Healthcare & Life Sciences Industry Overview
Medical Plastics And Packaging: Convergence Creates Opportunity
Both the plastics and packaging and the medical sectors are experiencing thriving M&A environments, spurred by investor interest in each sector’s unique strengths and their common trait of steady, recession-resistant demand. When two such attractive sectors intersect, it creates substantial opportunities.
In this article, senior bankers from Harris Williams’ Industrials and Healthcare and Life Sciences (HCLS) Groups share their perspectives on what’s putting medical plastics and packaging on the radar for so many strategic buyers and investors.
There have been roughly ~550 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2018, worth roughly $174.9 billion, compared to $239.8 billion for all of 2017. Of these deals, ~165 were executed by private equity groups.
Notable transactions include the acquisition of Premise by OMERS Private Equity, AMPAC Fine Chemicals by Cardinal Health and CD&R, and LifePoint Health by Apollo and RCCH Health Partners.
Public Company Performance
Stock prices grew slightly for many HCLS companies during the past three months, higher than the value of the S&P 500 over the same period. In fact, the Harris Williams HCLS Composite Index grew 9.2%, while the S&P grew only 6.4%. Notable exceptions to this trend include physician practice management (decreased 6.8%), disease management (decreased 6.3%), specialty pharmacy (decreased 4.6%), and medical / surgical / dental supplies and distribution (decreased 2.6%).
Over the past 12 months industry-wide growth looks much stronger, with the HCLS Composite Index achieving a 14.9% increase. At the category level, provider-based services stock prices grew by 31.7% over the past 12 months, followed by payor, provider and pharmacy support services at 20.9% and products and devices at 9.0%. Specific stock price growth leaders over the past year include home care, hospice, and home infusion (67.2%), surgicenters / rehabilitation (59.2%), diagnostic imaging (46.4%), and long-term care (35.9%).
Substituting 29 of the most expensive brand-name combination drugs could have saved Medicare almost $1 billion in 2016, according to a new study published by JAMA. Physicians could vastly improve their referrals if providers shared insurance, quality, location, and specialization data with peers in their network. Physicians do not currently have adequate data to best use their referral networks, according to a new survey from Kyruus. Private equity firm Apollo has acquired LifePoint Health, which will create a company that operates 84 hospitals across 30 states once it is combined with RCCH HealthCare Partners.
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
(detail begins on page 9)
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
Pharma | Swapping Brand-Name Combo Drugs For Generics Could Save Medicare $1B A Year
Combination drugs ideally reduce the number of pills a patient has to take and improve adherence. But that doesn't happen if branded drugs are prohibitively expensive. Substituting 29 of the most expensive brand-name combination drugs with generic alternatives could have saved Medicare $925 million in 2016, according to a new study published by JAMA. The study also calls into question drugs that are nearly identical to existing medications and claims the financial harm of these drugs far outweighs the value they offer.
Providers| Lack Of Provider Data, Scheduling Options, Impedes Care Coordination
Physicians do not have the data to best use their referral network, which can hurt outcomes and damage the patient experience, according to a new survey from Kyruus. Physicians often refer patients to a small network of their favorites yet often do not know whether the physicians have changed hospitals or are out of network, which can result in surprise medical bills for patients. According to the Kyruus survey this dynamic can be resolved if providers share insurance, quality, location and specialization data with peers in their network.
M&A | LifePoint Acquired By Apollo For $5.6B
Private equity firm Apollo has completed the acquisition of LifePoint Health, a Tennessee-based hospital system, for $5.6 billion. Apollo plans to merge the Company with RCCH HealthCare Partners, creating a combined company that will operate 84 hospitals across 30 states. The deal comes at a time when LifePoint is struggling financially, reporting a net loss in Q1 2018 and divesting hospitals to help pay off its debt.
Payor, Provider, & Pharmacy Support Services1
*KKR & Co. reached an agreement on June 11th, 2018 to acquire Envision Healthcare for $46.0 per share, in a deal expected to close later in 2018.
*40% of Rite Aid’s stores were acquired by Walgreens in a $4.4 billion transaction completed on March 5, 2018. The remainder of stores were to be acquired by Albertson’s until the deal fell through on August 8, 2018.
Products & Devices1
*DaVita Medical Group to be acquired by UnitedHealth in a $4.9 billion deal announced on December 6th, 2017.
* Figures are adjusted for minority interest.
2. Company Filings
4. PNC Debt Capital Markets
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