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CONFIDENTIAL
WALL STREET MASTERMIND
Sector Spotlight: February & March Recap
Sector Leads
| Media & Entertainment
Jagger Lambert
| Media & Entertainment
James Conception
| Technology
Pan
| Technology
Teddy
| Healthcare
Nina Chhor
| Healthcare
Joe Ames
CONFIDENTIAL
WALL STREET MASTERMIND
Healthcare
Contributors
| Group Lead
Nina Chhor
| Group Lead
Joe Ames
| Analyst
Lance Heinan
| Analyst
Wyatt Rose
| Analyst
Shreyas Sridharan
| Analyst
Lucas Scicluna
3
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
4
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
5
Amylyx Pharmaceuticals disclosed on 3/8 that their Relyvrio product failed to meet the
trial’s main or secondary goals
The Cambridge-based biotechnology company was constructed entirely around Relyvrio,
which had received approval from the Food and Drug Administration in fall of 2022. Wall
Street analysts projected that Relyvrio could achieve annual revenues of $1b+ at its peak
Although the FDA wanted an additional, larger-scale study, pressure from ALS patients and
activists led the agency to backtrack, ultimately paving the path for its previous approval in
2022
As of September 2023, nearly 4,000 of roughly 30,000 (12.5%) US ALS patients were on
Relyvrio
Amylyx Pharmaceuticals’ ALS Drug Fails
Company Information
Cambridge, MA
Headquarters:
2013
Founded:
Joshua Cohen & Justin Klee
CEO:
James Frates
CFO:
AMLX
Ticker:
$185.7m
Market Cap:
$371.4m
Total Cash:
$380.1m
LTM Sales:
$-
$5.00
$10.00
$15.00
$20.00
$25.00
2/1/2024 2/15/2024 2/29/2024 3/14/2024
AMLX Post Feb-1 Stock Performance
Data release date
~82% plunge in
stock price
Firstly, the move represents a critical strike to Amylyx, whose fate rested firmly in the hands
of its Relyvrio product. Co-founders and Co-CEOs Joshua Cohen and Justin Klee pledged to
the FDA that they would pull their product from the market should confirmatory tests fail – a
decision which is expected to come within the next eight weeks
Perhaps the larger issue comes for the state of the US ALS treatment market where only
three other treatments remain. Of the three, the Biogen treatment is targeted towards a small
portion of the population with certain genetic mutations, while the other two (Radicava and
Riluzole) have shown modest effects on either function or survival
Ultimately for Amylyx, the signs point towards a significant restructuring, as the company’s
$371m in cash may not even keep the lights on through the end of the calendar year
Relyvrio Fails Confirmatory Trial
Commentary
Sources: Biopharma Dive,
6
NodThera’s Parkinson’s Update
Company Information
Boston, MA | Edinburgh, UK
Headquarters:
2016
Founded:
Dr. Alan P. Watt
CEO:
Dr. Thomas Jaecklin
CMO:
Private
Ticker:
Approval News
Sources: Biopharma Dive, Crunchbase, NodThera’s Website, Fierce Biotech
NodThera focuses on targeting the NLRP3 inflammasome – which are
believed to be a key driver of many chronic diseases such as:
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
NT-0796 Parkinson's
NT-0796 Obesity
NT-0249
Neuro Development Candidate
Additional Peripheral/
Neuro Development Candidates
Discovery IND-Enabling Phase 1 Phase 2
Current Portfolio
NodThera’s NT-0796 was found to reduce key neuroinflammatory and inflammatory
biomarkers in Parkinson’s disease patients to the levels found in healthy elderly controls
over a period od 28 days
NT-0796 is taken orally, and inhibits the NLRP3 inflammasome protein complex, which is
amongst proteins that, when misfolded, is believed to form toxic aggregates that activate
inflammasomes, leading to nerve cell damage and death
Experts believe that these agents could be useful in treating a variety of neurodegenerative
diseases, MASH (liver illness), and even obesity itself. NT-0796 was shown back in February
to cause weight loss at nearly the same rate as Wegovy in obese mice (19% vs 21.5%)
The news could put NodThera on the radar of larger pharmaceutical companies looking to
deploy their war chests on orphan drug makers
CNS
Heart
GI
Skin
Liver
Kidney
Lung
Pancreas
Bone/Joints
Alzheimer’s, Parkinson’s, Huntington’s, Stroke/TBI
Alzheimer’s, Parkinson’s, Huntington’s, Stroke/TBI
IBS
Urticaria, Hidradenitis, Suppurativa
Hepatitis, NASH
Nephritis, Lupus Nephritis, CKD
Severe Asthma, Cystic Fibrosis
Pancreatitis, Diabetes
Osteoarthrosis, Osteopenia, Gout
7
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
8
Upcoming Clinical Trials
Description
Current Stage
Product
Company
Small interfering RNA treatment for Transthyretin
amyloidosis cardiomyopathy
Phase 3
HELIOS-B
TIGIT Antibody treatment for Lung Cancer
Phase 3
Skyscraper-01
Antibody-drug conjugate treatment for Lung Cancer
Phase 3
Evoke-01
Small molecule (BTK inhibitors) treatment for
Multiple Sclerosis
Phase 3
Gemini-1 & Gemini-2
Gene therapy treatment for Duchenne muscular
dystrophy
Phase 3
NCT04281485
Base editing CRISPR treatment for Sickle Cell
Disease
