Healthcare & Life Sciences Industry Overview

Deal Profile: The Retina Group of Washington

As the global population ages and obesity rates continue to increase, the demand for ophthalmology services will grow as well. Even during the COVID-19 lockdown that shuttered some medical businesses, ophthalmologists remained able to perform procedures necessary to save vision. Today, as the COVID-19 crisis shows signs of abating in some locations, ophthalmology patient volumes have strongly rebounded.

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M&A Environment

There have been a little over 480 M&A transactions in the healthcare and life sciences (HCLS) industry since the beginning of 2020, worth roughly $19.1 billion, compared with approximately $233 billion for all of 2019.

Notable recent transactions include the acquisition of Dermira Inc. (NasdaqGS:DERM) by Eli Lilly and Company (NYSE:LLY), InTouch Technologies Inc. by Teladoc Health (NYSE:TDOC) and Decision Resources Inc. by Clarivate Analytics Plc. (NYSE:CCC).1

Public Company Performance

Stock prices increased for many healthcare and life sciences (HCLS) companies during the past three months. In fact, the Harris Williams HCLS Composite Index increased 6.9%, while the S&P increased 4.9%. Notable sector increases include contract pharma manufacturing (increased 37.7%), assisted living (increased 30.2%) and specialty pharmacy (increased 26.9%).

Industrywide stock prices have experienced slight decreases as a whole; however, the HCLS Composite Index showed a mild decrease over the past 12 months of 10.8%. At the category level, products and devices grew by 8.2% on average over the past 12 months, followed by provider-based services declining 8% and payor, provider and pharmacy support stock prices declining 9.6%. Specific stock price growth leaders over the past year include medical devices and products (24.4%), specialty managed care (20.6%), and home care, hospice and home infusion (20.4%).1

Industry News

Federal health officials released a proposed rule late Monday that sets 2021 Medicare payment rates for physicians and includes changes to the Merit-based Incentive Payment System. The Centers for Medicare & Medicaid Services released the draft of its proposed annual Physician Fee Schedule and Quality Payment Program rule, which updates the payment rates for physician services. As previously promised by Centers for Medicare and Medicaid officials, the proposed rule will also expand the list of telehealth services covered by Medicare. Services added include more complex visits that allow offices to bill for more advanced office/outpatient evaluation and management codes.

COVID-19 patients might have been flooding into emergency departments in the spring, particularly in states like New York. But for everything else - heart attacks, strokes and other kinds of emergencies -- the numbers were down for many hospitals across the country. A new study collating data from five health systems in Colorado, Connecticut, Massachusetts, North Carolina and New York reported decreases in emergency department visits between 40 and 60 percent in the first four months of 2020, with the most rapid decreases in March. Prior research from the CDC found that in the 10 weeks after COVID-19 was declared a national emergency, emergency room visits “declined 23% for heart attack, 20% for stroke, and 10% for hyperglycemic crisis.” The Department of Veterans Affairs has also reported similar findings about a precipitous drop in emergency room visits.

Healthcare and health IT groups are applauding federal lawmakers' efforts to help establish a unique patient identifier in U.S. healthcare. Many health IT leaders see the investigation and creation of unique patient identifiers as critical to solving issues with patient matching and potentially minimizing misidentification and medical errors. And this effort is even more crucial amid a global health crisis, the groups say. On Thursday, the U.S. House of Representatives passed the six-bill FY2021 minibus package that includes the Labor-Health and Human Services appropriations bill. As part of the bill, the House approved by voice vote the bipartisan Foster-Kelly Amendment, which strikes Section 510 of the Labor-HHS bill and removes the ban on using federal funding to create patient identifiers.

1. FactSet

M&A Overview1

Announced Healthcare & Life Sciences M&A

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Healthcare & Life Sciences M&A Trends

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Announced Private Equity M&A Activity

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Debt Markets Overview

Key Credit Statistics2

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Select Healthcare & Life Sciences Debt Offerings3

(by deal amount)

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Public Markets Overview1

Key Trading Statistics

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Public Company Sector Performance

(12-month % change in stock price)

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Equity Markets Overview

Healthcare & Life Sciences Industry Stock Performance1

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Top Equity Offerings4

(by proceeds)

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M&A Transactions

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

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What We’ve Been Reading

Policy | CMS Proposes Changes to Docs' Medicare Payments for 2021, Including Payment Cuts for Some Specialties

