medical technology m&a review q2 2015 · activity overview – broad economy driven by strong...

Medical Technology M&A Review Q2 2015

For additional information or inquiries, please contact one of our following team members:

www.pmcf.com

Bryan Hughes 312.602.3636 [email protected]

Brian Gorski 312.602.3623 [email protected]

Stephen Fisher 312.602.3654 [email protected]

Mike Brooks 312.602.3644 [email protected]

About PMCF

P&M Corporate Finance (“PMCF”) is an investment banking firm, focused ex-clusively on middle market transactions, with professionals in Chicago, Detroit, and across the globe through Corporate Finance International associates. Our deep knowledge of the medical technology market covers a wide range of sectors, including contract manufacturing & research, medical devices, in vitro diagnos-tics and life science instruments. Offering a depth of advisory services, PMCF has helped clients worldwide meet their sale, acquisition, financing, and strate-gic alliance goals. Additional information on PMCF can also be found by visiting our website, www.pmcf.com.

Investment Banking Services:• Mergers and Acquisitions

• Sales and Divestitures

• Capital Raising

• Strategic Assessments

CHICAGO225 W. Washington Street, Suite 2700Chicago, IL 60606312.602.3600

DETROITTwo Towne Square, Suite 425Southfield, MI 48076248.223.3300

Select PMCF Medical Technology Transactions

has acquired

Universal Container Corporation

www.pmcf.com

Medical Technology – M&A Review Q2 2015

2

Venture Capital

Activity Overview – Broad EconomyDriven by strong valuations in later stage invest-ments, $30 billion was invested by the venture capital community through the first six months of 2015. A total of $17.5 billion was raised in Q2 2015, representing an increase of +29.9% from Q1 2015. It was the most capital raised in a quarter since Q4 2000.

Led by Snapchat, Inc.’s $538 million raise from a collection of 35 investors, the software industry raised a total of $12.9 billion in H1 2015. With its ability to disrupt entrenched industries and, in some cases, create new industries altogether, software continues to have the highest level of funding, representing 41.8% of total invested dollars in H1 2015. Headed by the largest deal in Q2 2015, AirBnB Inc.’s $1.5 billion raise, the media and entertainment industry experienced an increase of +127% in dollars and a 34% rise in total number of deals in Q2 2015. The consumer products and services segment also enjoyed signif-icant increases in total funding for Q2 2015 com-pared to Q1 2015, with +129% growth.

Venture capital investment represents an alterna-tive asset class that is not correlated to market returns and, as such, the total number of in-vestments made is not the best proxy to monitor changes in investor sentiment. Changes in invest-ment dollars, however, provide a clearer picture as to directional trends. Not surprisingly, investment dollars across all stages of development (see “Stage Definitions” above right) expanded in H1 2015 relative to H1 2014, with the exception of Seed Stage Investments, which declined -32%. Expan-sion Stage investments grew by +18%, and Later Stage grew by +44% from H1 2014 to H1 2015. Series D+ valuations included a historical number of unicorns, companies receiving valuations ex-ceeding a billion dollars. Many of these compa-nies are mature with adequate financials, allow-ing atypical venture capitalist investors, such as mutual funds, to participate in financing.

Medical Devices & Equipment SegmentVenture capital investment in medical device and equipment represented 4% of total venture in-vestment in H1 2015, down from 5% in H1 2014. However, the amount invested in Q2 2015 was $814 million, +71% higher than that in Q1 2015.

OutlookVenture capital funding is expected to continue its growth in 2015, as non-traditional investors continue to tap the market. Median valuations should continue to strengthen as these investors crowd into earlier stages of development and more companies choose to stay private longer.

Stage DefinitionsStart-up/Seed: The company has a concept or product under development, but is likely not fully operational. Typically in existence less than 18 months. Early: The company has a product or service in testing or pilot production. In some cases, the product may be commercially available. May or may not be generating revenues. Typically in business less than three years.Expansion: Product or service is in production and com-mercially available. The company demonstrates significant revenue growth, but may or may not be showing a profit. Typically in business more than three years.Later: Product or service is widely available. Company is generating ongoing revenue; potentially positive cash flow. More likely to be, but not necessarily, profitable. May include spin-offs of operating divisions of existing public companies and established private companies.