Phase 1-2
Beacon
CAR T-cell therapy for relapsed/refractory large B-
cell lymphoma
Phase 2
ALPHA2
Investigational allogeneic MukltiTAA T-cell therapy
for post-transplant acute myeloid leukemia
Phase 2
ARTEMIS
Sources: Biopharma Dive, ClincialTrials.gov, CGTLive
9
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
10
J&J Legal Controversies
JNJ PBM Lawsuit Overview Opioid Deaths per 100,000
0
5
10
15
20
25
30
35
1998 2002 2006 2010 2014 2018 2022
Heroin Commonly Prescribed Opioids Other Synthetic Opioids Any Opioid
First Wave (1998 – 2010)
Rise in Prescription opioid overdoses
Second Wave (2010 – 2014)
Rise in heroin overdoses
Third Wave (2014 – 2019)
Rise in fentanyl overdoses
Fourth Wave (2019-)
Rise in psychostimulant drugs
Commentary
• Aggressive marketing and sales tactics by pharmaceutical companies promoted the widespread
use of opioids for chronic pain, leading to a surge in prescriptions and subsequent misuse
• The liberal prescribing practices contributed to a growing public health crisis as overdoses from
prescription opioids, like OxyContin and Vicodin, soared
• As prescription opioid regulations tightened and sales were scrutinized, users turned to more
readily available substances like heroin. The illicit sale of fentanyl, often misrepresented or mixed
with other drugs, surged in the market, leading to a catastrophic rise in overdose deaths due to its
extreme potency
Employee
Health Plan
JNJ negotiates prices with Express Scripts
and other PMB's
Pays for Provides to
JNJ is being accused of failing to negotiate lower prices on behalf
of their employee health plan, causing employees to pay more
Opioid Settlements
Companies offering employee health plans have a fiduciary duty
to those plans in their negotiations with PMBs. That is to say that
they must ensure that they gain the most favorable terms for
their employees:
• On top of their PMB lawsuit issues, JNJ recently settled a legal suit
brought by Washington State for ~$149.5mn in accordance with
their role in fueling the ongoing Opioid Epidemic
• $123.3 of this $149.5mn will be used to combat the current
epidemic (including fentanyl)
• The entire sum will be paid in one year, with the proposed JNJ
settlement featuring $98.9mn paid over the course of nine years
Sources: Washington State Attorney General’s Report, US Center for Disease Control Reports
11
o
Oncology R&D Spend ($b)
Oncology’s Research Boom
Commentary
$129.0
$148.0
$167.0
$189.0 $196.0
$218.0
$251.0
$295.0
$340.0
$375.0
$-
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Projected CAGR: 10.5%
Current CAGR: 11.1%
R&D Spend CAGR by Cancer Type (2018 – 2022)
62%
23%
23%
17%
16%
12%
12%
10%
5%
4%
0%
SCLC
Ovarian
Kidney
Multiple
Myeloma
NSCLC
Breast
Other
Prostate
NHL
CRC
CML
High growth attributed to
expansion of PD-1 Inhibitors
Account for 53% of all
oncology sales
• Oncology has proven to be an area of extensive emphasis for life science investment. Companies
rely on revenue from other drugs in order to fund high-risk, high-reward projects such as those in
oncology, gene therapy, and other rare diseases known as orphan drugs
• Following President Biden’s State of the Union address, he doubled-down on his desire to
strengthen the Price Negotiation component of the Inflation Reduction Act
• This would result in lost revenue (either via reduced prices or excessively punitive taxes) which
would impact the ability of large pharmaceutical companies to invest in R&D
• The move likely will drive R&D and improvements in rare diseases towards VC-backed startups
Sources: Biopharma Dive
12
Oncology’s Research Boom
Valuation
Key Product & Treatment
Target
Acquirer
$43bn
ADCETRIS, PADCEV,
TIVDAK, TUKSYA
$21bn
ADCs for Breast Cancer
$10bn
ADCs for Ovarian Cancer
Mega Deals
― Larger deals in oncology represent
the premiums that the products
could yield for these companies
when they come to market
― Gaining approval for a specific type
of cancer medicine can be thought
of similar to the Arms Race during
the Cold War
Defying the Market
― 2023 was a rough year for M&A, but
oncology and pharmaceutical M&A
as a whole prevailed
― Q4 2023 saw $84.2b of total deal
value within the pharmaceutical
landscape as a whole
Moving Beyond COVID
― Many pharmaceutical companies
have been forced to look for
revenue streams beyond the COVID
vaccine
― Many made the mistake of selling
the vaccine on a demand versus a
government-contract basis
Major Oncology Deals Since 2020
Sources: Biopharma Dive, Pharmaceutical Technology
0
5
10
15
20
25
30
$-
$10.0
$20.0
$30.0
$40.0
Q3
2021
Q4 Q1
2022
Q2 Q3 Q4 Q1
2023
Q2 Q3 Q4
Deal
Volume
Deal
Volume
($b)
Deal Value Deal Volume
Immuno-Oncology M&A
Pfizer – Seagen ($43b)
Commentary
13
President Biden’s Proposal to Strengthen Medicare’s Pricing Power
Support for Current IRA Provisions
Strengthening Provisions
84% 82% 81%
87% 89% 89%
86% 79% 77%
70%
75%
80%
85%
90%
Capping monthly
O.O.P costs for Insulin
Annual limit on O.O.P.
