Healthcare & Life Sciences Industry Overview

M&A Environment

There have been roughly ~400 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2018, worth roughly $165.0 billion, compared to $239.8 billion for all of 2017. Of these deals, ~150 were executed by private equity groups.

Notable transactions include the acquisition of Alcami by Madison Dearborn Partners, Envision Healthcare by KKR, Caradigm by Inspirata, and the merger of CBR Systems and California Cryobank by GI 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 6.3%, while the S&P grew only 2.9%. Notable exceptions to this trend include physician practice management (decreased 22.2%), dental products (decreased 11.7%), disease management (decreased 11.2%), behavioral health / management (decreased 5.9%), and diagnostic imaging (decreased 1.6%).

Over the past 12 months industry-wide growth looks much stronger, with the HCLS Composite Index achieving an 7.3% increase. At the category level, payor, provider and pharmacy support services stock prices grew by 16.5% over the past 12 months, followed by provider-based services at 12.9% and products and devices at 2.5%. Specific stock price growth leaders over the past year include specialty pharmacy (69.3%), diagnostic imaging (51.5%), home care, hospice, and home infusion (43.3%), and surgicenters / rehabilitation (31.8%).

Industry News

Substantial movement on solutions to fix the 340B program has largely been thwarted by an escalating lobbying war between hospitals and drugmakers. According to a new study by the Medical Group Management Association, medical practices with a higher non-physician provider-to-physician ratio are more profitable and productive. Humana, TPG Capital, and Welsh, Carson, Anderson & Stowe closed the acquisitions of Curo Health Services and Kindred Healthcare on July 2, paving the way for the creation of the country’s largest hospice operator.

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 Statistics3

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Select Healthcare & Life Sciences Debt Offerings4

(by deal amount)

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Public Markets Overview1

Key Trading Statistics (detail begins on page 9)

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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 Offerings2

(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

Pharma | Big Pharma, Hospitals Squaring Off In Lobbying Fight Over 340B Program

"Substantial movement on solutions for fixing the beleaguered 340B program, which was designed by Congress in 1992 to help the poor, has largely been thwarted by an escalating lobbying war between entrenched parts of the healthcare industry. While hospitals and drugmakers have been at odds over the program's scope and reach for years, the war intensified late last year when the Trump administration proposed an across-the-board cut to Medicare Part B payments. That cut went into effect in January."

Read the article.

Providers| Advanced Practice And Nurse Practitioners Bring More Profit And Productivity To Medical Practices

"Medical practices with more advanced practice practitioners, nurse practitioners and other non-physician providers are more profitable and productive, according to a new report. While primary-care practices with a higher non-physician provider-to-physician ratio—at least 0.41 non-physician providers per physician—have higher expenses, they also earn more in net income than practices with fewer non-physician providers (0.20 or fewer per physician), according to the Medical Group Management Association's analysis of more than 3,000 providers."

Read the article.

M&A | Humana, Private Equity Firms Close On Curo And Kindred

"Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe have completed the acquisitions of Curo Health Services and Kindred Healthcare, paving the way for the creation of the country's largest hospice operator. The trio announced in April they intended to combine Mooresville, N.C.-based Curo with the hospice business of Kindred at Home, a transaction first announced in December and that closed on July 2."

Read the article.

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. Company Filings

3. S&P

4. PNC Debt Capital Markets

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