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Tracking the Next M&A Deal: 16 MedTech Companies to Watch
September 8, 2022
10 min read
Interest in medical technology has grown exponentially since the initial onslaught of the COVID-19 pandemic and shows no signs of slowing down when it comes to growth opportunities. The virus ushered in demand for diagnostic testing, personal protective equipment, ventilators and other medical supplies to fight and protect against COVID-19. And with physical medical spaces, like hospitals and physicians offices, posing a threat to the health of patients and practitioners alike, a need for virtual health consultation and services has emerged.
As these demands continue to grow in volume, the Medtech industry has had to recalibrate its manufacturing capabilities and capacity to meet them, but moreso, overcome the limitations brought on by supply chain disruptions. Leaders in the Medtech industry have begun partnering together to strategize against these long-term impediments, which has already led to robust M&As this year.
With the COVID-19 variants Omicron and Delta, as well as new cases of viruses like Monkeypoxes sprouting, investors and analysts are wondering: where will the next big Medtech M&A be?
Top Medtech M&As of 2022 So Far
It’s undeniable that the Medtech industry has become a goldmine for capital and growth opportunities. Global M&A deals within the industry reached a $1.4 billion evaluation in April of 2022 – a value that marked a 266.2% increase over March ($390.55m) and a drop of 81.4% compared to the last 12-month average ($7.68bn). And as of April 2022, $8.59bn worth of medical device M&A deals were announced globally, marking an increase of 72.6% year on year.
The top five M&A deals accounted for 77.9% of this past April’s overall value, raking in $1.12bn against the overall value of $1.4bn recorded for the month. Wallaby Medical’s acquisition of Phenox was the highest-grossing deal for the month– the deal netted an astounding $541.63 million. Fulgent Genetics followed with their acquisition of Inform Diagnostics for $170 million, while Integer’s deal with Aran Biomedical brought in $141.73 million. Castle Biosciences acquired AltheaDx for a similar amount, $140 million, while Cochlear’s acquisition deal with Oticon Medical brought in $122.03 million.
Potential MedTech M&As to Watch
Leading public Medtech companies have made recent product developments that have positioned them as potential, lucrative M&A opportunities. While these companies listed below may have a high valuation, leading to what would be an expensive acquisition, the Medtech market has leaned towards being a buyer’s market in recent months, as valuations continue to drop.
Considering their products, growths, and margins, these are the companies you should keep your eye on:
1. AtriCure (ATRC)
AtriCure, the leading provider of innovative technologies for the treatment of Atrial Fibrillation (Afib) and related conditions, has recently produced two products analysts believe will drive the company’s revenue growth exponentially. The cryoSphere probe, designed to block pain by temporarily ablating peripheral nerves in adult patients, and EPi-Sense, the only FDA-approved hybrid therapy for severe atrial fibrillation patients, are backed with strong clinical-trial results.
2. Axonics (AXNX)
The company, which focuses on urinary and bowel dysfunctions, won FDA approval in March for its non-rechargeable (primary cell) sacral neuromodulation (SNM) system called F15. Analysts believe the product closes a portfolio gap and that Axonics’s revenue growth should be driven by market expansion and market share gains with the launch of the F15.
3. Cardiovascular Systems (CSSI)
Over the past 18 months, Cardiovascular Systems has made developments regarding its product pipeline and even announced a partnership with Innova Vascular to develop a full line of thrombectomy devices. While analysts suggest these strategic revenue contributions will not be fully realized until the 2024 fiscal year, they do believe their pipeline will expose the company to higher growth end markets and result in a meaningful expansion to the company’s total available market (TAM), with its pipeline alone projecting to expand its TAM by at least $18 billion.
4. Conmed (CNMD)
Developing surgical and patient monitoring products and services, Conmed has garnered attention in the surgical smoke management space due to its growing number of acquisitions. In 2016, they acquired SurgiQuest and inherited the AirSeal System, the premiere access management technology for laparoscopic and robotic procedures. Three years later, they also acquired Buffalo Filter, which was considered a leader in surgical smoke evacuation technologies such as smoke evacuation pencils, smoke evacuators, and laparoscopic solutions. Most recently, Conmed has laid out plans to acquire In2Bones for $145 million and up to an additional $110 million in growth-based earnout payments over four years.
5. Establishment Labs Holdings (ESTA)
Analysts have forecasted certain catalysts for Establishment Labs Holding to improve the company’s revenue stream: the launch of their Motiva MIA breast implants, the product’s passing China’s regulatory approval by the end of the year, and an on-schedule modular submission to the FDA. Many experts are considering the Motiva breast implant as a disruptive technology likely to replace current implant options due to its unique appearance, natural feel, and impressive safety profile.
6. Glaukos (GKOS)
Glaukos is slated to release its iStent Infinite Trabecular Micro-Bypass System, one of the most anticipated medical devices to treat glaucoma patients in the United States, this year. The company faced delays with the FDA-approval of their iStent Infinited last year due to COVID-19, preventing them from putting it on the market sooner.
7. InMode (INMD)
As a response to seeing stronger consumer demand for aesthetic procedures, InMode has been manufacturing radio-frequency (RF) based devices. These RF technologies can be used across a variety of aesthetic-oriented procedures in plastic surgery, gynaecology, dermatology, otolaryngology, and ophthalmology. Analysts believe these new products, specifically their Empower RF and their Envision RF, and existing will drive strong growth for the company.
