Healthcare Attempts to Recover After April Job Losses
The Healthcare industry experienced a loss of 1.4 million jobs in April, due to a lack of demand for elective and routine procedures. Recovery in the industry began in May and June as nonessential services began rehiring their previously laid-off workers. May and June experienced rehirings of 315,000 and 358,000 jobs in the industry, respectively. The data shows a steady recovery for employment in the healthcare industry. Still, a continued recovery is contingent on whether elective procedures, independent physician practices, and dentist offices can remain operational.1 2
Coronavirus Pandemic Brings New Opportunities to Augmented Reality
The Coronavirus has made employees and customers in the healthcare industry less willing to be in close proximity, paving the way for training employees and service customers in safer ways. Augmented reality is being used in a variety of new ways to help train employees in a contactless environment. Augmented reality lays out digital content, such as 3D or visual instructions, to the user's view of the real world. Sheba Medical center is one of many healthcare facilities currently using augmented reality to train physicians, nurses, and biomedical engineers to operate ventilators during the coronavirus pandemic.3
Cyberattacks on the Healthcare Industry Rise
Federal prosecutors see a rise in cyberattacks on the healthcare industry. Healthcare, pharmaceutical, and research organizations have been targeted in attempts to access research on coronavirus vaccines and treatments. In March, the U.S. Department of Health and Human Services experienced an attack on its servers, overloading the agency's systems. Healthcare systems nationwide have reported similar cyberattacks in recent months. The World Health Organization (WHO) also reported an increase in cyberattacks by 500% in April. Fortune 500 company Magellan Health was one company targeted in April, where an undisclosed number of employee's personal data was stolen through a ransomware attack.4 5
3M Names New CFO to Manage Effects of COVID-19
3M recently named Monish Patolwala as their new CFO effective July 1. The news comes as 3M has seen strong demand for products such as masks but suffered declines in other areas, as lockdowns resulted in lower industrial orders and a drop in healthcare spending. The company has also seen significant decreases in products that are sold to dentists and car manufacturers. 3M's current difficulties reflect the trends experienced by healthcare manufacturers across the industry, as a result of the Coronavirus.6
OptumHealth Acquires naviHealth
OptumHealth has acquired naviHealth, a digital healthcare management platform, for an undisclosed amount. naviHealth currently services the recovery management of 4.5 million post-acute patients and works with around 140 hospitals through their platform. naviHealth is the most recent of multiple acquisitions by OptumHealth to acquire digital health plan providers.7
Hospital M&A Deals Slow Less Than Expected
The hospital sector of the healthcare industry experienced 14 M&A transactions announced in the second quarter of 2020. This total is a significant decline compared to the 29 deals recorded in the first quarter. When compared to last year's second quarter transactions, the industry experienced 19 total transactions. The data shows a decrease in M&A activity for the industry in Q2 2020, but not as significant as expected. The pandemic is still having a significant impact on healthcare finances, with hospitals reporting EBITDA margins down 174% in April. EBITDA remained down 9% year-over-year in May.8
Virtual Clinical Trials Used to Fast-Track Drug Development
With $2.6 billion marking the average cost of bringing a drug to market and two-thirds of the cost resulting from clinical trials, new processes for decreasing the time and cost of these trials are being explored through digital alternatives. Virtual testing has been adopted exponentially by pharmaceutical companies, as over 1,100 clinical trials have been disrupted as of May 20. Since virtual implementations are more suitable for specific elements of a trial, future clinical trials will likely combine both virtual and in-person components.9
Healthcare Stocks Plunge as Coronavirus Infections Rebound
The S&P 500's healthcare sector finished June as the second-worst performer of the index's 11 groups, falling 2.5% compared with the benchmarks 1.8% gain. Despite the recent decline, the sector remains down just 0.3% in 2020. This is due to large jumps in the sector at the beginning of the pandemic. June's losses are believed to reflect the recent rise in coronavirus infections that have resulted in another pause of elective surgeries, further eating into hospital revenues.10
Largest Transactions Closed
- Forty Seven, Inc.
- Gilead Sciences, Inc.
- Ra Pharmaceuticals, Inc.
- UCB SA
- 21st Century Oncology, Inc.
- Genesis Care Pty Ltd
- Stemline Therapeutics, Inc.
- Berlin-Chemie AG
- Drug Delivery Business of 3M
- Altaris Capital Partners, LLC
- Censa Pharmaceuticals Inc.
- PTC Therapeutics, Inc.
- UAS Laboratories, Inc.
- Chr. Hansen Holding A/S
- Progenics Pharmaceuticals, Inc.
- Lantheus Holdings, Inc.
- Universal Care, Inc.
- Bright Health Company of California, Inc.
- Engage Therapeutics, Inc.
- UCB SA
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.
EBIT - Earnings Before Interest and Taxes