Mammoth retailers like Amazon, Walgreens, and even Dollar General, a trusted low-price brand in rural America, are competing for a bite of the healthcare apple, and are reported to be investing billions of dollars and creating significant expansion plans. Their goal: become dominant players in urban areas where they have a dominant footprint and the new battleground; rural America. In a report from Cain, approximately 15% of US patients live in rural areas. Many are at higher risk for cancer, heart disease, stroke, chronic respiratory issues and unintentional injuries than metropolitan patients, according to the CDC. Patients in outside of urban areas are also typically older, sicker and more apt to be lower income.

Hospitals, payers, and PE firms have been vying over the past decade to acquire independent physician groups, and COVID accelerated consolidation among physician specialties. Data reported in Cain Brothers Industry Insights¹ shows that 75% of physicians are employed by a larger entity (i.e., nonphysician owned). The hospital and independent segments are self-explanatory but the corporate segment is mix of PE firms, payers, and non provider groups that all want a bite of the healthcare apple.

Thank goodness for svb and all the good data they produce! We believe that M&A activities in our sector are poised for a great year in 2023 and I am happy to report that svb agrees with our view of the market.

During COVID, it would have been dangerous to attend JP Morgan (no way to remain 6 feet apart in all those crowded hallways packed with investors trying to get to the next deal… ). This year, the first since 2021, it was the weather where, just outside Union Square, a tree fell on a Muni bus during one of many storms that passed through San Francisco.

There was a lot to learn at AdvaMed, and the CEOs Unplugged panels did not disappoint. The US President of Siemens Healthineers, David Pacitti, talked about how COVID pushed them to new strategies where Siemens Healthineers is working with the hospital C-Suite to sell medical imaging equipment such as fluoroscopy equipment, MRI, X-ray, ultrasound and CT scanners. The Siemens Healthineers 10-year plan focuses “less on the box,” the big iron, and more on the customer journey.

In a Truist survey of 49 US hospital administrators, managing approximately 572 hospitals (63,000 beds), roughly 8% of all US hospitals, one key takeaway was that capital equipment budgets and spending for the next twelve months has declined from the Truist 2Q22 survey, from a slight positive (+0.2%) to a low negative (-1.9%) in 3Q22.

Many say the lifeblood of Medtech Is M&A, so, how goes M&A in 2022?

To support that statement, one of the most well attended sessions at the 3rd annual MedExecWomen meeting was Making Acquisition Strategy Succeed: Perspectives From Each Side Of The Deal; a panel that offered unique perspectives from the acquirer and acquiree. From that panel we learned that a 100% earnout was rare (22%) but there were wise tips and techniques to increase that low percentage from the panelist.

I always like to take a read on the thoughts and opinions of leaders outside of our medtech industry, especially during a period of unrest like we’ve seen during the pandemic. There is much good information in The GLG CEO Survey 2022 report (n=471 CEOs) where CEOs shared their strategies and what they expect will happen next five years, especially about knowledge-based employees that can work from home independently as long as they have well-defined expectations.

I love doing hospital administrator research!

And, the Truist team has done a fine job of conducting their own hospital administrator research.

Where else can you get a sense of the economic trends in the US hospital ecosystem? In our research we recommend that almost every client (especially when we are doing due diligence research for mergers and acquisitions) add a segment of interviews for hospital administrators. We have our own special techniques to make sure we get the most qualified hospital administrators possible and have been successful in uncovering trends for our clients for the past 15 years.

Although the US medical device industry saw a decrease of ~30% in deal activity during May 2022, (as compared to the prior 12-month average), there was still much activity to report. According to the Globaldata Deals Database , in May 2022, 76 medical device industry deals worth $866.4m were declared in the US, as compared to the 12-month average of 112 deals.