8. Inspire Medical Systems (INSP)
Nearly 11 years after being spun out of Medtronic, Inspire Medical Systems has remained afloat, most notably with its product line. In 2014, the company introduced the first implantable device for sleep apnea. Since Inspire Medical Systems went public in 2018, it’s managed to expand its U.S. sales leadership team, which now includes eight area vice presidents and 30 regional managers.
NeuroPace is bringing innovation to the treatment of epilepsy, having raised $67 million in 2020 to support the commercial expansion of its technology. Crafted as a closed-loop, brain-responsive neurostimulation system designed to reduce epileptic seizures, Neuropace’s device uses a brain-computer interface to continuously monitor brain waves to recognize each patient’s unique seizure onset fingerprint. “While we are still early in our pursuit of generalized epilepsy indication expansion, we are excited about what this would mean for our business and for our patients,” Mike Favet, NeuroPace CEO, says.
10. Nevro (NVRO)
Nevro’s also recently launched a revolutionary pain management device that positions them from extensive growth. Nevro’s HFX spinal cord stimulation (SCS) platform includes a Senza SCS system that treats chronic trunk and limb pain, as well as painful diabetic neuropathy. “We are confident that we have laid a very strong foundation for attractive future growth and that we are very well-positioned for a strong second half of 2022 and beyond as the impact and uncertainties of COVID on our market continue to subside,” Keith Grossman, Nevro CEO, says.
11. OrthoPediatrics (KIDS)
Analysts see OrthoPediatrics position for growth due to a few factors: new product launches internationally, an extensive procedure backlog, and ApiFix. Their ApiFix procedure gives select adolescent idiopathic scoliosis (AIS) patients a less invasive surgical option for spinal curvature correction that does not involve fusion. These corrections occur intraoperatively while the ApiFix system accommodates patient growth or additional correction post-operatively. OrthoPediatrics’s ApiFix was a gold winner in the 2022 Medical Design Excellence Awards for the category of implant and tissue replacement products.
12. Paragon28 (FNA)
Paragon 28 develops products for foot and ankle conditions. The company has seen strong demand for medical education regarding their products within the first quarter and improved rep productivity, which aligns the company for future growth.
13. Penumbra (PEN)
The company recently introduced Real Immersive System y-Series to expand its virtual reality-based healthcare platform that aims to help improve patient care, including clinical rehabilitation therapy. Penumbra’s vascular business has been the main driver for the company’s growth, while its neuro business has shown signs of slowing down in the first quarter. Regardless of the trends, analysts suggest that both sectors of the business are expected to see more growth in late 2022. By 2023, Penumbra is expected to surpass it’s previous year stats with the release of several new products, including the Thunderbolt (smart aspiration for neuro use), Lightning Bolt (smart aspiration for arterial use), and a smart aspiration for venous use. However, while analysts believe the company possesses ample growth opportunities, they’re uncertain of its overall success.
14. Pulmonx (LUNG)
Pulmonx survived a business reality many Medtech companies have faced, a significant impact from the Omicron wave of COVID-19 and an eventual recovery when treatment centers began scheduling and performing procedures again. However, these setbacks have not stopped the company from making steady progress on expanding its global commercial footprint and driving clinician and patient awareness of its Zephyr valve. “We observed recovery trends, which extended not only to hospital procedure upticks, but also to leading indicators such as StratX uploads, and calls into our patient reimbursement support team,” Glen French, president and CEO of Pulmonx,” says. “Based on these trends, we have increased confidence in our ability to achieve our previously communicated full-year revenue.”
15. Si-Bone (SIBN)
SI-Bone, a medical device company pioneering MIS sacroiliac (SI) joint treatment, has also introduced revolutionary technology to the market. A two-year study demonstrated that Si-Bone’s minimally invasive iFuse procedure was more effective than conservative management. Si-Bone’s iFuse Granite (next-gen adult deformity product) is currently under review by the FDA. However, analysts are confident that iFuse, along with sales force expansion, surgeon training, and increased market penetration, will set the company up for revenue growth.
16. Staar Surgical (STAA)
In March, the company secured FDA approval for its highly anticipated EVO/EVO+ Visian Implantable Collamer Lens–a solution to correcting myopia (nearsightedness or the need for distance vision correction) and myopia with astigmatism. Staar Surgical estimates that 100 million U.S. adults between the ages of 21 and 45 who have myopia are potential candidates for EVO, a biocompatible implantable lens designed to correct distance vision. While most refractive error correction procedures incorporate laser technology like Lasik to reshape the cornea to about -8 to -10 diopter, Staar’s implantable collamer lens hand can be implanted in people with more severe refractive errors.
As we navigate the current pressures of inflation and supply chain disruptions, all while a potential recession looms in the backdrop, the most urgent question remains: what role will digital health play in the short and long-term future? We’re answering this question and more in our upcoming hot topic webcast with Accenture and Remote Patient Monitoring and Virtual Care on September 20th at 11 AM EDT, The Future of Digital Health: Empowering Better Human Health.
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