InSight

Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Healthcare’ Category

News From the Healthcare Industry

By Peter Heydenrych | Feb 20, 2015

HealthcareHealthcare M&A activity for North American based target companies in the  sector for Q4 2014 included 94 closed deals (more than 300 announced), with an average enterprise value of $228 million. Full-year totals for 2014 broke previous records for the number of deals and the dollars spent. More than 1,200 healthcare industry transactions were announced last year, an increase of 26% over 2013’s total of 1,035 transactions. The previous record for most transactions in a year was set in 1997, at 1,287. Total deal value reached $387.4 billion in 2014, and an increase of 137% over 2013’s total of $163.7 billion. The pharmaceutical sector accounted for 55% of the year’s total spending ($213 billion) and 14% of the deal volume (188 transactions).

As for the 2015 M&A outlook in the sector, activity is likely to keep booming in the first half of 2015 as Americans continue to enroll in healthcare plans through the exchanges.

Total revenue for the US healthcare sector is forecast to grow at an annual compounded rate of 5 percent between 2014 and 2018. US consumer prices for medical care commodities, an indicator of healthcare costs, increased 4.8 percent in December 2014 compared to the same period in 2013. US consumer prices for medical care services, an indicator of profitability for healthcare services, rose 2.4 percent in December 2014 compared to the same month in 2013. Total US revenue for healthcare and social assistance rose 5.3 percent in the third quarter of 2014 compared to the previous year.

Posted by Peter Heydenrych.

Read the Entire Healthcare 1st Quarter Newsletter Here


Q4 Healthcare M&A Update

By Catherine Patience | Nov 07, 2014

HEIPG-PipetteM&A activity for North American based target companies in the healthcare sector for Q3 2014 included 299 closed deals and total deal value of approximately over $14 billion, according to data provided by S&P Capital IQ. M&A Activity in the quarter was down by 11% versus Q2 2014 from 333 to 299 deals closed. The average total deal value also fell by nearly 200% from $379 million to $165 million. 

New data from Frost & Sullivan’s, an industry research group, “Analysis of Mergers and Acquisitions Trends in the United States Healthcare Provider Industry” reveals that M&A deals in the post-acute care, surgical and emergency center segments are expected to drive M&A activity in the U.S. healthcare provider industry. According to the report, the upward trend is also being driven by other factors having a negative impact on healthcare providers’ bottom line. This includes the charges levied on hospitals that get admissions due to hospital-acquired conditions, the Hospital Readmissions Reduction Program that imposes penalties on hospitals with high readmission rates, and value-based purchasing that ties hospitals’ performance to reimbursement rates for Medicare patients.

Read the Entire Healthcare 4th Quarter Newsletter Here

 


Q3 Healthcare Mergers & Acquisitions Update

By Catherine Patience | Aug 29, 2014

HEIPG-Heart RateM&A activity in the Healthcare sector for North American based target companies in Q2 2014 included 288 closed deals according to data provided by S&P Capital IQ.  According to a report from, Health Care M&A News, an industry news group, healthcare M&A activity in the second quarter was up 171% compared with the first quarter and was up 152% versus the same period in 2013.  Deal volume surged on the healthcare technology side to 143 deals, an increase of 31% compared with the previous quarter. The US healthcare sector, a sector that includes physicians, dentists, hospitals, home healthcare, nursing homes, and daycare services, is forecast to grow at an annual compounded rate of 5% between 2014 and 2018.

Read the Entire Healthcare 3rd Quarter Newsletter Here


Q2 Healthcare Mergers & Acquisitions Update

By Kim Levin | Jun 06, 2014

HEIPG-Doctor and xraysM&A activity in the Healthcare sector for North American based target companies in Q1 2014 included 313 closed deals according to data provided by S&P Capital IQ. According to a report from PriceWaterhouseCoopers, an international consulting firm, deal activity in the first quarter of 2014 was relatively consistent with the same period in 2013. However, the value of announced deals showed a sharp uptick indicating growth in multiples and demand for health-related companies as technology evolves and the Boomer Generation ages.