Source: Thomson Reuters, VentureSource, Cooley, William Hale andMedical eTrack, PitchBook. Excludes “Specialized Sectors.”

Source: Thomson Reuters & National Venture Capital Association

Number of Investments by Stage of Development

200

400500

300

100

Q2’14

Q1’14

Q4’13

Q3’13

Q2’13

Q1’13

Q4’12

Q3’12

Q2’12

Q1’12

Q1’15

Num

ber

of In

vest

men

ts

ExpansionSeed Later StageEarly Stage

0

700600

Q3’14

Q2’15

Q4’14

Source: Cooley Godward Kronish, LLP

Median Pre-Money Valuation by Series

Series CSeries A Series D+Series B

$100

$200

$150

$50

Q1 20152010 2011

Valu

atio

n ($

mm

)

2012 2013 2014

$300

$250

Q2 20150

Source: Thomson Reuters & National Venture Capital Association

0

40

80

120

20

60

100

Num

ber

of In

vest

men

ts

Number of Investments Investment Dollars

$600

$1,400

$1,000

$400$200

Inve

stm

ent

Dol

lars

($

mm

)

$0Q2’14

Q1’14

Q4’13

Q3’13

Q2’13

Q1’13

Q4’12

Q3’12

Q2’12

Q1’12

Q1’15

$1,200

$800

Q3’14

Q4’14

Q2’15

VC Investment in Medical Device & Equip.


PMCF

3

Medical Device Public Comparables

Diversified Medical Device Public Comparables Summary

Source: S&P Capital IQ, Company Reports

Cash($MM)LTM as of Debt

($MM)Market Cap

($MM)TEV

($MM)TEV/REV

TEV/EBITDA P/ECompany Name

Boston Scientific CorporationCR Bard Inc.Intuitive Surgical, Inc.Johnson & JohnsonMedtronic plcSmith & Nephew plcSt. Jude Medical Inc.Stryker Corporation

High Mean Median Low

6/30/20156/30/20156/30/20156/28/20154/24/20156/27/20154/4/20156/30/2015

903 1,103 1,562

33,954 19,490

88 726

4,280

33,954 7,763 1,332

88

5,112 1,400

0 19,307 36,257 1,598 3,504 3,469

36,257 8,831 3,487

0

23,730 12,674 17,858

270,261 104,952 15,104 20,469 36,165

270,261 62,651 22,099 12,674

27,939 12,970 16,296

255,614 121,719 16,614 23,286 35,354

255,614 63,724 25,612 12,970

3.8x4.0x7.6x3.5x6.0x3.6x4.2x3.6x

7.6x4.5x3.9x3.5x

16.1x13.2x23.0x10.5x19.4x12.6x13.5x13.6x

23.0x15.2x13.6x10.5x

NM46.3x38.4x17.4x30.7x30.1x20.8x54.9x

54.9x34.1x30.7x17.4x

As of June 30, 2015

Public trading multiples for the Diversified Medical Device (“DMD”) comparables maintained strong levels in Q2 2015 as average EV/EBITDA and EV/Revenue multiples were 15.2x and 4.5x, respectively. Although average EV/EBITDA decreased slightly from 15.3x in Q1 2015, Q2 2015 increased +6.3% from a year ago, when EV/EBIT-DA multiples finished Q2 2015 at 14.3x. Average EV/Revenue multiples have remained consistent over the past three quarters, with Q2 2015 averaging 4.5x compared to 4.4x and 4.6x in Q4 2014 and Q1 2015, respectively.

The PMCF DMD Index underperformed the S&P 500 Growth Index in the first half of 2015, finishing down -2.9% at the end of Q2 2015, compared to +2.0% for the S&P 500 Growth Index.