"Federal health officials released a proposed rule late Monday that sets 2021 Medicare payment rates for physicians and includes changes to the Merit-based Incentive Payment System. The Centers for Medicare & Medicaid Services released the draft of its proposed annual Physician Fee Schedule and Quality Payment Program rule, which updates the payment rates for physician services. As previously promised by Centers for Medicare and Medicaid officials, the proposed rule will also expand the list of telehealth services covered by Medicare. Services added include morecomplex visits that allow offices to bill for more advanced office/outpatient evaluation and management codes, prolonged services, group psychotherapy, neurobehavioral status exam, care planning for patients with cognitive impairment and home visits. The proposed rule also will add certain services to the Medicare telehealth list for the remainder of the calendar year; however these services will not be permanently added. These services include certain home visits, emergency department visits and nursing facility discharges. A more sweeping extension of pandemic telehealth policies, including enabling patients to get telehealth visits at home, would require Congressional action, CMS officials have said. CMS also aims to simplify billing and coding requirements for office and outpatient visits. The agency plans to align its evaluation and management (E/M) visit coding and documentation policies with changes laid out by the CPT Editorial Panel for office/outpatient E/M visits, beginning Jan. 1, 2021."

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Provider | Hospitals Saw Fewer Heart Attacks and Strokes as the Coronavirus Pandemic Struck — And Nobody Knows Why

"COVID-19 patients might have been flooding into emergency departments in the spring, particularly in states like New York. But for everything else - heart attacks, strokes and other kinds of emergencies - the numbers were down for many hospitals across the country. A new study collating data from five health systems in Colorado, Connecticut, Massachusetts, North Carolina and New York reported decreases in emergency department visits between 40 and 60 percent in the first four months of 2020, with the most rapid decreases in March. Prior research from the CDC found that in the 10 weeks after COVID-19 was declared a national emergency, emergency room visits 'declined 23% for heart attack, 20% for stroke, and 10% for hyperglycemic crisis.' The Department of Veterans Affairs has also reported similar findings about a precipitous drop in emergency room visits. The billion-dollar question for health services researchers: Did patients have fewer heart attacks and strokes in this period due to lifestyle changes stemming from the pandemic? Or did rates stay constant, with more people suffering at home instead of coming into the emergency room? No one knows the answer yet, but medical researchers are doing their best to figure it out, cobbling together data from different health insurers, health systems and electronic medical record companies. One theory is that more people with minor ailments stayed home to avoid exposure to the virus. But the researchers suspect there’s a lot more to it than that. 'The thing that’s suspicious is that the proportion of visits that resulted in a patient stay did not go up,' said Molly Jeffery, an assistant professor of health sciences research at the Mayo Clinic, referring to the hospitals in New York. 'If people with minor issues stayed home and only the most severely sick went to the hospital, you’d expect the proportion of people being admitted to go up.'"

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Tech | Healthcare Groups Cheer House Move to Overturn Ban on Nationwide Patient Identifier

"Healthcare and health IT groups are applauding federal lawmakers' efforts to help establish a unique patient identifier in U.S. healthcare. Many health IT leaders see the investigation and creation of unique patient identifiers as critical to solving issues with patient matching and potentially minimizing misidentification and medical errors. And this effort is even more crucial amid a global health crisis, the groups say. On Thursday, the U.S. House of Representatives passed the six-bill FY2021 minibus package that includes the Labor-Health and Human Services appropriations bill. As part of the bill, the House approved by voice vote the bipartisan Foster-Kelly Amendment, which strikes Section 510 of the Labor-HHS bill and removes the ban on using federal funding to create patient identifiers. The long-standing ban has stifled innovation around patient identification issues and has prevented the Department of Health and Human Services from engaging the healthcare community to develop and advance a comprehensive nationwide patient matching strategy, according to healthcare leaders. Reps. Bill Foster (D-IL) and Mike Kelly (R-PA) have led the efforts in the House of Representatives to remove the ban for the past two years. Industry efforts to establish a unique patient identifier in U.S. healthcare hit a roadblock last year. A similar measure passed the House last year, but Senate appropriators failed to include language overturning the two-decade-old ban in the draft fiscal year 2020 funding bill for HHS. 'There has never been a clearer need to have accurate patient information. Filling in these critical gaps of data are essential to effectively respond to any public health crisis,' said Joel White, Health Innovation Alliance (HIA) executive director, in a statement."

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Public Comparables

Payor, Provider, & Pharmacy Support Services1

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Products & Devices1

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Provider-Based Services1

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1. FactSet

2. S&P

3. PNC Debt Capital Markets

4. Company Filings