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David Jasmund

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Industry Trends

Biotech Valuations Cool

Amid a global pandemic, many V.C. firms sought to capitalize on the COVID-19 related growth in the healthcare industry. Funding for the biotech industry reached record levels in 2020 and 2021; two years later, that funding is losing steam. Although funding will still be available, the record high valuations will not be as prominent in the current environment, and growth expectations have greatly diminished.1

Automation and Technology Continue to Drive Healthcare Investments

Significant accounting and administrative tasks are still done by hand rather than widely available technology for much of the healthcare industry. With labor shortages, invoicing errors, purchasing errors, and various other internal inefficiencies already affecting the industry, automation and technology advancements will be a worthwhile investment. Technology will increase not only the speed of workflow but also the accuracy, saving time and money for all involved.2

DOJ Sues to Block Merger of United Health and Change Healthcare

The deal valued at $13 billion would combine Change Healthcare and United Health’s OptumInsight segment providing more effective and cost-efficient software, data analytics, and tech-enabled management services. The companies claim the deal would provide healthcare providers with the necessary resources to simplify core processes and provide better healthcare experiences for all involved. The DOJ claims that the acquisitions would give United Health unfair access to its competition’s data and sensitive information that they could use to increase control over the industry.3

High-Quality Medical Care at Home

Care at Home services could increase the quality of care and decrease the associated costs for many. Providers could transition an estimated $265 billion of care to at-home services for those receiving Medicare. Adoption of Care at Home would rely on support from providers who are not incentivized to pursue this due to the low-cost setting and uncertainty about reimbursement. Adopting this practice relies on a clear strategy to outline who and what care would be under this umbrella and how it would benefit the providers.4

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Alexion Pharmaceuticals, Inc.
  • AstraZeneca PLC
  • $43,364.73
  • PPD, Inc.
  • Thermo Fisher Scientific Inc.
  • $21,709.41
  • Varian Medical Systems, Inc.
  • Siemens Healthineers AG
  • $17,159.96
  • athenahealth, Inc.
  • Hellman & Friedman LLC; GIC Pte. Ltd.; Abu Dhabi Investment Authority; H&F Investors IV LLC; Bain Capital Private Equity, LP; Bain Capital Investors, LLC; Bain Capital Tech Opportunities, L.P.
  • $17,000.00
  • PRA Health Sciences, Inc.
  • ICON Public Limited Company
  • $12,783.70
  • Hill-Rom Holdings, Inc.
  • Baxter International Inc.
  • $12,268.77
  • Aldevron, LLC
  • Danaher Corporation
  • $9,563.00
  • PAREXEL International Corporation
  • EQT Partners AB; Goldman Sachs Asset Management, L.P.
  • $8,500.00
  • GRAIL, Inc.
  • Illumina, Inc.
  • $8,000.00
  • Acceleron Pharma Inc.
  • Merck Sharp & Dohme Corp.
  • $7,589.72

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • MedRisk, LLC
  • CVC Capital Partners Limited
  • $1,150.00
  • Springstone Health Opco, LLC
  • Medical Properties Trust, Inc.
  • $950.00
  • Cordis Corporation
  • Hellman & Friedman LLC
  • $927.00

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • CIOX Health
  • Datavant, Inc.
  • $7,000.00
  • Arena Pharmaceuticals, Inc.
  • Pfizer Inc.
  • $6,728.19
  • Majority of Alliance Healthcare Businesses of Walgreens Boots Alliance, Inc.
  • AmerisourceBergen Corporation
  • $5,908.42

 

Source S&P Capital IQ as of 4/7/2022 and PCE Proprietary Data

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Contacts

Michael Poole

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David Jasmund

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Hodgson, Leah. “Biotech industry faces reset as public market turmoil impacts valuations.” News & Analysis, Pitchbook, 11 Mar. 2022.
  2. Alkire, Michael J. “For Health Care Providers, Five Trends To Watch In 2022.” Health Affairs Forefront, Health Affairs, 31 Jan. 2022.
  3. Beirne, Logan. “Regulators put United Health-Change Healthcare Merger on Life Support.” Mergers & Acquisitions, Law Street, 8 Mar. 2022.
  4. Bestsenny, O., Chmielewski, M., Koffel, A., and Shah, A. “From facility to home: How healthcare could shift by 2025” Healthcare Systems & Services, McKinsey & Company, 1 Feb. 2022.
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