4.6x

0.0x

5.0x

10.0x

20.0x

Average Enterprise Value/EBITDA Average Enterprise Value/Revenue

Q1 ‘152011 2012 2013 Q1 ‘14 Q2 ‘14

9.9x 9.8x

12.4x13.5x 14.3

15.4x 15.2x

4.5x3.3x 3.3x 3.6x 3.9x 4.0x 4.4x

14.5x

4.0x

15.0x15.3x

Q2 ‘15Q3 ‘14 Q4 ‘14

Diversified Medical Device Public Trading Multiples

Diversified Medical Device Index

-5%

0%

10%

Jan-15 Feb-15 Mar-15

5%

Jun-15Apr-15 May-15 Jul-15

PMCF Diversified Medical Device Index S&P 500 Growth Index (̂ SGX) –Index Value

www.pmcf.com


4

Orthopedic Medical Device Public Trading Multiples

Orthopedic Medical Device Index


Orthopedic Medical Device Public Comparables Summary



($MM)Market Cap

($MM)TEV

($MM)TEV/REV


Alphatec Holdings, Inc.Exactech Inc.Globus Medical, Inc.NuVasive, Inc.Orthofix International N.V.Smith & Nephew plcStryker CorporationWright Medical Group NVZimmer Biomet Holdings, Inc.


As of June 30,2015

6/30/20156/30/20156/30/20156/30/20156/30/20156/27/20156/30/20156/30/20156/30/2015

9 15

200 279 56 88

4,280 428

1,884

4,280 804 200

9

77 22 0

369 0

1,598 3,469

560 12,050

12,050 2,016

369 0

138 291

2,436 2,291

622 15,104 36,165 1,337

22,185

36,165 8,952 2,291

138

229 299

2,236 2,389

566 16,614 35,354 1,469

32,353

35,354 10,168 2,236

229

1.1x1.2x4.6x3.1x1.5x3.6x3.6x4.7x4.7x

4.7x3.1x3.6x1.1x

8.9x6.8x

13.1x17.3x18.7x12.6x13.6x

NM12.2x

18.7x12.9x12.9x6.8x

NM17.8x25.4x69.1x

NM30.1x54.9x

NM27.9x

69.1x37.5x29.0x17.8x

Average EV/EBITDA multiples for the Orthopedic Medical Device (“OMD”) comparables continued to decrease through Q2 2015, dropping to 12.9x, their lowest point since 2013. Exactech Inc. had the worst performance in Q2 2015, dropping -17.8% on weak Q1 earnings. Average EV/Revenue multiples increased compared to Q4 2014 and Q1 2015, finishing Q2 2015 at 3.1x.

The PMCF OMD Index has underperformed the S&P 500 Growth Index throughout most of 2015, finishing Q2 2015 down -1.1% compared to +2.0% gains for the S&P 500 Growth Index year-to-date.


13.4x 12.9x

8.6x 8.8x

11.9x13.3x

14.3x 13.5x

2.9x 3.1x1.6x 1.7x 2.4x 2.7x 2.7x 2.6x

14.0x

2.9x

Q1 ‘152011 2012 2013 Q1 ‘14 Q2 ‘14 Q2 ‘15Q3 ‘14 Q4 ‘140.0x

5.0x

10.0x

20.0x

15.0x

-5%

0%

10%


S&P 500 Growth Index (̂ SGX) –Index ValuePMCF Orthopedic Medical Device Index

5%



PMCF

5

Cardiovascular Medical Device Public Comparables Summary



($MM)Market Cap

($MM)TEV

($MM)TEV/REV


ABIOMED, Inc.AngioDynamics Inc.Cardiovascular Systems Inc.CryoLife Inc.Edwards Lifesciences Corp.Endologix Inc.LeMaitre Vascular, Inc.Merit Medical Systems, Inc.Sorin SpAThoratec Corp.Vascular Solutions Inc.


