Has Medtech Shifted to a Seller's Strike?

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Analyst says both the number and dollar volume of medtech M&A deals are likely to drop in 2022, compared to 2021.

While potential medtech acquirers are licking their lips, their targets are licking their wounds, Mike Matson, a medtech analyst at Needham & Co., said in a research note today.

Matson observed that both the number of medtech merger and acquisition (M&A) deals and dollar volume of deals are likely to decrease in 2022, compared to last year.

"While growth company valuations are down significantly, we think that we may have transitioned from a buyers' strike (due to high valuations) to a sellers' strike (due to low valuations) and believe that valuations may need to remain depressed for some time before the sellers are willing to accept typical acquisition premiums over their current valuations," Matson wrote.

The analyst noted that there have been 152 deals so far this year totaling $7.7 billion in the FactSet medical specialties sector. If this pace were sustained, Matson estimates there would be 402 deals totaling $20.3 billion by the end of the year. That would compare to 497 deals totaling $108.4 billion in 2021, which he says does not include contribution from special purpose acquisition companies (SPACs). As MD+DI reported throughout 2021, SPACs were quite popular with medtech companies last year.

Last year's big spenders on the M&A front included Hologic, which announced no less than five acquisitions this year, positioning itself to become a diversified leader in the diagnostics space. The company's buying spree is, in part, why MD+DI editors picked Hologic for Medtech Company of the Year 2021Boston Scientific also announced five acquisitions last year, by our count.

Noteworthy medtech M&As that have been announced or closed so far 2022 include Medtronic's recently closed acquisition of Intersect ENT, a three-way merger of Fresenius Health Partners, InterWell health, and Cricket Health, and Masimo's $1.02 billion acquisition of Sound United, which investors continue to seem skeptical of.

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