Medical Equipment Deal Value Increased 33% In Q2 2012

Friday 27 July 2012, Amsterdam

The new Medical Equipment Quarterly Deals Analysis: M&A and Investment Trends - Q2 2012 report is an essential source of data on and trend analysis of the mergers and acquisitions (M&As) and financing in the medical equipment market. The report provides detailed information on M&As, equity/debt offerings, private equity, venture financing and partnership transactions registered in the medical equipment industry in Q2 2012. The report provides detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments, and geographies. The report provides information on the top private equity, venture capital and advisory firms in the medical equipment industry.

The data presented in this report comes from proprietary in-house Medical eTrack deals database and primary and secondary research.

Some High Value Deals Increase Deal Value Considerably In Q2 2012

M&As and asset transactions, which include change in ownership and control of companies or assets (the report does not consider this value as a new investment in the market), reported an increase of 33% in deal values in Q2 2012. The deal values increased to $26 bn in Q2 2012 from $20 bn in Q1 2012. However, the number deals decreased from 683 in Q1 2012 to 672 in Q2 2012. On a year-on-year basis, the number of deals was fewer and deal values smaller in Q2 2012, when compared to 781 deals worth of $71.1 bn in Q2 2011. HealthCare IT market was attracted substantial investments in Q2 2012. It recorded 38 acquisitions worth $4.8 bn in Q2 2012.

SXC Health Solutions’s acquisition of Catalyst Health Solutions for $4.4 bn, Hologic announcing the acquisition of Gen-Probe, a diagnostic test maker, for $3.7 bn, and EQT’s acquisition of BSN Medical from Montagu Private Equity for $2.3 bn and Agilent Technologies’s acquisition of Dako from EQT for $2.2 bn were some of the high value deals reported in Q2 2012.

According to Analyst Bhaskar Vittal, “High value deals are expected to continue in the near to mid future as companies continue to explore inorganic growth opportunities and expand their product portfolio and reach. Most of the major medical device companies generate good free cash flows and going for a big sized deal will not put significant financial constraints on them.”

Follow-on Issue Was Prefered By Companies In Q2 2012

Global equity offerings, including initial public offerings (IPO), secondary offerings, and private investment in public equities (PIPEs), reported an increase in the number of deals and deal values in Q2 2012. The segment reported 87 deals worth $2.2 bn in Q2 2012, as compared to 62 deals worth $1.7 bn in Q1 2012. On a year-on-year basis, the number of deals increased and deal values decreased in Q2 2012, when compared with 84 deals worth $2.6 bn in Q2 2011.

In Q2 2012, companies in the industry preferred raising funds from public through secondary issues. There were 30 secondary/ follow-on offerings worth $1.8 bn in Q2 2012, as compared to 17 deals worth $1.1 bn in Q1 2012. Besides, 51 PIPE deals worth $251m were recorded in Q2 2012.

Ningbo David Medical Device Co., Ltd., Shanghai Kinetic Medical Co., Ltd., Cancer Genetics, Inc., Accelera Innovations, Inc., PN Med Group Inc. and MRI Interventions, Inc. completed initial public offerings (IPO) in Q2 2012.

Debt offerings, including secondary offerings and private debt placements, recorded a decrease in the number of deals and deal values in Q2 2012 with 16 deals worth $2.5 bn, as compared to 32 deals worth $8 bn in Q1 2012.

Venture Capital Investments Increase 5% In Q2 2012

The venture capital (VC) market reported 194 deals worth $1.5 bn in Q2 2012, as compared to 221 deals worth $1.4 bn in Q1 2012. On a year-on-year basis, the number of deals and deal values decreased in Q2 2012, when compared to 250 deals worth $2.3 bn in Q2 2011. North America remained the favorite destination for the VC investors. The region recorded 169 VC deals worth $1.3 bn in Q2 2012.

In Q2 2012, venture capital investors focused on making investments in growth and later stage companies, as they seemed to less risky. Out of the 194 deals reported in Q2 2012, 90 were start-up stage financing deals worth $321m, 67 were growth stage financing deals worth $666.5m, 25 were later stage financing deals worth $493.1m and 12 were seed stage financing deals worth $6.9m.

New Enterprise Associates topped the list of venture financing firms by participating in 13 deals worth $315.2m in the last four quarters (Q3 2011 to Q2 2012). The firm focused on investments in North America-based companies. TriVascular, Inc., Sensors for Medicine and Science, Inc., Relievant MedSystems, Inc. and Roka Bioscience, Inc. are some of the companies, which succeeded in raising the highest amount of funding from New Enterprise Associates during the same period.

The private equity (PE) market recorded an increase in the number of deals and deal values in Q2 2012 with 23 deals worth $2.9 billion in Q2 2012, as compared to 14 deals worth $395.5m in Q1 2012. EQT’s acquisition of BSN Medical from Montagu Private Equity for $2.3 billion was the only PE deal that contributed much to the deal value in Q2 2012.

According to Analyst Bhaskar Vittal, “Growth in PE/VC investments in medical devices is expected to slow in the near future due to uncertain economic conditions surrounding Europe and slow growth in the US. Governments are reducing their healthcare expenditure especially in European countries such as Spain and Italy and there are concerns that other countries may follow suit. In such situations, PE/VC investments on start up companies can slow down significantly or the deals are done at cheap valuations.”

Deal Values In North America Increase In Q2 2012

North America reported an increase deal values in Q2 2012. The region recorded deals worth $18 bn in Q2 2012, as compared to $12.4 bn in Q1 2012, reflecting an increase of 43%. However, the number of deals remained unchanged with 510 deals each in Q2 2012 and Q1 2012. SXC Health, Hologic, WellPoint and Valeant Pharma were some of the active buyers in the region in Q2 2012.

Europe recorded an increase in deal values in Q2 2012 with deals worth $7.9 bn, as compared to $3.8 bn in Q1 2012. On However, the number of deals declined marginally from 159 in Q1 2012 to 158 in Q2 2012. On a year-on-year basis, the deal values were 80% less in Q2 2012 when compared to $41 bn in Q2 2011.

Asia-Pacific registered an increase in the number of deals with 86 in Q2 2012 as compared to 82 in Q1 2012. The deal values reported a decrease in Q2 2012 with deals worth $800.4m as compared to $3 bn in Q1 2012.