prescription drug costs
Authorize Fed. Gov. to negotiate some
drug prices
Total Democratic-Leaning Republican-Leaning
Commentary
Sources: Biopharma Dive, Kaiser Family Foundation
More Qualifying Drugs
― President Biden looking to expand government-
negotiable drug count from 20 to 50 per annum
Increased O.O.P. Cap
― Expand current cap to $2,000 on O.O.P expenses
to private insurers
― Also looking to extend a $2 cost-sharing limit
for high-value generic drugs
• While the proposals are overwhelmingly popular with most polled Americans,
analysts strongly doubt the ability of the President to get these provisions through a
heavily-divided Congress
• Pharmaceutical companies have argued that the existing provisions will handcuff
their ability to innovate through production of new, higher-risk products
• The argument of these large pharmaceutical companies is that they use profits from
their most successful drugs to fund R&D for new projects
• The current provision shave been challenged in court, with PhRMA and
AstraZeneca already losing their initial bids and others making their appeals heard
14
Bayer Opts to Retain Monstanto
Legal Troubles
― Monsanto’s Roundup, the most
popular and profitable weed killer
ever sold, has led to over $11B in
legal payouts
― There are over 30,000 pending
lawsuits against Roundup,
including 4,000 multidistrict
litigation cases in California
Impulse Buy
― Werner Baumann had spent less
than two weeks as CEO for Bayer
when he extended the offer
― The deal came despite largescale
skepticism from investors
regarding Bayer’s plan to go into
agribusiness to stabilize revenue
Rising Leverage
― Following the Monsanto
acquisition, Bayer’s debt
skyrocketed from $15B to over
$50B
― Bayer’s book value of equity
dropped from $54B to $40B in June
2020 following legal settlements
Commentary
1901
Monsanto founded in St.
Louis, MO, by John
Francis Queeny
1974
Monsanto brought
glyphosate to market
under trade name
Roundup
1983
Monsanto scientists
among first to
genetically modify a
plant cell
1993
Searle division filed
patent for Celebrex, the
first FDA-approved
selective COX-2 inhibitor
1985
Monsanto acquired G.D.
Searle & Company – a
pharmaceutical and
agriculture company
2000
Pharmacia spun off agro-
business subsidiary into
“new Monsanto”
1999
Monsanto agreed to
merge with Pharmacia &
Upjohn
2016
Werner Baymann
becomes CEO of Bayer;
makes bid for Bayer 10
days later
2018
Bayer closes acquisition
of Monsanto for $63B
2018
Monsanto ordered to
pay $289.2M in damages
related to Roundup
2022
Analysts’ estimate total
Roundup liability to
Bayer between €5B and
€25B
2023
Bill Anderson becomes
CEO of Bayer in June;
previously was CEO of
Roche’s pharma division
2023
Bayer begins exploring
potential spinoff of
Monsanto in summer
2023
2023
In Q3 Bayer’s Net
Debt/EBITDA ratio
approaches 6x, up from
over 3x in Q2
2023
Bayer opts to retain
Monsanto in early
March; opting to spend
2-3 years restructuring
Sources: Wall Street Journal, Bloomberg, Macrotrends
15
Obesity Drug Planned Coverage
$0.5bn $0.8bn $1.5bn
$5.1bn
$7.6bn
$13.0bn
$19.1bn
$25.0bn
$31.3bn
$39.1bn
$44.0bn
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
US Obesity Drug Market Projections ($bn)
1) Increase in commercial coverage
2) Significant mfg. capacity expansion
1) Increase in commercial penetration
2) Start of Medicare coverage
53% proj. CAGR 2022-2030
Sources: J.P. Morgan “The increase in appetite for obesity drugs” (November 2023), Fierce Healthcare “Demand for GLP-1 drugs is growing” (June 2023)
Note: Planned coverage survey also included 7% of respondents per category who were unsure of the plan’s status regarding weight loss medications
Commentary
43%
28%
22%
41%
28%
19%
49%
31%
20%
0% 10% 20% 30% 40% 50% 60%
Currently
Covered
Considering
Coverage
Not
Considering
Coverage
All Employer Health Plan
Plan Coverage of Obesity Drugs
• The market for obesity drugs continues to rise rapidly, and is expected to expand even further
as more and more health plans opt to provide coverage
• At the current rate, the main concern is how quickly and efficiently can the pharmaceutical
companies produce these products
• Major companies will soon follow incorporate inorganic growth to their GLP-1 production
capabilities in efforts to meet the demand within the market
16
Analyst Consensus Projections
Viking Therapeutics' GLP-1 Rise
Company Information
San Diego, California
Headquarters:
2012
Founded:
Brian Lian
CEO:
Gregory Zante
CFO:
VKTX
Ticker:
Public Market Information
$8.28 – $99.41
52 Week Low/High:
$77.35
Share Price:
94.3M
Shares Outstanding:
$8.69B
Market Cap:
0.93
Short Ratio:
Key Metrics
22.2x
Price/Book (LTM)
7.0x
Price/Book (2023)
$362.1M
Cash Balance
$63.8M
2023 R&D Expense
$(0.71)
$(0.90) $(0.91)
$(1.05)
$(1.50)
$(1.27)
$(1.75)
$(1.50)
$(1.25)
$(1.00)
$(0.75)
$(0.50)
$(0.25)
$-
2021A 2022A 2023A 2024E 2025E 2026E
EPS History (Actual & Projections)
Stock Performance Since February 1
$-
$25.00
$50.00
$75.00
$100.00
2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024
VK2735 Phase II clinical
trial results announced
Stock rallies 120%
VKTX announces $550M
stock offering
Stock drops 15%
Sources: KoyFin
17
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
18
Healthcare BioTech Acquisitions
EV/Revenue
EV/EBITDA
Premium
Price Per Share
Purchase Price
Target EBITDA
Date
Company Acquired
Acquirer
97%
$21.00
$2,000M
3/19/24
Fusion Pharmaceuticals
AstraZeneca
N/A
N/A
$800M
3/14/24
Amolyt Pharma
AstraZeneca
N/A
N/A
$90M
3/13/24
IFM Due
Novartis
27%
$32.50
$4,300M
2/12/24
CymaBay
Gilead
18%
€ 68.00
€2,700M
2/5/24
Morphosys
Novartis
N/A
$30.00
1700M
1/23/24
Inhibrx
Sanofi
4%
$43.00
$348M
1/17/24
Taro Pharmaceutical
Sun Pharma
N/A
N/A
$1,000M
1/9/24
Aiolos Bio
GSK
105%
$28.00
$2,000M
1/8/24
Ambryx Biopharma
Johnson & Johnson
118%
$23.00
$680M
1/8/24
Harpoon Therapeutics
Merck & Co.