As of June 30,2015

6/30/20155/31/20156/30/20156/30/20156/30/20156/30/20156/30/20156/30/20156/30/20154/4/20156/30/2015

155 20 84 35

1,409 71 19 12 17

240 36

1,409 191 36 12

0 138

0 0

600 72 0

210 196

0 0

600 111

0 0

2,743 589 839 320

15,319 1,034

212 948

1,331 2,416

599

15,319 2,395

948 212

2,588 707 755 285

14,511 1,036

192 1,146 1,509 2,175

564

14,511 2,315 1,036

192

11.3x2.0x4.3x2.0x6.1x6.8x2.7x2.2x1.7x4.6x4.4x

11.3x4.4x4.3x1.7x

NM13.4x

NM24.5x22.9x

NM15.3x14.0x18.1x28.1x21.3x

28.1x19.7x19.7x13.4x

NMNMNM

55.1x17.7x

NM38.6x37.2x30.2x58.1x51.1x

58.1x41.1x38.6x17.7x

Average EV/EBITDA multiples for the Cardiovascular Medical Device (“CVMD”) comparables showed a significant increase in Q2 2015, averaging 19.7x compared to 17.6x in Q1 2015 and 16.2x in Q4 2014. This increase between Q2 2015 and Q1 2015 was driven by double-digit growth on EV/EBITDA multiples experienced by comparables constituents. In particular, Sorin’s average EV/EBITDA multiple grew 28% to 18.1x, following the approval by the shareholders of the merger with Cyberonics. Average EV/Revenue multiples dropped slightly to 4.4x in Q2 2015, but remained 14% above Q4 2015.

The PMCF CVMD Index continued its strong performance during Q2 2015, ending the first half of 2015 +17.3%. After a significant drop-off in late April, the PMCF CVMD Index showed a strong recovery through Q2 2015. The significant drop in late April was driven primarily by a nearly 7% drop in Edwards Lifesciences Corp. following its Q1 2015 earnings call, which projected lower growth for Q2 2015.

Cardiovascular Medical Device Public Trading Multiples

Cardiovascular Medical Device Index


0.0x

5.0x

10.0x

15.0x


16.2x

19.7x

10.4x

12.9x

14.6x13.9x

14.3x

3.8x 4.4x3.0x 3.0x 3.9x 3.4x 3.5x

13.4x

2.9x

Q1 ‘152011 2012 2013 Q1 ‘14 Q2 ‘14

20.0x

25.0x

17.6x

4.7x

Q3 ‘14 Q4 ‘14 Q2 ‘15-5%

10%

S&P 500 Growth Index (̂ SGX) –Index ValuePMCF Cardiovascular Medical Device Index

5%

30%

20%

35%

25%

15%

0%

Jan-15 Feb-15 Mar-15 Jun-15Apr-15 May-15 Jul-15

www.pmcf.com


6

Diversified Diagnostic Public Comparables Summary



($MM)Market Cap

($MM)TEV

($MM)TEV/REV


Abbott LaboratoriesBecton, Dickinson and Co.Danaher Corp.Hologic Inc.Johnson & JohnsonLaboratory Corp. of America Novartis AGOrion OyjRoche Holding AGSigma-Aldrich CorporationThermo Fisher Scientific, Inc.


As of June 30,2015

6/30/20156/30/20154/3/20156/27/20156/28/20156/30/20156/30/20156/30/20156/30/20156/30/20156/27/2015

11,177 1,597 2,511

886 33,954

619 5,810

189 7,262 1,067

808

33,954 5,989 1,597

189

8,778 13,171 3,178 3,942

19,307 6,787

23,274 256

25,741 300

14,064

25,741 10,800 8,778

256

73,068 29,660 60,583 10,694

270,261 12,170

235,315 4,928

236,755 16,674 51,652

270,261 91,069 51,652 4,928

70,787 41,234 61,319 13,750

255,614 18,355

252,847 4,995

257,489 15,907 64,909

257,489 96,110 61,319 4,995

3.5x4.9x3.0x5.4x3.5x2.9x4.6x4.2x4.8x5.8x3.9x

5.8x4.2x4.2x2.9x

15.6x19.0x13.5x15.0x10.5x14.6x13.5x13.1x12.4x18.9x16.2x

19.0x14.8x14.6x10.5x

36.8x26.0x23.7x93.5x17.4x26.9x22.2x19.7x24.2x33.5x30.1x

93.5x32.2x26.0x17.4x

Average EV/EBITDA multiples for the Diversified Diagnostic Medical Device (“DDMD”) comparables maintained their upward trend through Q2 2015, growing from 14.1x at the end of Q1 2015 to 14.8x at the end of Q2 2015. Average EV/Revenue also continued an upward trend, ending Q2 2015 at 4.2x compared to 3.8x and 4.0x at the end of Q4 2014 and Q1 2015, respectively.

