The report below provides a good
overview of the fourth quarter M&A activity in the Healthcare Industry
Sector.
M&A activity for North American based target
companies in the Healthcare sector for Q3 2017 included 183 closed deals,
according to data published by industry data tracker FactSet.
National health expenditures are
projected to grow at a rate of 5.6% on average per year according to the U.S.
Office of Actuary. The country’s aging population is expected to contribute
significantly to that spending growth.
Industry
Indicators
- US consumer prices for medical care
commodities, an indicator of healthcare costs, increased 2.4% in August
2017 compared to the same period in 2016.
- US consumer prices for medical care services,
an indicator of profitability for healthcare services, rose 1.6% in August
2017 compared to the same month in 2016.
- Total US revenue for healthcare and social
assistance rose 3.4% in the second quarter of 2017 compared to the
previous year.
Industry
Update
The use of telemedicine in US health
care networks is rapidly growing, but the extent of treatment varies widely due
to differences in state coverage policies. Currently, 48 states and Washington,
DC, include some form of live video reimbursement in their Medicaid
fee-forservice models. While states are gradually expanding laws and program
guidelines to cover more telehealth services, reimbursements are often
restricted to certain types of care. Most states don't allow reimbursement for
store-and-forward (data transmission) and remote patient monitoring services.
Only a few states allow telehealth to
fulfill insurers' "network adequacy" standards – mandates on how many
physicians and facilities must be included in a coverage network to ensure
proper care, according to California Healthline. Regardless, health networks
are steadily increasing use of telehealth tools to fulfill value-based care
initiatives. For California health network Kaiser Permanente, a majority of
patient interactions now occur through online portals, apps, or virtual visits.
Transactional
Overview
Notable closed lower middle market
transactions for the period in Healthcare sector include:
September 2017 – Dynatronics Corp.
acquired Bird & Cronin, Inc. for US$15.5 million in cash, convertible
preferred stock and contingent payout. Under the terms of transaction,
Dynatronics Corp would pay US$10 million in cash, US$4 million in convertible
preferred stock, an earn out payment ranging from US$0.5 million to US$1.5
million. Dynatronics Corp. manufactures and distributes technology medical
devices, treatment tables and rehabilitation equipment. Bird & Cronin
manufactures and distributes orthopedic products.
June 2017 - Saol International Ltd acquired
Venus Biotherapeutics Sub LLC, a subsidiary of Aptevo BioTherapeutics LLC,
ultimately owned by Aptevo Therapeutics Inc, for US$74.5 million. Under the
terms of transaction, Saol International Ltd would pay an upfront payment US$65
million and an additional US$7.5 million related to the achievement of certain
gross profit milestones and may receive up to US$2 million related to
collection of certain accounts receivable after closing. Saol International
operates as an investment holding company. Venus Biotherapeutics provides
therapeutic products.
July 2017 - Grifols Innovation &
New Technologies Ltd, a subsidiary of Grifols SA, acquired a 44% minority stake
in GigaGen Inc for US$35 million in cash. The acquisition would strengthen
Grifols Innovation & New Technologies’ research and development portfolio.
Grifols Innovation & New Technologies provides research and experimental
development services in biotechnology sector. GigaGen offers single cell
droplet technology to clinical researchers and physicians.
Source - CFA
Collectively, the Alcor
Mergers and Acquisition provides
M&A advice to public and private companies in all sectors of the healthcare
industries, including healthcare information technology, medical devices,
pharma, surgical equipment and supplies, biotechnology, assisted living and
long term care.
Alcor
M&A is a leading advisory firm providing financial services with an
emphasis on customized solutions in the areas of M&A
advisory, Joint Venture Advisory, Financial Advisory, Private
Equity, Debt
Financing and International Business Development. These
services leverages insights, relationships and a culture that
emphasizes a strong orientation towards excellence.
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