Healthcare Q3 2019

Q3 Healthcare

M&A Transaction Trends

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

M&A Industry Trends

Amazon's Launched its Virtual Healthcare Service for Employees

Amazon launched its pilot healthcare service for employees in the Seattle area. The service aims to provide Amazon employees with the flexibility to communicate with medical professionals over chat or video call. The initiative comes as a result of a partnership announced with J.P Morgan and Berkshire Hathaway. The move signals a broader trend among tech companies expansion into healthcare services, primarily medical consultation.1

Mayo Clinic to Store Patient Data on Google's Cloud

Google and the Mayo Clinic recently announced a partnership. Mayo will house its patient data on Google’s cloud. This news comes as both Microsoft Azure and Amazon Web Services partner up with healthcare providers to offer data storage and analytics. The cloud computing trend comes at a time when healthcare providers are consolidating as a way to ensure stronger value to patients. The ability to analyze massive troves of data provides physicians with better ways to identify signs of disease early-on and heightened accuracy to diagnoses.2, 3

Otezla Purchase Goes for $13.4 Billion in Cash

Healthcare deals continued at a robust pace through Q3. In August, Amgen announced plans to purchase the anti-inflammatory drug Otezla from Celegen for $13.4 billion in cash. Bristol-Myers Squibb is in talks to acquire Celegen for $74.0 billion. In Mid-August Bayer decided to sell its animal medicines business to Elanco Animal Health for $7.6 billion, this values the company at roughly 19.0x EBITDA.4

Johnson & Johnson Fined $572 Million for Their Part in the Opioid Crisis

An Oklahoma judge ruled that Johnson & Johnson exaggerated the benefits and downplayed the addictive qualities of opioids, ordering the manufacturer to pay a fine of $572 Million. Additionally, new legislation in Congress addresses the rising costs of hospital bills and has made investors bearish on healthcare. The share of junk-rated corporate loans has risen to 6.9% in the last month – the highest level since 2009.5, 6

FDA Working to Prevent Misdiagnosis Within Mobile Apps

The FDA announced new guidelines for mobile healthcare products that provide telemedicine services. The rules are meant to give some clarity as to precisely what services mobile apps can offer. The FDA hopes to prevent these tools from misdiagnosing patients, specifically higher risk diagnoses such as diabetes or forms of cancer.7

Largest M&A Transactions Closed

Target Buyer Value($mm)
Array BioPharma Inc. Pfizer Inc. $11,499.34
Xiidra of Shire US, Inc. Novartis AG $5,300.00
Peloton Therapeutics, Inc. Merck & Co., Inc. $2,202.56
Benchmark Senior Living Portfolio - $1,700.00
Real Estate of 11 Acute Care Hospitals and 2 Behavioral Health Facilities MPT Operating Partnership, L.P. $1,400.00
Exonics Therapeutics, Inc. Vertex Pharmaceuticals Incorporated (NasdaqGS:VRTX) $1,043.00
Modis Therapeutics, Inc. Zogenix, Inc. $404.77
Cavion LLC Jazz Pharmaceuticals plc $312.50
SentreHEART, Inc. AtriCure, Inc. $300.00
Aratana Therapeutics, Inc. Elanco Animal Health Incorporated $251.12

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

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Contacts

Michael Poole

 

Michael Poole

Investment Banking | ESOP

 

407-621-2112

mpoole@pcecompanies.com

David Jasmund

 

David Jasmund

Investment Banking | ESOP

 

407-621-2111

djasmund@pcecompanies.com


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. Etherington, Darrell. “Amazon Launches Amazon Care, a Virtual and in-Person Healthcare Offering for Employees.” TechCrunch, TechCrunch, 24 Sept. 2019.
  2. Molteni, Megan. “AI Could Reinvent Medicine-Or Become a Patient's Nightmare.” Wired, Conde Nast, 19 Sept. 2019.
  3. Evans, Melanie. “Google, Amazon and Microsoft in Battle to Store Health Data in the Cloud.” The Wall Street Journal, Dow Jones & Company, 10 Sept. 2019.
  4. Grant, Charley. “Amgen Shows Price Is Still Right for Blockbuster Drug Deals.” The Wall Street Journal, Dow Jones & Company, 26 Aug. 2019.
  5. Hoffman, Jan. “Johnson & Johnson Ordered to Pay $572 Million in Landmark Opioid Trial.” The New York Times, The New York Times, 26 Aug. 2019.
  6. Goldfarb, Sam. “Health-Care Turmoil Adds to Debt Investors' Concerns.” The Wall Street Journal, Dow Jones & Company, 27 Sept. 20191.
  7. Ross, Casey, and Casey. “FDA Clarifies How It Will Regulate Digital Health, Artificial Intelligence.” STAT, 26 Sept. 2019.
David Jasmund

 

David Jasmund

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