The PMCF DDMD Index has tracked closely with the S&P 500 Growth Index in H1 2015, with the PMCF DDMD Index ending Q2 2015+1.2%, and the S&P 500 Index ending Q2 2015 +2.0% for the year.

Diversified Diagnostic Public Trading Multiples

Diversified Diagnostic Medical Device Index



14.1x 14.8x

9.0x10.2x

11.3x12.4x

13.3x 13.7x

4.0x 4.2x2.6x 3.0x 3.2x 3.4x 3.7x 3.8x

13.5x

3.8x

Q1 ‘152011 2012 2013 Q1 ‘14 Q2 ‘14 Q2 ‘15Q3 ‘14 Q4 ‘140.0x

5.0x

10.0x

20.0x

15.0x

PMCF Diversified Diagnostic Index

-5%

0%

10%


5%


S&P 500 Growth Index (̂ SGX) –Index Value


PMCF

7

Mergers & Acquisitions

The number of Medical Device transactions increased in Q2 2015, with 146 transactions taking place in the quarter compared to 123 transactions in Q1 2015, an increase of +19%. Activity continues to be driven pri-marily by corporate buyers with large cash reserves and a favorable lending environment. Buyers are mo-tivated to broaden portfolio capabilities, access new geographies, and consolidate core businesses in order to achieve scale, and thus respond to increased com-petitive financial pressure.

Although average transaction value declined -0.9% from Q1 2015 to Q2 2015, total transaction value increased +27%. Average TEV/EBITDA multiples increased in Q2 2015 to 19.3x, up from 17.4x and 18.26x in Q1 2015 and Q2 2014, respectively. Aver-age TEV/Revenue multiples rebounded in Q2 2015 to 4.2x, up from 2.3x in Q1 2015. Overall, average TEV/EBTIDA multiples were 18.8x for 1H 2015, which is above the 16.6x average experienced in H1 2014.

In H1 2015, M&A activity was spread evenly across product segments, with no one segment accounting for more than 25% of overall transaction volume. The Equipment segment experienced the heaviest activ-ity, accounting for 23%, followed by the Service and Contract Manufacturing segments, which accounted for 18% and 17% of transaction activity, respectively. The Contract Manufacturing segment experienced the largest increases in transaction activity in H1 2015 compared to H1 2014, with an increase of +100%. The Distribution and Diagnostic (non-imaging) seg-ments saw the biggest decline in H1 2015 compared to H1 2014, dropping -64% and -63%, respectively.

Outlook for Medical Devices & Equipment SegmentGlobal M&A activity in the medical device industry has been showing consistent upward trends in Con-tract Manufacturing, Equipment, Therapeutic Devic-es, and Services. These four segments have been in-creasing their share and accounted for approximately 70% of transactions in the medical device industry in H1 2015.

Large contract manufacturers are expected to con-tinue to drive industry consolidation by acquiring smaller specialized companies. Non-healthcare com-panies, particularly general industrial companies, have started to focus their attention to the medical device industry for long-term manufacturing growth. As an example, Nordson Corporation, recently ac-quired Avalon, a leading designer and manufacturer of highly specialized catheters and medical tubing products for cardiology, pulmonology, and related ap-plication. This approach has sparked the interest of similar players that are seeking M&A opportunities in the industry.

