Thursday 4 January 2018

M & A News In The Healthcare Industry Sector


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 advisoryJoint Venture AdvisoryFinancial 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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