DEAL SPOTLIGHT: Zoll Medical Corp
Industry Commentary: Acquisition of Itamar Medical by ZOLL Medical Corporation
This week from around the industry, Back Bay Life Science Advisors’ investment banking team comments on the $538 million acquisition of Itamar Medical by ZOLL Medical Corporation, announced September 13, 2021.
The medtech M&A and public markets differ from that of biotech, and metrics for medtech value creation are similarly different so we find this deal interesting for a number of reasons:
Remote patient monitoring is the broader category of the sleep apnea testing system which precipitated the acquisition. The increase in remote monitoring in any guise parallels the rise in accuracy of remote and efficient noninvasive physiologic monitoring and the utility of multiple measured parameters incorporated into one device or system.
The disintermediation of what was previously expensive hospital or specialized area-based testing centers for a variety of conditions, the utility of these devices to monitor and diagnose conditions in real time and real-life basis, and the algorithm driven-approach to physiologic data are all noteworthy elements in terms of the shifting care paradigm.
The Achilles’ Heel of the biosensor movement is a generation of data without accompanying interpretation or synthesis into useful and actionable diagnostic data. The Itamar-ZOLL deal is one example of the essence of all useful biomarkers—information that together renders secure diagnoses and then catalyzes a therapeutic response.
From a deal perspective, it is noteworthy that the medtech M&A and public markets have been more sustainably robust than they have been in years.
Though still driven by revenue traction and profitability versus the development stage-risk speculation of the biotech markets, the markets are providing:
The ability to finance more aggressively to prove revenue traction
Opportunities to drive a meaningful valuation at a premium to the M&A markets alone
The creation of a split pathway of either:
acquisition at a premium to a public valuation or
the ability to further diversify and grow, based on a sustainable market cap and access to more extensive capital than is typical in singularly focused or earlier stage medtech
Given the dollar infusions into healthtech (see charts below), and the pandemic-related lesson that even with the transient diminution in elective procedures hurting medtech stocks during the pandemic, medtech remains a highly valuable space for development and investment. The solutions medtech can provide—including system-based quality and economic improvements, advances in diagnostic, monitoring and therapeutics options—bode well for future investment.
While Back Bay Life Science Advisors did not work on this specific deal, we often execute biotech and medtech collaborations, partnering, and M&A. Congratulations to all parties involved!
FINANCING IN REMOTE PATIENT MONITORING (2021 Jan-June Only)
