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For more information, visit www.tresvista.com
US HEALTHCARE – INDUSTRY UPDATE
Healthcare Spend per Capita for OECD Economies
Recent Healthcare Deals Factors Driving Healthcare Dealmaking
Rise of Digital M&A:Driven by a consumer-oriented shift, digital health M&A has surged as the industry trends toward convenient care
Proliferation of Healthcare Technology and Outsourcing:Increased administrative burdens have led to healthcare tech and outsourcing being employed to improve efficiency and control costs
Ever-growing Payors:PE groups have accounted for an increasing share of healthcare services M&A across all sub-sectors
Evolving Providers:Scale has increased, leading to M&A volume concentrating in larger deals
Company Investor Company Investor
Investor Company InvestorCompany
$993Mn
Source: Pitchbook Source: Wells Fargo - A Review of Key Factors Driving Healthcare Dealmaking
USA$10,209 per capita
6.4% of GDP
Canada$4,826 per capita
10.6% of GDP
Japan$4,717 per capita9.0% of GDP
France$4,902 per capita
9.5% of GDP
Switzerland$8,009 per capita11.3% of GDP
Germany5,728 per capita9.4% of GDP
UK$4,246 per capita
10.6% of GDP
New Zealand$3,683 per capita13.3% of GDP
Austria$5,440 per capita10.6% of GDP
Sweden$5,511 per capita
11.3% of GDP
Belgium$4,774 per capita
10.6% of GDP
Netherlands$5,386 per capita10.8% of GDP
Australia4,543 per capita13.9% of GDP
Source: OECD, www.worldpopulationreview.comGDP data as of 2019
Trends for the Healthcare Industry in 2019
Healthcare Cybersecurity~32,000 intrusion attacks per day per organization, compared to 14,300 per organization in other industries
Ageing and Lifestyle FactorsThe ageing population (those over 65 years old) is set to increase by 8%, from 559 million in 2015 to 604 million in 2020
Precision Medicines~65% of patients prescribed the world’s top 5 selling drugs didn’t respond to the therapy
Exponential Technologies to Improve Hospital Performance~45% of hospitals with negative margins in 2011 were still negativein 2015
Source: Deloitte - 2019 US and Global Health Care Industry Outlook and Medcity News - Five innovation trends that will impact the healthcare industry in 2019
Issues for the Healthcare Industry in 2019
Source: Deloitte - 2019 US and Global Health Care Industry Outlook
Investing in digital innovation and transformation
Using new care delivery models to
improve access and affordability
Adapting to change in consumer needs,
demands, and expectations
Maintaining regulatorycompliance and cybersecurity
Recruiting, developing and retaining top talent
Creating financial sustainability in an
uncertain health economy
$75Mn
$540Mn$1.4Bn
For more information, visit www.tresvista.com
TresVista is the leading provider of high-end outsourced support for asset managers, investment banks, research firms, and corporates. TresVista delivers operational efficiencies and cost savings to its clients while providing them with dedicated teams to support them across various functional activities. Services include investor
relations, fund raising, deal sourcing, deal execution, valuation, research, financial modeling, portfolio management, marketing and legal support.
ABOUT TRESVISTA
US HEALTHCARE – INDUSTRY UPDATE
Quarterly M&A Activity in US Healthcare
IRR for Healthcare Focused PE Funds Capital Invested in US Healthcare Deals
(29%)
(11%)
3% 1% 4%
8%
9%
11% 12%
14% 15%
(26%)
(10%)
6%
(2%)
5% 6%
11%
10% 11% 14%
16%
(52%)
(32%)
2%
13% 16%
19% 22% 26% 25%
16%
23%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Buyout PE Growth-Expansion Co-Investment
Source: Pitchbook
2008 2009 2010 2011 2012 2013 2014 2015 20182016 2017
Avg. Capital Invested per Deal – Strategic ($B)Avg. Capital Invested per Deal – PE ($B)
Source: Pitchbook
$38
$139
$18
$280
$57
$99
$66$80
$36
$69
$37$43 $47
$81
$62
$258
$67
$287
$65
$91
$69
$130
Source: Pitchbook
1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18
324
218
315 326 298 337 296 241 210 282 241 244 237 260 192213 159
213
262 272
292
241
262
252
283
280290 296
312
301 328
261
Strategic Buyer PE Buyer
Affordable Care Act (ACA) – An Update
ACA: Medicaid Expansion States
32%It has helped me and/or my family
32%It has not helped or hurt me and/or my family
20%It has hurt me and/or my family
16%I don’t know
Source: PwC Health Research institute consumer survey, September 2018 and CNN – 4 ways Obamacare is changing for 2019
ACA: Medicaid Non-Expansion States
It has not helped or hurt me and/or my family
It has helped me and/or my family
I don’t know
It has hurt me and/or my family
12%
20%
43%
25%
1. Impact: Less robust coverage on individual and non-group markets due to greater availability of non-conforming plans Implication: Payors, providers could triage patients to lower-cost care options such as telehealth/in-home nurse visits
2. Impact: ACA provision for monetary penalties on manufacturers that charge more to go into effect in JulyImplication: Attention on drug prices to increase despite slowdown in rule-making
3. Impact: Insurance regulations are falling to states, creating a mosaicImplication: Stakeholders should closely follow state regulatory decisions when pursuing new opportunities
Impact of Recent Changes
US Healthcare Services M&A (by Size)
2008 2009 2010 2011 2012 2013 2014 2015 2018*2016 2017
$100M-$250M $250M-$500M $1B-$5B$500M-$1BUnder $100M $5B+
Source: Pitchbook* As of November 08, 2018