N/A
N/A
$250M
1/8/24
Calypso
Novartis
Sources: Biopharma Dive
19
2024
2023
2022
2021
2020
2019
2018
Deal Value
3
11
26
15
9
10
11
< $500M
2
6
6
4
7
4
5
$500M - $999M
5
13
8
12
8
9
3
$1B - $4.99B
0
4
1
2
1
2
3
$5B - $9.9B
0
4
2
2
3
4
2
$10B+
2024
2023
2022
2021
2020
2019
2018
Premium
2
5
5
4
2
1
1
0% to 24%
1
5
6
2
3
2
2
25% to 49%
0
5
4
3
4
6
6
50% to 74%
0
7
4
4
3
1
2
75% to 99%
2
6
7
3
5
6
2
100% +
Healthcare BioTech Acquisitions
Leading Facilitator
― Biopharma M&A has driven the vast
majority of deal activity in an
otherwise frozen market over the
last year
― There is immense competition with
orphan and specialty-drug markets
At a Premium
― Premiums held strong in 2023
despite more difficult financing
conditions and a tighter regulatory
environment
Crystal Ball
― New cause-based treatments such
as CRISPR, GLP-1’s, , and CAR-T Cell
Therapies will lead to even greater
M&A competition
― Despite not being popular amongst
analysts, the shift to cure-based
treatments is likely to dominate the
next decade of major players within
healthcare – leading to weakened
market position for traditional
giants such as Pfizer and JNJ
Commentary
Sources: Biopharma Dive
20
Novo Nordisk’s Acquisition of Catalent
21
Analyst Consensus Projections
Novo Nordisk Company Overview
Company Information
Bagsvaerd, Denmark
Headquarters:
1923
Founded:
Lars Jorgensen
CEO:
Karsten Knudsen
CFO:
NVO
Ticker:
Public Market Information
$75.56 - $138.28
52 Week Low/High:
$126.46
Share Price:
4.48B
Shares Outstanding:
$569.0B
Market Cap:
0.88
Short Ratio:
Key Metrics
33.9x
EV/EBITDA
16.2x
EV/Sales
$30.2B
Cash Balance
$32.4B
2023 R&D Expense
$10.40
$12.26
$18.67
$3.35 $4.06 $4.82
$-
$5.00
$10.00
$15.00
$20.00
2021A 2022A 2023A 2024E 2025E 2026E
EPS History (Actual & Projections)
Stock Performance Since February 1
$100.00
$125.00
$150.00
2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024
Phase I Amycretin results
show 13.1% weight reduction
Stock rallies 8%
Sources: KoyFin
22
Analyst Consensus Projections
Catalent Company Overview
Company Information
Somerset, NJ
Headquarters:
2007
Founded:
Alessandro Maselli
CEO:
Matti Masanovich
CFO:
CTLT
Ticker:
Public Market Information
$31.45 - $67.54
52 Week Low/High:
$56.45
Share Price:
94.3M
Shares Outstanding:
$10.2B
Market Cap:
3.08
Short Ratio:
Key Metrics
38.7x
EV/EBITDA
3.7xx
EV/Sales
$229.0M
Cash Balance
$17.0M
2023 R&D Expense
$3.15 $2.74
$(1.41)
$0.51
$1.48
$2.00
$(5.00)
$(2.50)
$-
$2.50
$5.00
$7.50
2021A 2022A 2023A 2024E 2025E 2026E
EPS History (Actual & Projections)
Stock Performance Since February 1
$25.00
$50.00
$75.00
2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024
NVO announces $63.50 per
share cash tender offer
Stock rallies 9%
Sources: KoyFin
23
Novo’s Production Capabilities
• Used for the treatment of type 2 diabetes. It's a
GLP-1 receptor agonist that enhances glucose-
dependent insulin release
Victoza
• Also for type 2 diabetes, it's another GLP-1
Ozempic
• A fast-acting insulin used by people with diabetes
to control blood sugar levels
NovoRapid
• A long-acting insulin used for both type 1 and type
2 diabetes, known for its flexible dosing schedule
Tresiba
92.6%
Novo’s Key Products
Segmentation & Geographic Distribution
Global Locations
93%
7%
55%
22%
12%
7%
4%
Leading Facilitator
― Biopharma M&A has driven the vast
majority of deal activity in an
otherwise frozen market over the
last year
― There is immense competition with
orphan and specialty-drug markets
At a Premium
― Premiums held strong in 2023
despite more difficult financing
conditions and a tighter regulatory
environment
Commentary
Diabetes & Obesity
Rare Disease
Other
China
USA
EMEA Canada
Strategy & Operations
Production & Manufacturing
Research & Development
Sources: Zymewire, SEC Filings
24
Catalent’s Business Model
 Expanded capabilities through acquisitions of Aptuit, Micron Technologies, and
Paragon Bioservices Inc.
