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Device/Diagnostics Quarterly Deal Statistics, Q3 2016

A look at financing, M&A and alliance activity July–September 2016

 
• By Amanda Micklus and Maureen Riordan

Q3 medtech financing doubled in dollar volume to $3 billion, with debt offerings again representing the majority of the aggregate; acquisitions totaled $5.3 billion, mainly due to Johnson & Johnson’s $4.3 billion buy of Abbott Medical Optics. Diagnostics financings, which brought in $85 million, continued to decline, but at $5 billion, acquisitions showed a slight increase over the previous quarter, with Danaher’s takeover of Cepheid accounting for most of the M&A volume.

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Financing by device companies during the third quarter of 2016 totaled $3 billion, doubling Q2's $1.5 billion. As in the past two quarters, debt offerings continue to make up the highest percentage of the financing dollars at 72% in Q3. (See Exhibit 1.) Most of the $2.2 billion in Q3 debt dollars are attributed to the outlier $1.75 billion sale of 9.625% second lien senior secured notes due 2021 by Acelity LP Inc.’s wound care and regenerative medicine subsidiaries Kinetic Concepts Inc. and KCI USA Inc. [See Deal]; this single transaction accounted for 57% of Q3’s total dollar volume and is also the largest-know debt raise by a medtech company since Strategic Transactions started tracking this activity in 1991. Acelity says the proceeds will repay existing debt. (The company also offered $400 million principal amount of first lien senior secure notes in February 2016 [See Deal].)

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