Medtech IPOs have performed well in recent years, even outpacing other areas of the health industry, a top analyst said recently. The comments came as part of the MedTech Investing Conference in Minneapolis last week. Other industry executives at the conference also described a generally positive climate for medtech IPOs.
In his presentation “Overview of the Medtech IPO and M&A Activity,” Neil Riley, managing director at Piper Jaffray‘s equity capital markets group, said that after a period of stagnant economic growth, there have been indications that the IPO environment is getting better.
“There has been some volatility, but overall there’s been a steady upward trend in capital markets,” he said. “We continue to see an upward trajectory in terms of IPO activity overall.”
Riley said that medtech IPOs are actually outperforming offerings in other similar industries. His data showed that on average, med tech IPOs had better early returns than other health care-related IPOs in 2013. In addition, companies issuing medtech IPOs met or exceeded their earnings projections since 2012, he said. The IPO approach is attractive because it offers companies a path to liquidity, Riley said.
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In a panel discussion on IPOs and M&A, other experts cautioned that IPOs are only one option for medtech companies, and not always the best answer. Publicly traded companies sometimes face increased expectations, and certainly are given more scrutiny, said David Milne, managing partner of SV Life Sciences. He noted that CEOs of publicly traded companies have to spend a lot of time explaining the operational details of the company to investors and the public.
“The board will be looking at more short-term news flow, which may not be consistent with your plan,” he said. “It may change the strategy that you have for the company.”
The IPO panel discussed a number of funding approaches that medtech companies have tried, including reverse mergers, venture capital investments, and structured deals.
“I think there are a lot of dynamics that are positive in the financing environment, and IPOs are one of them,” said Milne.