 Entered into partnerships for oncology development, cannabinoid-derived
medicines, and COVID-19 vaccine manufacturing
 Continued investment in R&D, including the acquisition of MaSTherCell for cell
therapy development
Wockh…
Others,
17%
Sandoz Int'l,
12%
Jubilant,
13%
Recipharm
AB, 13%
Catalent,
13%
Abbot Labs,
8%
Bachem
Holding, 8%
Eurofins
Scientific,
4%
Simtra
BioPharma,
4%
PolyPeptide
Group, 4%
*Figure shows Cavalent’s outsourcing counterparties
(by drug percentage) for obesity treatments
Catalent
Growth
History
Outlook
 Headquarters in Somerset, New Jersey
 Global provider of delivery technologies, drug manufacturing, biologics, and
consumer health products
 Employs over 14,000 professionals worldwide, including 2,400 scientists and
technicians
 Generated over $3 billion in annual revenue in fiscal year 2020
 Formed in April 2007 through the acquisition of Cardinal Health's
pharmaceutical technologies and services segment by affiliates of the Blackstone
 Expanded through acquisitions of companies like PCI, R.P. Scherer Corporation,
and Magellan Laboratories Inc.
 Went public in 2014 and listed on the New York Stock Exchange (NYSE) as CTLT
 Announced acquisition by Novo Holdings A/S for $16.5 billion in February 2024
 Scaling up production for obesity and diabetes drugs Wegovy and Ozempic to
meet increasing demand
 Strong financial performance, with consistent revenue growth and significant
investments in future growth initiatives
Outsourcing Counterparties
Sources: Global Data, Pharma Intelligence Center Drugs by Manufacturer Database
25
Leveraging Catalent
Major Obesity Drug Manufacturing Sources Optimizing the Supply Chain
Sources: Novo Nordisk, GlobalData, Pharma Intelligence Center
Facility Name
Source
Type
Manufacturing
Source
Drug
Novo Nordisk (Zealand, Denmark)
In-House
API
Wegovy
Novo Nordisk (Clayton, North Carolina)
In- House
Novo Nordisk (Hovestaden, Denmark)
In-House
Dose
Catalent (Bruxelles-Capitale, Belgium)
Outsourced
Novo Nordisk (Hovestaden, Denmark)
In-House
Packaging
Eli Lilly (Fegersheim, France)
In-House
Dose
Mounjaro Eli Lilly (Toscano, Italy)
In-House
Eli Lilly (Indianapolis, Indiana)
In-House
Novo Nordisk (Zealand, Denmark)
In-House
API
Ozempic
Novo Nordisk (Hovestaden, Denmark)
In-House
Novo Nordisk (Hovestaden, Denmark)
In-House
Dose Novo Nordisk (Centre, France)
In-House
Novo Nordisk (Clayton, North Carolina)
In-House
Novo Nordisk (Hovestaden, Denmark)
In-House
Packaging
Novo Nordisk (Clayton, North Carolina)
In-House
Note: through acquiring Catalent, Novo Nordisk is moving towards inorganically meeting the strong
demand for both Ozempic and Wegovy. The move accelerates the timeline given the alternative option is
through capital investment in existing and new facilities.
26
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
27
Public HCIT Company Performances
Return
YTD
Jan 2024
Company
19.37%
$ 327.97
$ 274.76
HCA Healthcare (HCA)
17.67%
$ 89.83
$ 76.34
GE HealthCare Technologies (GEHC)
16.38%
$ 67.32
$ 57.84
Boston Scientific (BSX)
-6.26%
$ 27.46
$ 29.29
Pfizer (PFE)
0.34%
$ 52.33
$ 52.15
Bristol-Myers Squibb (BMY)
12.13%
$ 530.22
$ 472.86
McKesson (MCK)
-26.05%
$ 7.95
$ 10.75
Veradigm (MDRX)
8.71%
$ 60.27
$ 55.44
Enovis Corp. (ENOV)
19.37%
17.67%
16.38%
-6.26%
0.34%
12.13%
-26.05%
8.71%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
January-24 February-24 March-24
HCA GEHC BSX PFE BMY MCK MDRX ENOV
2024 YTD Returns
HCA Healthcare, GE HealthCare Technologies, and
Boston Scientific have all exhibited strong positive
returns, indicating robust growth and investor
confidence in their respective businesses. On the
other hand, Pfizer and Veradigm are the only two to
post negative YTD returns. Veradigm is facing both
growth challenges and gross margin pressures while
Pfizer’s stock continues to drop due to stymied
revenue streams from its COVID-19 vaccine. Pfizer
currently sits well below its 200-day moving average.
Both Bristol-Myers Squibb and Enovis have
maintained stability with a marginal positive return,
failing to keep pace with the top 3 performers (HCA,
GEHC, and BSX). Additionally, McKesson and Enovis
Corp. have seen moderate to positive returns,
demonstrating relative resilience and growth
potential within their respective segments of the
healthcare industry. Overall, these returns reflect the
diverse performance within the healthcare sector,
influenced by a range of factors including company
performance, industry dynamics, and broader market
conditions.
28
IT Expansion in Healthcare
HCIT Developments
Sector
Company Name
Company
Therapeutic Devices and Engineering
Medical Devices
Meditronic
Translational Medicines and Analytics
Biotech
Bristol Myers Squibb
Health Systems and Process Automation
Consumer HealthTech
Access Healthcare
Diagnostics and Laboratory Automation
Biotech
Bio-Rad Laboratories
Medicine IT and Supply Chain Innovation
Biotech
Teva Pharmaceuticals
Digital Platform and Data Management
Biotech
PCI Pharma Services
Healthcare and Treatment Devices
Medical Devices
Boston Scientific
Treatment and Billing Automation
Software & Data
Tebra
Healthcare Career and Recruitment
Software & Data
Relias
AI and Data Integration in Healthcare
Software & Data
ConcertAI
29
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
30
HCIT Current Events
Cybersecurity in Healthcare
The Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) has proposed a
comprehensive system for reporting cyber incidents across 16 critical sectors, following the Cyber Incident Reporting for
Critical Infrastructure Act of 2022. The proposed rule aims to establish a standardized framework for reporting cyber
incidents across critical healthcare sectors.
