Mercer Capital’s Medical Technology Industry Newsletter is a biannual publication providing perspective on valuation issues pertinent to Medical Technology professionals. The Medical Technology newsletter highlights the following segments: biotechnology, healthcare technology, healthcare supplies, medical equipment, and life science tools and services. Each issue includes typically includes market overview, mergers and acquisitions review, guideline company pricing, and more.
Excerpting from the discussion:
Overall industry multiples highlight favorable trends and outlook for the sector. Forward price-to-earnings multiples exceeded 22x across all industry segments, which is above the overall market with the median S&P 500 trading at approximately 19x forward earnings at year-end 2014. Additionally median revenue growth in the last twelve month period was approximately 7.3%. While median EV/Revenue and EV/EBITDA for the Medtech industry was 3.5x and 15.0x, respectively, at year-end 2014, certain higher growth sectors such as biotechnology and health care technology exhibited higher pricing multiples.
Medical equipment M&A is expected to increase as the number of new products being introduced expands the treatable patient populations, thus allowing companies to evaluate new synergistic opportunities. Also, potential internal rates of returns on transaction analyses are benefitting from lower financing costs as interest rates remain relatively low. Further, large medical-device manufacturers that have engaged in significant or multiple deals, such as Medical Depot and 3D Systems Corporation, may lose market share in 2015 as they focus on integrating large businesses, as opposed to sales and product marketing, to take advantage of synergistic opportunities. Looking forward, deal volume may increase further as companies continue to expand pipelines and segment offerings.
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