Read the Entire Healthcare 2nd Quarter Newsletter Here


Healthcare Q1 M&A Update

By Catherine Patience | Mar 14, 2014

HEIPG-Heart RateM&A activity in the North American Healthcare sector for Q4 2013 through February 24, 2014 included 469 deals closed according to data provided by S&P Capital IQ.  According to a report from industry firm Healthcare Financial Management Association, 2013 was sparked by a heavy wave of consolidation in the healthcare space led by regulatory changes and the implementation of the Affordable Care Act (“Obamacare”).  Looking forward to 2014, strong M&A activity is expected to continue as many targets view transactions as the only opportunity to mitigate risk in an ever-evolving environment. This sentiment should be felt throughout the sector with payers, hospitals and other providers looking to join forces as larger biotech giants continue to have an appetite for small operations with significant intellectual property and novel products. Many in the healthcare subsectors will see M&A as an avenue to increase value by offering superior products and services.

Read the Entire Healthcare 1st Quarter Newsletter Here


Healthcare M&A Activity Update

By Kim Levin | Jan 10, 2014

HEIPG-Pipette ReservoirM&A activity in the North American healthcare sector for Q3 2013 was down 24% from last quarter, with 409 deals announced or closed in the period according to data provided by S&P Capital IQ. Deal count however, remained on the uptick, adding 26 deals quarter over quarter. The pharmaceutical sector continued to see the biggest deals with Amgen’s $10.4 billion purchase of Onyx Pharmaceuticals leading the pack as the quarter’s largest deal. Vendors racked up the most deals. Two of the five largest vendor deals involved private equity investors purchasing electronic medical record companies.

Read the Entire Healthcare 4th Quarter Newsletter Here


Healthcare M&A Activity Update

By Kim Levin | Oct 16, 2013

HEIPG-Heart RateThe US healthcare sector includes more than 780,000 hospitals, doctor’s offices, emergency care units, nursing homes and social services providers with combined annual revenue of about $2 trillion. The sector is forecast to grow exponentially, driven by the Affordable Care Act, which ensures that previously uninsured Americans will receive access to healthcare coupled with the recovering economy.

 

 

Read the Entire Healthcare 3rd Quarter Newsletter Here


Excise Tax on Medical Devices

By David DuWaldt | Jun 14, 2011

.

Who Really Pays?

Pursuant to the federal health care legislation of March 2010, a new section 4191 was added to the Internal Revenue Code.  This new code section provides for an excise tax of 2.3% on sales of medical devices other than eyeglasses, contact lenses, hearing aids, and other medical devices purchased, at retail, by the general public for individual use.  In other words, Class I medical devices sold to the public are generally excluded from the excise tax.  The application of this new excise tax takes effect for sales by the manufacturer, producer, or importer of medical devices after December 31, 2012.

Medical Device

An earlier version of the health care bill that was introduced by the Senate had a starting date in 2010 and it would have cost the medical device industry approximately $40 billion in excise tax over ten years.  Several large medical device manufacturers and industry groups were able to influence members of Congress so that the final version of the law begins with medical device sales in 2013.  Starting in 2013, the final version of this excise tax provision is expected to cost the medical device industry approximately $20 billion over ten years. Read more »


Good News for the Medical Device Industry

By David DuWaldt | Oct 22, 2008

On February 20, 2008, the United States Supreme Court issued a momentous decision in Riegel v. Medtronic.  This decision represents a major victory for the medical device industry since it provided that medical devices, which are approved under the Food and Drug Administration’s pre-market approval (PMA) process, cannot be subject to a products liability or other personal injury claim under state law.

The Riegel case was decided based on certain language contained within the Medical Device Amendments of 1976 (MDA), which preempt state law claims for damages when a medical device has undergone the PMA process.  While this case does provide relief to manufacturers with respect to those medical devices that did receive pre-market approval from the Food and Drug Administration, it is important to note that medical devices which only meet the “section 510(k) process” (a section of the MDA describing the review process) do not get relief from state law injury claims.  This particular issue has already been decided by the U. S. Supreme Court in the 1996 case of Medtronic v. Lohr, and therefore, distinguishes Lohr from the Riegel case.

So what economic effect might the Riegel case have on medical device manufacturers?  Like so many other questions, this will depend on several factors, including the type of medical devices being manufactured and sold. Read more »