The healthcare sector, due to its importance
and historical targeting, would face expanded
reporting requirements under the rule.
Research indicates significant disruptions to
healthcare delivery due to ransomware
attacks, with the agency previously launching
the Ransomware Vulnerability Warning Pilot
to mitigate such threats. The goal is to balance
qualitative benefits and implementation costs,
focusing primarily on hospital reporting to
safeguard healthcare delivery.
 Significant short-term compliance costs
 Long-term benefits associated with improved
cybersecurity resilience and public trust
 Enhanced incident reporting can lead to more
efficient incident response processes and
damage mitigation
 Moderating risk of prolonged disruptions to
critical infrastructure and services
 Timely and transparent reporting of cyber
incidents
 Advancement of public trust and retention
The Need for
Cybersecurity
in Healthcare
Financial
Implications
Sources: Healthcare It News
31
18.9%
16.3%
14.4%
13.0% 12.8%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$0
$5
$10
$15
$20
$25
$30
$35
2022 2023 2024 2025 2026
Healthcare Cloud Spending ($B) Percent Change YOY
HCIT Current Events
Tech giants and private equity firms are increasingly investing in
healthcare software and IT, likely resulting in more M&A
activities. Startups are attractive targets due to their innovation
and market potential, leading to increased deal activity in the
healthcare tech space. This influx of investment signifies a
broader recognition of the immense value and growth
opportunities within the healthcare technology sector, driving
consolidation and competition among key players aiming to
capitalize on its potential.
Virtual Healthcare Non-Traditional Players and Startups
The surge in telehealth and virtual care's popularity is anticipated
to fuel a wave of M&A activities, highlighting their pivotal role in
shaping the evolving health tech ecosystem. With healthcare
software and IT navigating through dynamic landscapes
influenced by technological breakthroughs, regulatory shifts, and
a pronounced focus on digital health solutions, strategic M&A
endeavors are poised to redefine the future of healthcare
technology. Importantly, studies show that people are mostly
satisfied with their virtual experiences.
Telehealth Patient Satisfaction Healthcare Cloud Spending Projections
The Percent Change YOY is forecasted to slightly decrease year-over-year due to concerns
surrounding data security and healthcare integrity issues.
Sources: Single Care Blog
32
AI-Based System Reduces Claim Denials
Source: HealthcareITnews "AI-based system reduces claims denials for Community Medical Centers of Fresno"
Integration
&
Impact
AI System Streamlines Claims Processing and Enhances Efficiency at Community Medical Centers
 Over the last decade, payer tactics have escalated denials, intensifying the workload
 Historical workflows were insufficient, prompting a search for innovative solutions
 Initiated in late 2022, a vendor-suggested AI system was beta-tested to predict denials and assess recovery potential, using
Community Medical Centers' own data
 The system integrates directly with the existing EHR, eliminating the need for extra programming
Outcomes
Solution
Business Need
• Impact: Achieved a 22% reduction
in one type of denial and an 18%
reduction in another within the first
six months, translating to over 30 hours
per week of saved work for the follow-up
staff.
• Benefits: The AI tool not only
reduced the number of denials but also
optimized staff workflows, allowing for more
focus on appeal work and enhancing
overall operational efficiency.
• Key Takeaways: Ensure staff buy-
in and introduce new tools gradually.
Select AI technologies that align with
your specific needs and are trained on
relevant data to truly benefit from the AI's
capabilities.
 Strategy: Adopted an AI-
based system offered by their
clearinghouse vendor, designed to predict
denials before claim submission and score
incoming denials by their probability of
recovery.
 Implementation: The
system seamlessly integrated with the
existing EHR, requiring no additional
programming. It focused on predicting
specific types of denials and providing
actionable insights to address potential issues
preemptively and guide follow-up actions
effectively.
 Context: Community Medical
Centers of Fresno faces a continuous
struggle with claims denials, a common
issue in healthcare. The volume of
denials has increased due to payers
employing delay tactics, burdening the team
with additional workload.
 Objective: To efficiently
manage the heightened level of claims
denials by seeking innovative
solutions that streamline workflows,
improve denial management, and prevent
denials upfront, without adding complexity
to existing processes.
33
AI Nurses & Future of the Field
 Partners: Nvidia and Hippocratic AI
 Objective: Introduce generative AI
nurses to healthcare, enhancing
efficiency and accessibility
 Cost Comparison: AI nurses work
for $9/hour vs. U.S. Average
registered nurses' cost of $38/hour,
which is a 76% decrease in wage
cost
 Operational Savings: Significant
reduction in labor costs for
healthcare
Collaboration
Overview +
Impact
Industry
Context
 Nurse Strikes: Over 32,000
nurses striked in 2023,
highlighting workforce challenges
 AI as a Solution: Addresses
worker shortages predating the
COVID-19 pandemic
Future of
Healthcare AI
Market
Response &
Testing
 Validation: Tested by
thousands of nurses and
hundreds of doctors.
