in the industry and in the Company, given a heavy backlog heading into the second quarter.  

News & Insights

Positive Prognosis: Healthcare Continues to Attract Strong Attention

Private equity investors remain focused on the attractive returns they can generate through investments in healthcare, while strategic acquirers see M&A in the   industry as a way to accelerate cost reductions.

Those are two of the takeaways from recent healthcare events attended by professionals from Harris Williams & Co.’s Healthcare & Life Sciences (HCLS) Group. Vice presidents Eugene Bord and Mervyn Han attended the Association of Corporate Growth’s (ACG) 10th annual Healthcare Conference in New York. Meanwhile, Whit Knier, a director, and Nick Owens, a vice president, went to McGuireWoods and RSM’s annual Healthcare and Life Sciences Private Equity and Finance Conference in Chicago. 

Both private equity groups and strategic acquirers continue to invest heavily in healthcare.  Private equity is focused on building platforms with flexible cost structures and opportunity for growth, while strategic acquirers are creating innovative business models that help them control costs. For both groups, healthcare will remain an important sector for acquisitions.

A link to the complete article can be found here. For more information, please contact Eugene BordMervyn Han, or Nick Owens

Fast Forward: Consolidation Continues in Medical Device Contract Manufacturing

Consolidation continues at a rapid   pace in the medical device   contract manufacturing industry,   driven by dual imperatives:   Original equipment manufacturers   (OEMs) are simplifying supply   chains, and larger players are diversifying and seeking exposure to higher-growth segments.

Those are the key takeaways from the Medical Design & Manufacturing (MD&M) West conference, North America’s largest medical technology conference. The event attracted over 20,000 executives from leading medical technology companies, and gave professionals from Harris Williams & Co.’s Healthcare & Life Sciences (HCLS) Group, a wealth of opportunities to get the latest intelligence on this dynamic industry.

M&A activity is expected to continue within the medical device contract manufacturing industry, driven by efforts to simplify supply chains and participate in high-growth end markets. Deep cash reserves, favorable financing terms and a host of consolidation opportunities are reinforcing this trend.

A link to the complete article can be found here. For more information, please contact Andy Dixon or Tyler Bradshaw.


Home Care 100: Potential Changes Fueling Growth

James Clark, a managing director   in Harris Williams & Co.’s   Healthcare and Life Sciences   (HCLS) Group, recently attended   the Home Care 100 Leadership   Conference. Clark spoke with a   number of top executives from the home care and hospice industry, and came away with the following insights on this continually evolving market:

  • Industry consolidation and investments from adjacent healthcare sectors are driving strong deal activity.
  • The Centers for Medicare and Medicaid Services’ (CMS) shift from a 60-day to a 30-day episode has raised concerns, but should not be as disruptive as initially feared.
  • However, the agency’s recent proposal to include unskilled care in the Medicare Advantage benefit could transform the industry.

The home care industry remains attractive to strategic acquirers and private equity groups, providing a wealth of opportunities to create innovative, in-demand service offerings. Proposed changes to Medicare rules should provide a sense of clarity to investors and reinforce this trend.

A link to the complete article can be found here. For more information, please contact James Clark.

Ahead of the pack: the next generation of veterinary services platforms

Harris Williams & Co. professionals   Geoff Smith, Whit Knier and Taylor   Will recently attended the North   American Veterinary Community   Veterinary Meeting & Expo (VMX)   in Orlando, Florida. The event   attracted a record-breaking 18,000 attendees, including veterinary professionals, practice owners, private equity investors and vendors.

The Harris Williams & Co. team gained valuable insights on the forces shaping the future of the veterinary services industry, and how investors can make the most of the opportunity.

Strong consumer demand for veterinary services will continue to support robust M&A activity in the sector. With valuations on the rise, investors are looking for alternative ways to participate in the segment, and are being more selective in terms of acquisitions. In addition, growing, multi-site veterinary services platforms stand to move ahead of the pack by focusing on operational excellence and consistency.

A link to the complete article can be found here. For more information, please contact Geoff SmithWhit Knier or Taylor Will.

What We're Reading

Healthcare | Spending in the U.S. and Other High-Income Countries

JAMA - March 13, 2018

Health care spending in the United States is a major concern and is higher than in other high-income countries, but there is little evidence that efforts to reform U.S. healthcare delivery have had a meaningful influence on controlling healthcare spending and costs.

In 2016, the U.S. spent nearly twice as much as 10 high-income countries on medical care and performed less well on many population health outcomes. The U.S. spent 18% of its gross domestic product on healthcare while spending in other countries such as Australia and Switzerland ranged from 10% to 12%.

Contrary to some explanations for high spending, social spending and healthcare utilization in the U.S. did not differ substantially from other high-income nations. Prices of labor and goods, including pharmaceuticals and devices, and administrative costs appeared to be the main drivers of the differences.

Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the U.S. versus a range of 1% to 3% in the other countries. For pharmaceutical costs, spending per capita was $1,443 in the U.S. versus a range of $466 to $939 in other countries. Salaries of physicians and nurses were also higher in the U.S.

A link to the study can be found here.

Post-Acute | SNFs Feel the Pinch From Fewer Inpatient Stays

Modern Healthcare - March 16, 2018

A new analysis released by Avalere Health found that Medicare beneficiaries have spent 15% fewer days in SNFs between 2009 and 2016. 

Avalere found the rise of home healthcare was not the main driver for the decline in SNF use. Rather it had to do more with hospitals increasingly placing patients in observation status over admitting them for inpatient services. 

Under CMS rules, Medicare covers up to 100 days of care at a SNF, but patients must have received at least three days of hospital inpatient care before they can qualify for coverage at a nursing facility. Patients placed in observation are not eligible to stay at a SNF after they are discharged. 

Per capita hospital discharges fell by 17% between 2009 and 2016 while the number observation stays increased, according to the analysis. 

“What skilled-nursing facilities need to do is measure their outcomes and be able to communicate both costs and clinical outcomes to referral sources,” said Dan Mendelson, president of Avalere Health.

A link to the original article can be found here.

M&A | Cigna Agrees to Buy Express Scripts for More Than $65 billion

Wall Street Journal - March 8, 2018

Health insurer Cigna Corp. plans to buy Express Scripts Holding Co. in a cash-and-stock deal worth $54 billion that the companies say will expand their health care offerings and help them control costs. The deal has a total transaction value of $67 billion, which includes Cigna’s assumption of $13 billion of Express Scripts’ net debt.

The combination is the latest in a furious round of consolidation as healthcare companies seek to position themselves to provide more cost-effective care and fend off heightened competition from Amazon.com Inc. and others.

A link to the original article can be found here.


Public Markets Overview

Key Trading Statistics1

Public Company Sector Performance

12-month % change in stock price

Equity Markets Overview

Healthcare & Life Sciences Industry Stock Performance1

Top Equity Offerings2

(by proceeds)

M&A Overview

Announced Healthcare & Life Sciences M&A1

Healthcare & Life Sciences M&A Trends1

Announced Private Equity M&A Activity1

Debt Markets Overview

Key Credit Statistics3

Select Healthcare & Life Sciences Debt Offerings4

(by deal amount)

Public Comparables

Payor, Provider, & Pharmacy Support Services1

Products & Devices1

Provider-Based Services1




M&A Tranasctions

Announced U.S. Healthcare & Life Sciences M&A1

1. FactSet

2. Company Filings

3. S&P

4. PNC Debt Capital Markets