Source: S&P Capital IQ, PMCF

Medical Device M&A Transaction Statistics

Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘130

40

20

60

80

120

140

100

160

180

0

$50

$100

$200

$150

$250

$300

$350

Ave

rage

Tra

nsac

tions

Val

ue (

$m

m)

Num

ber

of M

&A

Tra

nsac

tions

M&A Transactions Average Transaction Value

Q2 ‘15

Source: S&P Capital IQ, PMCFNote: Certain outliers have been removed

Transaction Value ($MM)

TEV/Revenue

TEV/EBITDA

Q2 15Q2 15Q1 15Q1 15Q4 14Q4 14Q3 14Q3 14Q2 14Q2 14Q1 14Q1 14

H1 2015H1 2015

H1 2014H1 2014

MeanMedianMeanMedianMeanMedianMeanMedianMeanMedianMeanMedian

MeanMedian

MeanMedian

4.18x1.50x2.27x2.24x4.52x2.18x5.18x2.43x9.36x2.52x3.89x1.93x

3.42x2.00x

5.46x2.07x

19.33x11.50x17.38x17.30x16.92x11.45x12.98x10.10x18.26x13.80x16.12x16.90x

18.81x14.70x

16.63x16.40x

$300.8 $ 58.1 $275.7 $ 15.6 $185.6 $ 35.1 $258.2 $ 20.2 $128.4 $ 17.8 $211.6 $ 32.1

$288.7 $ 24.8

$136.4 $ 21.5

Mean/MedianPeriod

Medical Device M&A Transaction Metrics

Transactions by Product Segment – H1 2015

Distribution4.0%

Equipment23.0%

Therapeutic Device14.0%

Diagnostic (non-imaging)

5.0%

Diagnostic (imaging)

4.0%

ContractManufacturing

16.0%

Consumable/Disp12.0%

Mobility/Rehab1.0%

Others3.0%

Service18.0%


www.pmcf.com


8

Medical Equipment M&A

Trends in M&A:• M&A in the Medical Equipment sector maintained a high level of activity through the first half of 2015, setting up 2015 totals

to match historical highs achieved in 2014.

• Strategic buyers maintained a high level of M&A activity in Medical Equipment, with 53 transaction occurring in H1 2015.

• The Surgical sector continues to drive growth in 2015, with 12 transactions in Q2 2015, followed by the Furniture and Equipment and Monitor sectors with six and five transactions, respectively.

• International deal volume grew in Q2 2015, with over 71% of M&A activity in the Medical Equipment sector occurring outside of the U.S.

Transactions by Buyer Type Transactions by End Market

Strategic Buyer Financial Buyer

101

5466

8580

1826

1214

17 17

0

20

40

60

120

80

100

2010 2011 2012 2013 2014

Num

ber

of D

eals

140

53

11

H1 ‘15

Acute Care

Aesthetic

Furniture/Equipment

Monitor

Ophthalmology

Respiratory

Safety/Drug Delivery

Surgical

Other

Total

5

1

24

17

5

12

10

41

12

127

0

2

20

13

0

2

4

11

14

66

0

1

7

5

2

1

3

8

3

30

2013End Market 2014 Q1 ‘15

0

1

6

5

0

2

4

12

4

34

Q2 ‘15

H1 2014 H1 2015Buyer Type

Private Acquirer48.5%

Public Acquirer35.9%

Private Equity10.9%

PE to PE4.7%

Int'l - to - Int'l

U.S. - to - Int'l

U.S. - to - U.S.

Int'l - to - U.S.

Total

31

5

22

8

66

45

6

59

17

127

2013 2014

22

1

10

1

34

Q2 ‘15Seller-to-Buyer

14

1

9

6

30

Q1 ‘15

Cross-Border Transaction Trends

Featured Sector Transactions:June 2015 – Hill-Rom Holdings, Inc. (NYSE: HRC), a global medical technology company with approximately 8,000 employees worldwide, acquired Welch Allyn, Inc., a manufacturer of physical examination instruments and accessories and EMR-connected vital signs and cardiac monitoring solutions, for approximately $2.05 billion in cash and stock. The two companies have nearly two centuries of medical device innovation between them and will combine their unique strengths to develop new technologies that enhance outcomes for patients and their caregiv-ers. John J. Greisch, President and CEO of Hill-Rom, said, “Hill-Rom is at the forefront of improving the healthcare delivery system, and this compelling combination further positions Hill-Rom to play an increasingly important role in improving patient care. As one company, we will have the infrastructure, capabilities, and innovative product port-folio to faster pursue a differentiated business model that meets the evolving needs of patients and customers and delivers superior healthcare outcomes across multiple care settings.”