 Adoption: Currently being
tested by over 40 healthcare
providers nationwide
 Cost of Healthcare Access: Trending
towards zero due to scalable AI
solutions
 Ethical Consideration: Adheres to
"first, do no harm" principle,
engaging humans when necessary
 Addressing Shortages: Aims to
mitigate the projected global shortfall
of 10 million health workers by 2030,
particularly in underserved areas
Innovative
Patient
Interaction
 Emotional Connection
Optimization: Utilizing Nvidia's AI
for "super-low-latency voice
interactions" enhances patient
engagement by making conversations
with AI healthcare agents more
natural and responsive, which is
critical for building trust and rapport
in a clinical context
 Inference Latency Improvements:
Every 0.5-second improvement in the
AI's response time can increase
patient emotional connection by 5-
10%, showcasing the importance of
speed in patient-AI communication
for effective healthcare delivery
Source: Business Insider "Nvidia's new AI nurses treat patients for $9 an hour"
34
Telemed Market Discussion
Trends
 Telemedicine is projected to have a compound annual
growth rate (CAGR) of 24.0% from 2023 to 2030, as
global market size will reach $83.5 billion in 2022
 Telemedicine’s innovative model will help tackle the
shortage of healthcare providers in rural areas,
particularly in countries such as China and India
 Leading providers have obtained patents for their
technologies, indicating potential for augmented
innovation and competition in the field
 There have been enormous efforts to make changes to
telehealth laws, and some states have passed laws to
make payment parity requirements permanent
Risks &
Uncertainties
 The industry faces regulatory burdens, reimbursement
issues, and technological challenges, which are critical to
address for continued growth
 There is concern regarding the uncertainty surrounding
virtual care reimbursement, as well as the potential
impact of evolving regulatory and legal frameworks on
telehealth solutions
 As telemedicine gains further traction worldwide,
competition is will intensify, as companies are striving to
gain market share in an emerging industry.
 The future of telehealth is facing uncertainties due to the
evolving post-pandemic legal, legislative, and regulatory
environment, as well as economic and restructuring
challenges in the industry
Sources: McKinsey “Telehealth: A quarter-trillion-dollar post-COVID-19 reality”
Virtual Visit Dollars Saved ($bn)
$1250 $1004
$35
$165
$35
$12
~$250bn of all Medicare, Medicaid, and Commercial
Outpatient spend could be virtualized
20%
ED/UCs
33%
Office Visits
35%
HH Services
2%
Tech-enabled
Med Admin
% of visits per category virtualized
35
Ambience Healthcare $70M Series B
Company
Description
 Ambience Healthcare’s mission is to supercharge clinicians from breakthrough
generative AI technology. The Ambience AI operating system consists of a
holistic suite of applications, which helps to alleviate clinician burnout, improve
overall system efficiency, and enable high-quality care.
 The company’s flagship product, Autoscribe, offers state-of-the-art speech
recognition, real-time documentation, and custom-built AI to embed into EMR
workflows and generate notes within seconds and customize to individual
preferences to reflect each provider's style and voice.
Series B Financing
 Ambience Healthcare has raised $70M of Series B primarily from OpenAI and Kleiner Perkins on
February 6, 2024, putting pre-money evaluation at $230M. Optum Ventures, Memorial Hermann
Foundation, Andreessen Horowitz and several undisclosed investors also participated in the round.
 The recent funding will accelerate the product roadmap, build dedicated teams for health system partners,
and further develop AI foundation models for medicine. The platform covers a wide range of ambulatory
specialties and subspecialties, including cardiology, oncology, pediatrics, and emergency care.
Major Customers
Core Products & Specialties
Founded
Industry
Headquarters
Status
2020
Healthcare IT
San Francisco, CA
Privately Held
AutoScribe - AI medical scribe
AutoCDI - coding and compliance
AutoAVS - after-vist summaries
AutoRefer - handoffs within specialists
AutoPrep intelligent pre-charting
Sources: TechCrunch, Pitchbook
36
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
37
12/31/22
3/31/23
6/30/23
9/30/23
12/31/23
Current
Quarterly Metrics
2.90bn
2.91bn
3.50bn
2.88bn
3.06bn
3.24bn
Market Cap
3.17bn
3.23bn
3.83bn
3.31bn
3.49bn
3.67bn
Enterprise Value
13.87
--
--
--
--
--
Trailing P/E
21.98
24.1
28.99
20.12
21.14
22.73
Forward P/E
--
1.88
3.87
--
--
1.9
PEG Ratio (5yr expected)
0.74
1.85
2.19
1.76
1.83
1.92
Price/Sales
0.85
0.85
1.02
0.83
0.89
0.96
Price/Book
7.75
7.94
8.94
7.94
7.67
2.22
Enterprise Value/Revenue
56.75
116.51
101.4
92.78
50.96
22.32
Enterprise Value/EBITDA
Enovis Healthcare Profile
$60.21
Current Price
$43.04 - $66.14
52 Week Range
154,423
Daily Trading Volume
3.24B
Market Cap (USD)
2.06
Beta
--
PE Ratio (TTM)
-1.00
EPS (TTM)
2
4 5
2
5
6
4
1
1
0
2
4
6
8
10
12
14
Jan Feb Mar
Sell
Underperform
Hold
Buy
Strong Buy
Enovis (ENOV) Bank Recommendations
Sources: Yahoo Finance
38
Enovis Healthcare Consolidated Balance Sheet
2020
2021
2022
2023
Consolidated Balance Sheet ($th)
$ 7,351,549
$ 8,515,912
$ 4,273,248
$ 4,509,334
Total Assets
$ 3,763,675
$ 3,854,479
$ 823,447
$ 1,088,633
Total Liabilities Net Minority Interest
$ 3,587,874
$ 4,661,433
$ 3,449,801
$ 3,420,701
Total Equity Gross Minority Interest
$ 5,747,556
$ 6,696,003
$ 3,488,085
$ 3,884,556
Total Capitalization
$ 3,543,387
$ 4,617,378
$ 3,448,085
$ 3,418,392
Common Stock Equity
$ 178,925
$ 78,485
$ 75,540
$ 70,252
Capital Lease Obligations
$ (1,434,600)
$ 1,529,092
$ 353,770
$ 230,136
Net Tangible Assets
$ 550,171
$ 1,279,695
$ 229,824
$ 526,912
Working Capital
$ 5,774,630
$ 6,703,704
$ 3,707,364
$ 3,884,556
Invested Capital
$ (1,434,600)
$ 1,529,092
$ 353,770
$ 230,136
Tangible Book Value
$ 2,410,168
$ 2,164,811
$ 334,819
$ 536,416
Total Debt
$ 2,134,175
$ 1,406,074
$ 234,984
$ 429,973
Net Debt
$ 39,499
$ 52,083
$ 54,229
$ 54,597
Share Issued
$ 39,499
$ 52,083
$ 54,229
$ 54,597
Ordinary Shares Number
Enovis exhibits a solid foundation
and financial position as depicted by
its balance sheet. With a significant
total asset base, the company
demonstrates substantial resources
at its disposal. Its total liabilities,
while present and notable, are
relatively lower compared to its
assets, indicating a favorable debt-
to-asset ratio. Despite carrying this
notable level of debt, Enovis
maintains a solid foundation of
tangible assets, suggesting stability
and operational support.
