in a large number of transactions
across a wide spectrum of industries
Miami, FL – Farlie Turner & Co. (“Farlie Turner”), a leading investment bank serving middle market companies, co-sponsored the Healthcare Leadership Insights conference with DLA Piper and BNY Mellon Wealth Management in Miami on October 20th. With almost 80 healthcare CEOs, business owners and investors in attendance, the conference included different perspectives on public healthcare equities, the healthcare M&A market, selling a privately held business, raising institutional capital and other strategic corporate events.
Chris Fay, Portfolio Manager and Senior Healthcare Analyst at The Boston Company, a wholly-owned subsidiary of BNY Mellon, discussed the current state of the public markets in healthcare. Over the last 10 years, the healthcare stock index grew 115.7%, while the S&P increased 57.4% over the same time period. Mr. Fay described how the healthcare sector’s outperformance of the general market has been driven by a number of demographic trends including an aging Baby Boomer population and increased rates of obesity, diabetes, Alzheimer’s disease and various forms of cancer. While the overall healthcare stock index has seen strong growth, he noted that not all of the sub-sectors have benefitted equally. For example, biotechnology stocks took a hit from negative publicity surrounding Mylan’s sharp price increase for its EpiPen product, prompting a tweet from Presidential candidate Hillary Clinton in August regarding the continued increase in drug prices. While share prices of biotechnology companies have struggled to recover since the summer, Mr. Fay believes that the Presidential elections will benefit healthcare stocks, regardless of the outcome, by removing uncertainty in the market. He also discussed the current depressed state of therapeutic stocks, as well as the “stretched” valuations for medical technology and medical product stocks.
Mike Turner, Co-Founder and Managing Director at Farlie Turner, moderated a panel on the current healthcare M&A market. Mr. Turner was joined by Kaustav Sen, a Principal at Blue Sea Capital, Taylor Cole, a Managing Director at Harren Equity, and Chris Calton, Managing Director and Head of Healthcare at Farlie Turner. The group discussed current market activity, with 2015 being a record year in regards to both the number of transactions and total dollars spent. Since 2010, healthcare M&A activity by number of deals has increased 8%, while total dollar volume has increased 15% per year through 2015. The increasing levels of activity have been driven by healthcare reform and value-based healthcare, low interest rates and the large corporate cash balances and untapped private equity capital. The private equity panelists discussed the need for CEOs and investors to have a strong personal fit and alignment of objectives and incentives with professional investors to increase the likelihood of a successful outcome for all parties.
Following this, Josh Kaye, Managing Partner of the Miami Office and Chair, U.S. Healthcare Sector at DLA Piper, moderated a panel on “Optimizing Growth and Accessing Private Capital.” His panelists included Chris Grottenthaler, Founder & CEO of True Health Diagnostics, Scott Kimmel, Co-Founder of BioClaim, Inc., and Dr. Jim Leavitt, Co-Founder and President, Gastro Health, LLC. The panel discussed the optimal time to access outside capital and the qualities and traits of companies and entrepreneurs that attract professional investors. The panelists also discussed their own businesses and operating strategies and how their institutional investors helped to improve their strategy and grow their business.
The last panel of the day was led by Adam Rogers, Partner & Certified Board Specialist in Heath Law at DLA Piper, and focused on “Platform and Add-On Acquisitions with Financial and Strategic Sponsors.” Panelists included John Randazzo, Senior Advisor at Warburg Pincus, Brian Regan, General Partner at Welsh, Carson, Anderson & Stowe, and Daniel Rosenberg, Managing Director, Sterling Partners. The panel noted that the healthcare market, which represents a $3 trillion sector of the economy that is rapidly growing and is bolstered by favorable industry and demographic trends, is of great interest to many private equity firms. The panel affirmed that investors are keenly interested in putting capital to work in healthcare businesses that operate as market leaders in niche sub-sectors and have significant opportunities to drive profits through operational improvements, leadership team buildouts and best practice implementation. The panel ended with a candid discussion on partnering with investors, noting that businesses looking to partner with private equity firms should be open and honest about their strengths and weaknesses in order to foster a relationship of trust and to facilitate the best possible outcome for all parties.
Finally, Dr. Douglas Hough, Associate Scientist and Associate Director, MHA Program at the Bloomberg School of Public Health at Johns Hopkins University, discussed developing a better understanding of the healthcare market through behavioral economics and his book, Irrationality in Healthcare: What Behavioral Economics Reveals About What We Do and Why. His presentation highlighted how behavioral economics can help make sense of many of the anomalies in the U.S. healthcare market. Dr. Hough touched on several factors impacting consumer behavior such as loss aversion, framing, hyperbolic discounting and action bias. While behavioral economics is not a perfect science for predicting consumer purchasing behavior and habits, Dr. Hough demonstrated how it is a solid start. By understanding behavioral economics, Dr. Hough contends that healthcare CEOs and business owners can more effectively understand and even predict how patient consumers and doctors may behave in the uncertain environment of healthcare reform. Further, leaders in the healthcare industry can utilize behavioral economics techniques to help shape and guide consumer behavior towards favorable outcomes.
The half-day event provided unique content to a broad range of stakeholders and participants in the U.S. healthcare market. The event ended with a cocktail reception in which business owners and CEOs were able to discuss some of the topics with panelists in more depth. To learn more about the event, please feel free to contact any of the Farlie Turner professionals listed below.
Mike Turner, Co-Founder & Managing Director (954) 358-3800 firstname.lastname@example.org
Chris Calton, Head of Healthcare & Managing Director (615) 324-8746 email@example.com
Scott Saunders, Managing Director (954) 358-3800 firstname.lastname@example.org