M&A Activity Picking Up

Medical device and digital health M&A activity is picking up after a slow start to 2020, with deal activity hampered, of course, by the spread of COVID-19. But just as 2Q earnings evidenced better-than-expected revenue results as hospitals re-opened to elective procedures, so too have acquisitions in the medical technology sector. The second half of the year has historically seen more deal activity than the first, but just six weeks into 3Q:20, we’ve witnessed two multi-billion dollar acquisitions and several smaller strategic plays.

On August 2, Siemens Healthineers announced the acquisition of Varian Medical Systems for $16.4 billion. The deal expands Siemens’ heathcare capabilities to include Varian’s cancer therapy systems, which are focused primarily on radiation technologies. In digital health, Teledoc and Livongo agreed to merge in a deal valued at $18.5 billion that will create a major platform for virtual care delivery and chronic disease management. Medtronic announced plans to acquire spinal robotics and surgical planning company Medicrea, which we covered here, as well as Companion Medical, the manufacturer of a smart insulin pen.

We’re enthusiastic about this increase in M&A activity, which signals confidence in hospital capital equipment expenditures and innovation in access to care and chronic disease management. We are closely following these trends as they continue to evolve.