The long-term underlying drivers of M&A in healthcare remain strong. Across all the industry’s sectors, 1 percentage point of growth (either organic or inorganic) has an average of four times as much impact on total shareholder return (TSR) as 1 percentage point of EBITDA margin expansion, Bain reports.
Cash balances are high, with the top 25 pharma, medtech, and payer companies all having at least 15% of their last 12 months’ revenues on hand in the form of cash. Private equity funds also are sitting on a significant amount of cash. With this level of available cash, it is difficult to see a world where M&A values do not return in earnest once the market digests the current moment of uncertainty—even if debt markets have gotten more expensive. Read more.
