Healthcare & Life Sciences Industry Overview
There have been roughly ~630 M&A transactions in the healthcare & life sciences (HCLS) industry since the beginning of 2018, worth roughly $185.7 billion, compared to $232.0 billion for all of 2017. Of these deals, ~190 were executed by private equity groups.
Notable transactions include the acquisition of K2M Group by Stryker, Allergan by Almirall SA , and Cartiva by the Wright Medical Group.
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 9.0%, while the S&P grew only 7.3%. Notable exceptions to this trend include specialty pharmacy (decreased 12.2%), disease management (decreased 1.9%), dental products (decreased 1.0%), and behavioral health / management (decreased 0.6%).
Over the past 12 months industry-wide growth looks much stronger, with the HCLS Composite Index achieving a 18.9% increase. At the category level, provider-based services stock prices grew by 41.3% over the past 12 months, followed by payor, provider and pharmacy support services at 25.5% and products and devices at 13.6%. Specific stock price growth leaders over the past year include home care, hospice, and home infusion (83.1%), surgicenters / rehabilitation (67.4%), long-term care (56.9%), and acute-care hospitals (40.8%).
According to CMS, the average monthly Medicare Advantage monthly premium will be $28 next year, the lowest it has been in the last three years. This represents a decrease of 6% since 2018. Kohlberg Kravis Roberts is finalizing its acquisition of Envision Healthcare. Envision, a physicians services provider, is under pressure to retain its in-network status with UnitedHealth in 2019. Envision Healthcare makes about 25% of its commercial revenue through UnitedHealth, and keeping this contract is critical to its goal of moving further in-network. Providers are increasingly turning to digital tools to meet increased demand for healthcare. Despite this, adoption has been slow due to fragmentation and a lack of infrastructure in the industry.
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
Public Company Sector Performance
(12-month % change in stock price)
Equity Markets Overview
Healthcare & Life Sciences Industry Stock Performance1
Top Equity Offerings2
Announced U.S. Healthcare & Life Sciences M&A1
What We’ve Been Reading
Insurance | Medicare Advantage Premiums Hit Three-Year Low
"According to CMS, the average monthly Medicare Advantage monthly premium will be $28 next year, the lowest is has been in the last three years. This represents a decrease of 6% over 2018, and 83% of enrollees who keep the same plan will see their rates decrease or stay the same in 2019. Experts attribute the decrease in premiums to the increasing number of coverage options. Over 91% of Medicare enrollees will have access to 10 or more Medicare Advantage plans next year, thanks to 600 additional plans starting next year."
Providers| Losing UnitedHealth Contract Could Cut Into Envision's Revenue
"Envision Healthcare, a physicians services provider, is under pressure to retain its in-network status with UnitedHealth in 2019 as it finalizes its acquisition by Kohlberg Kravis Roberts. Envision Healthcare makes about 25% ($1 billion) of its annual commercial revenue from UnitedHealth. UnitedHealth recently warned hospitals that Envision would be out-of-network starting January 1, yet Envision expects to remain in-network. Envision is trying to increase the percent of its revenue coming from in-network providers from 91% currently to 95% by year end and keeping UnitedHealth is crucial to this strategy."
Tech | Providers Are Going Digital to Meet Increased Demand
"Providers are increasingly turning to digital tools to meet increased demand for healthcare as the U.S. population ages. According to venture fund Rock Health, there were 345 digital health investment deals in 2017. Despite this, very few people communicate with healthcare providers digitally. Most people also do not use digitally-connected monitoring devices. According to EY, the slow adoption is due to fragmentation in the industry as well as a lack of infrastructure to support the digital tools."
Payor, Provider, & Pharmacy Support Services1
Products & Devices1
2. Company Filings
4. PNC Debt Capital Markets
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