Healthcare & Life Sciences Industry Overview

Our Latest Insights | Post-Acute Care: Five Traits of Growth-Ready Providers

With growth on the horizon, post-acute care is attracting the attention of strategic buyers and investors.

In this article, James Clark, a managing director in the firm’s Healthcare & Life Sciences Group, draws upon recent client experience—including the sale of AccentCare—to identify five key traits of growth-ready post-acute care providers.

Read the article.

M&A Environment1

There have been a little over 550 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2019, worth roughly $261.2 billion, compared to $241.7 billion for all  of 2018. One hundred thirty three of these deals were executed by private equity groups.

Notable transactions include the acquisition of Array BioPharma by Pfizer, Takeda Pharmaceutical – Xiindra Business by Vertex Pharmaceuticals, Tilos Therapeutics by Merck & Co, Endocare / Scion Medical Limited by Arsenal Capital Partners, and Social & Scientific Systems by DLH Holdings.

Public Company Performance1

Stock prices increased for many HCLS companies during the past three months. In fact, the Harris Williams HCLS Composite Index increased 5.0%, while the S&P increased 4.5%. Notable sector increases include Information Services (increased 25.4%), Contract Pharma Manufacturing (increased 19.4%), and healthcare staffing (increased 17.9%).

Over the past 12 months, industry-wide stock prices have experienced slight increases as a whole, however the HCLS Composite Index shows a mild decrease of 6.7%. At the category level, products and devices grew by 17.6% on average over the past 12 months, followed by provider-based services at 9.7%, and payor, provider and pharmacy support stock prices at 3.3%. Specific stock price growth leaders over the past year include long-term care (36.5%), home care, hospice and home infusion (27.2%), contract research organizations (22.2%), and medical devices and products (21.8%).

Industry News

PillPack, Amazon’s foray into the pharmacy industry, was informed this week that it will soon be cut off from patient medication data, a move that will seriously complicate the business. PillPack’s pharmacy delivery system relies on its access to an accurate list of its patients’ medications and without access to Surescripts data, PillPack will lose the digital history on all patients, requiring them to call each patient by phone. Amazon’s jump into the pharmacy industry presents a serious threat to the status quo and has caused major incumbents to push back. Meanwhile, former Vice President Joe Biden unveiled his 2020 White House campaign’s healthcare plan, which aims to protect and build upon ObamaCare by adding a public option. Biden’s plan would also increase the value of tax credits to power premiums, expand coverage to low-income Americans, and lower the costs of prescription drugs.

The Dow Jones Industrial Average reach a record high of 27,000, thanks in part to a rally in healthcare stocks. While UnitedHealthcare, Cigna, and CVS’s significant gains helped push the Dow industrials to its best close ever, the S&P 500’s healthcare sector struggled as shares of biotech firms, pharmaceutical companies, and life sciences shops broadly declined. However, stocks remain supported by the Fed doubling down on signaling the central bank could cut interest rates later this month.

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

Business | Amazon Threatens to Sue Major Pharmacy Player if it Prevents PillPack from Accessing Patient Drug Data

“Amazon’s PillPack is considering legal action against Surescripts and other drug supply-chain players in a dispute over patient health data… Spending on prescriptions in the U.S. is approaching $500 billion a year, and the industry has long been controlled by a handful of large players, who manage pricing and access to medications. Amazon’s jump into the market poses a serious threat to the status quo… PillPack was informed this week that it will soon be cut off from patient medication data, a move that would seriously complicate its business, according to people familiar with the matter... PillPack’s pharmacy delivery service relies on its access to an accurate list of its patients’ medications, so it can properly inform them about health and safety risks, uncover and duplicate subscriptions and help them keep up with refills. Without access to Surescripts data, PillPack would lose the digital history on all patients and would likely have to call each by phone, a process that would be extremely time-consuming, costly, and would present safety risks for patients who may not remember everything.”

Read the article.

Health Policy | Biden Pitches New Subsidies, Public Option in Health Care Plan

“Former Vice President Joe Biden unveiled his 2020 White House campaign’s health care plan this month, with a goal of protecting and building on ObamaCare by adding a public option. Unlike other Democratic hopefuls, Biden does not support eliminating private insurance or a “Medicare for All” plan and is not a pathway to a Medicare for All system. Under Biden’s plan, Americans would have the option to purchase a public health insurance option, like Medicare. His plan would also increase the value of tax credits to lower premiums, expand coverage to low-income Americans in 14 states that have blocked the ACA’s Medicaid expansion, and automatically enroll individuals making below 138 percent of federal poverty line through interacting with public schools and other low-income programs. Additionally, Biden’s plan aims to lower the costs of prescription drugs, repeal the law that bars Medicare from negotiating lower prices with drug corporations, and limit launch prices for drugs that face no competition.”

Read the article.

Markets | Healthcare Rally Helps Lift Dow to Record Close

“A rally in healthcare stocks pushed the Dow Jones Industrial Average over 27,000 for the first time after the Trump administration abandoned a plan to curb drug rebates. The decision canceled a proposal that would have eliminated rebates from government drug plans, easing concerns of a massive disruption to the U.S. pharmaceutical industry. While UnitedHealth, Cigna, and CVS’s significant gains helped push the Dow industrials to its best close ever, the S&P 500’s healthcare sector struggles as shares of biotech firms, pharmaceutical companies and life sciences shops broadly declined. Stocks have been supported as Federal Reserve Chairman Jerome Powell has doubled down on signaling the central bank could cut interest rates later this month. “With the Fed looking almost certain to cut rates in the coming weeks, it is important to position portfolios properly regardless of the outcome,” Mark Haefele, global chief investment officer at UBS Global Wealth Management, said in a note to clients on Thursday, recommending holding more stocks and cash over short-maturity U.S. government bonds.”

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. S&P

3. PNC Debt Capital Markets

4. Company Filings

 

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