June 2015 – The XIO Group, a global investment firm, signed a definitive agreement to acquire Lumenis Ltd. (Nasdaq: LMNS), a leader in the field of minimally invasive clinical solutions for the Surgical, Ophthalmology, and Aesthetic markets, for approximately $500 million in cash. “This acquisition is a strong recognition and vote of confidence in Lumenis’ achievements and its employees, and I am excited about the future prospects of Lumenis,” said Tzipi Ozer-Armon, Chief Executive Officer.



Private Equity22.1%

PE to PE7.4%


Source: S&P Capital IQ, PMCFSource: S&P Capital IQ, PMCF




PMCF

9

Trends in M&A:• Overall M&A in the Therapeutic Device sector through the first half of 2015 maintained a consistent level of activity

compared to H1 14.

• Transactions with financial buyers declined sharply in H1 2015 compared to 2014 levels.

• Transaction activity in Q2 2015 was primarily driven by Ophthalmology, which had nine transactions in the period.

• International deal volume grew in Q2 2015, with 15 transaction in the period. Domestic deals increased in Q2 2015 compared to Q1 2015, with 35% of transactions occurring within the U.S.



57

10695

69 75

96

1819

0

20

40

60

120

80

100

2010 2011 2012 2013 2014

Num

ber

of D

eals

140

33

4

H1 ‘15

22

1

2

1

2

1

9

2

0

0

5

23

Q2 ‘15

Aesthetic

Cardiovascular

ENT

Gastrointestinal

Neurovascular

Ophthalmology

Ortho

Safety

Wound Care

Other

Total

3

12

3

3

8

10

12

0

9

19

79

7

31

3

3

5

15

23

0

6

22

115

4

0

3

1

2

1

1

0

1

1

14

2013End Market 2014 Q1 ‘15




PE to PE8.1%

Private Equity2.7%

Int'l - to - Int'l

U.S. - to - Int'l

U.S. - to - U.S.

Int'l - to - U.S.

Total

41

8

54

12

115

29

13

27

10

79

Seller-to-Buyer

5

3

5

1

14

2013 2014

11

3

8

1

23

Q2 ‘15Q1 ‘15




Private Equity19.4%

PE to PE22.2%

Source: S&P Capital IQ, PMCFSource: S&P Capital IQ, PMCF



Therapeutic Device M&A

Featured Sector Transactions:May 2015 – U.K. biotech firm, Circassia Pharmaceuiticals, agreed to pay approximately $215 million to acquire Aerocrine, a Swedish listed company focused on medical products for patients with asthma. Steve Harris, CEO of Circassia, said: “These proposed acquisitions and associated fundraising significantly accelerate Circassia’s strategy to become a self-sustaining specialty biopharmaceutical company focused on allergy and asthma. The com-bined organization will give us both the capability and resources to commercialize our enlarged late-stage pipeline of potential new allergy and asthma products, once approved, and thereby generate significant shareholder value.”

June 2015 – Medtronic plc (NYSE: MDT) announced it has acquired the assets of Aptus Endosystems, Inc., a Sunnyvale, CA-based, privately held medical device company focused on developing advanced technology for en-dovascular aneurysm repair (EVAR) and thoracic endovascular aneurysm repair (TEVAR), in a transaction valued at approximately $110 million. “We are excited to add this unique complementary, anchor technology to our aortic portfolio,” said Daveen Chopra, vice president and general manager of the Aortic business, within the Cardiac and Vascular Group at Medtronic. “The Heli-FX and Heli-FX Thoracic EndoAnchor systems strongly align with our strat-egy to invest in treatments that address complex aortic disease with a vision to treat disease of the entire aorta.”


www.pmcf.com


10

Consumable and Disposable M&A

Trends in M&A:• Consumable and Disposable M&A volume in Q2 2015 declined compared to Q1 2015, with a total of 12 transactions.

