Medical devices start-ups increasingly going public
The medical device industry is set to record $3.5bn in financing to private companies this year, with 2016 having a high occurrence of medical device IPOs and M&A activity. There have been 96 exits by medical device companies, since 2012, with 77 M&A exits and 19 IPOs. There have been 30 exits in this year alone, with 2 IPOs and 28 M&A. Electric signalling platform Pulse Biosciences, therapeutic device firm Tactile Systems, urological medical device business Laborie Medical Technologies and diagnostic product manufacturer Advanced Accelerator Applications have all undergone exits this year, ranging in value from $50m to $640m.

IPOs are down from last year, though. Year-to-date through Q3'16 saw 28 medical device M&As and 2 IPOs.

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The medical device industry has received a relatively steady flow of funding since 2012, with 2016 on pace to record $3.5B in financing to private companies, helped along by crossover investors — those like mutual funds normally focused on public markets — that have become increasingly active in the space.

Exits are also on track for a strong year. While there’s been a slowdown in total number of medical device IPOs this year, 2016 already reached a high in M&A activity. And this year is likely to top last year for total exits in the sector.

We used CB Insights data to analyze exit trends for the medical device industry, as well as identify the largest medical device exits and top acquirers in the space.

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Exit activity

Exit activity in the medical device space has been trending upwards, with 60% growth observed in 2015. Since 2012, there have been 96 first exits — 77 M&A exits and 19 IPOs.

As of Q3’16, the industry has seen 30 exits this year, 28 M&A and 2 IPOs. Pulse Biosciences, a development-stage device company working on an electric signaling platform with potential oncological applications, went public in May of this year valued at $50M. And in July, Tactile Systems, focused on therapeutic devices for chronic swelling, went public at a $166M valuation.

Largest medical device exits

Laborie Medical Technologies, an Ontario-based producer of devices with urological and gastroenterological applications, topped the list of medical device exits since 2012 with its $640M acquisition by Patricia Industries, itself a part of Investor AB, a Swedish investment company.

Advanced Accelerator Applications, a France-based company that develops diagnostic and therapeutics products such as PET (Positron Emission Tomography) and SPECT (Single Photon Emission Computed Tomography) imaging solutions, comes in second with a valuation of $617M at the time of its 2015 IPO. Following are ConforMIS, Topera Medical, and Glaukos, all with >$500M valuations at the time of exit.

Largest Medical Device Exits Since 2012 Rank Company Exit Type 1 Laborie Medical Technologies Acquired by Patricia Industries 2 Advanced Accelerator Applications IPO 3 ConforMIS IPO 4 Topera Medical Acquired by Abbott Laboratories 5 Glaukos IPO 6 Biocartis IPO 7 TWELVE Acquired by Medtronic 8 Nevro IPO 9 Ellipse Technologies Acquired by NuVasive 10 CardiAQ Valve Technologies Acquired by Edwards Lifesciences Corporation

Top medical device acquirers

The most active acquirer in the medical device industry was Medtronic with 8 acquisitions since 2012. Top acquirers were typically attracted to companies focused on the cardiovascular system. Five of Medtronic’s 7 acquisitions, TWELVE, Aptus Endosystems, and Medina Medical, were cardiovascular-based companies.

In a distant second were Abbott Laboratories and St. Jude Medical, with 3 acquisitions each. Again, 5 of these 6 acquisitions were in cardiovascular-focused companies, including Topera Medical and Endosense.

Most Active Acquirers Rank Acquirer 1 Medtronic 2 St. Jude Medical 2 Abbott Laboratories 3 Alcon 3 Covidien 3 Stryker

Featured image credit: Getty Images/ 3alexd

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