However, M&A transactions in the space are still trending to exceed the 58 transactions that occurred in 2014.

• Deal volume in Q2 2015 was led by Drug Delivery and Safety/Infection Control with four transactions each.

• Cross-border transaction activity involving U.S. domiciled companies continued to be limited with only one transaction in Q2 2015. International deal volume grew in Q2 2015, with 58% of transactions occurring outside of the U.S.



4132

40

2631

45

87

0

20

40

60

2010 2011 2012 2013 2014

Num

ber

of D

eals

80

27

5

H1 ‘15

17

Drug Delivery

Home Health

Hospital Care

IVD

Safety/Inf. Control

Surgical

Wound Care

Other

Total

4

5

13

7

8

12

3

6

58

2

3

4

1

7

6

4

9

36

2013End Market 2014

2

7

5

0

2

2

0

2

20

Q1 ‘15

4

1

1

1

4

0

0

1

12

Q2 ‘15




Private Equity36.6%

PE to PE6.7% Int'l - to - Int'l

U.S. - to - Int'l

U.S. - to - U.S.

Int'l - to - U.S.

Total

17

1

16

2

36

33

1

20

4

58

8

0

10

2

20

7

1

4

0

12

Seller-to-Buyer 2013 2014 Q2 ‘15Q1 ‘15




Private Equity12.5%

PE to PE3.1%





Featured Sector Transactions:June 2015 – Life Science, a business area in the Addtech Group (STO: ADDTB), agreed to acquire Mediplast AB, the parent company of the Mediplast Group and a leading Nordic supplier of medical technology equipment and consumables, from Priveq Investment Fund III and others for approximately $58 million. The acquisition of Me-diplast marks an important entry into the field of medical technology for the Life Science business area, and it will form the basis of the newly established Medical Technology business unit. “I’m very positive about this deal and look forward to having the opportunity to continue following Mediplast’s development in this new structure. Life Science is in an excellent position to continue to have good growth with profitability,” says Håkan Roos, Chairman of Roos Gruppen AB.

June 2015 – Steris Corp. (NYSE: STE), entered into an agreement to acquire General Econopak, Inc., a Philadel-phia, PA-based manufacturer of product solutions in the areas of sterility maintenance, barrier protection, and sterile cleanroom products, for approximately $180 million. General Econopak’s products are complementary to Steris’s Life Sciences’ formulated chemistries business, and Steris plans to integrate the Company into its Life Sciences segment.


Suite 2700 225 W. Washington Street Chicago, IL 60606-3564

This market overview is not an offer to sell or a solicitation of an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or recommend securities of individual companies, nor does it contain sufficient information upon which to make an investment decision.

P&M Corporate Finance, LLC will seek to provide investment banking and/or other services to one or more of the companies mentioned in this market overview.

P&M Corporate Finance, LLC, and/or the staff who prepared this market update, may own securities of one or more of the companies mentioned in this market overview.

The information provided in this market overview was obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not to be construed as legal, accounting, financial, or investment advice. Information, opinions, and estimates reflect P&M Corporate Finance, LLC’s judgment as of the date of publication and are subject to change without notice. P&M Corporate Finance, LLC undertakes no

obligation to notify any recipient of this market overview of any such change.

The charts and graphs used in this market overview have been compiled by P&M Corporate Finance, LLC solely for illustrative purposes. All charts are as of the date of issuance of this market overview, unless otherwise noted.

This market overview is not directed to, or intended for distribution to, any person in any jurisdiction where such distribution would be contrary to law or regulation, or which would subject P&M Corporate Finance, LLC to licensing or registration requirements in such jurisdiction.

The Diversified Medical Device Index, Orthopedic Medical Device Index, Cardiovascular Medical Device Index, and Diversified Diagnostic Index were developed by PMCF and may not be inclusive of all companies in these industries. They are not intended as composite indexes of these industry sector returns. Index and sector returns are past performance which are not indicators of future results.

www.pmcf.com

medical technology m&a review q2 2015 · activity overview – broad economy driven by strong...

Documents