Otherwise, the company’s liquidity
positions Enovis well to seize
growth opportunities and withstand
potential economic challenges in the
dynamic healthcare technology
sector. Enovis' balance sheet
highlights its ability to effectively
manage its capital structure, with a
significant portion of equity
financing contributing to its overall
financial health.
Overview
Sources: Yahoo Finance
39
2020
2021
2022
2023
TTM
Consolidated Income Statement ($th)
$ 1,120,700
$ 1,426,188
$ 1,563,101
$ 1,707,197
$ 1,707,197
Total Revenue
$ 517,060
$ 648,513
$ 693,718
$ 716,418
$ 716,418
Cost of Revenue
$ 603,640
$ 777,675
$ 869,383
$ 990,779
$ 990,779
Gross Profit
$ 653,041
$ 831,789
$ 960,041
$ 1,039,153
$ 1,039,153
Operating Expense
$ (49,401)
$ (54,114)
$ (90,658)
$ (48,374)
$ (48,374)
Operating Income
$ (52,824)
$ (29,112)
$ (24,052)
$ (19,749)
$ (19,749)
Net Non-Operating Interest Income Expense
$ (16,781)
$ (38,555)
$ 112,641
$ 995
$ 995
Other Income Expense
$ (119,006)
$ (121,781)
$ (2,069)
$ (67,128)
$ (67,128)
Pretax Income
$ (44,579)
$ (19,528)
$ 36,120
$ (13,289)
$ (13,289)
Tax Provision
$ 42,625
$ 71,657
$ (13,292)
$ (33,261)
$ (33,261)
Net Income Common Stockholders
$ 42,625
$ 71,657
$ (13,292)
$ (33,261)
$ (33,261)
Diluted NI Available to Com Stockholders
$ 1
$ 1
$ (0)
$ (1)
$ (1)
Basic EPS
$ 1
$ 1
$ (0)
$ (1)
$ (1)
Diluted EPS
$ 45,589
$ 51,141
$ 53,168
$ 54,495
$ 54,393
Basic Average Shares
$ 45,589
$ 51,141
$ 53,168
$ 54,495
$ 54,393
Diluted Average Shares
$ (66,182)
$ (62,799)
$ (71,178)
$ (65,709)
$ (65,709)
Total Operating Income as Reported
$ 1,170,101
$ 1,480,302
$ 1,653,759
$ 1,755,571
$ 1,755,571
Total Expenses
$ 42,625
$ 71,657
$ (13,292)
$ (33,261)
$ (33,261)
Net Income from Continuing & Discontinued Operation
$ (67,078)
$ (74,501)
$ (127,059)
$ (34,585)
$ (34,585)
Normalized Income
$ 52,824
$ 29,112
$ 24,052
$ 19,749
$ 19,749
Interest Expense
$ (52,824)
$ (29,112)
$ (24,052)
$ (19,749)
$ (19,749)
Net Interest Income
$ (66,182)
$ (92,669)
$ 21,983
$ (47,379)
$ (47,379)
EBIT
$ 180,047
$ 170,250
$ 241,693
$ 169,721
$ 169,721
EBITDA
$ 374,137
$ 502,514
$ 600,309
$ 632,835
$ 632,835
Reconciled Cost of Revenue
$ 246,229
$ 262,919
$ 219,710
$ 217,100
$ 217,100
Reconciled Depreciation
$ (77,573)
$ (106,874)
$ (39,722)
$ (54,369)
$ (54,369)
Net Income from Continuing Operation Net Minority Interest
$ (16,781)
$ (38,555)
$ 110,553
$ (24,668)
$ (24,668)
Total Unusual Items Excluding Goodwill
$ (16,781)
$ (38,555)
$ 110,553
$ (24,668)
$ (24,668)
Total Unusual Items
$ 196,828
$ 208,805
$ 131,140
$ 194,389
$ 194,389
Normalized EBITDA
$ -
$ -
$ -
$ -
$ -
Tax Rate for Calcs
$ (6,286)
$ (6,182)
$ 23,216
$ (4,884)
$ (4,884)
Tax Effect of Unusual Items
Enovis Healthcare Consolidated Income Statement
Revenue expected in the range of
$2.05 billion to $2.15 billion in 2024.
Double-digit growth projected for
Recon segment against a normalized
market backdrop, with stable P&R
growth in the low to mid-single
digits.
Anticipated underlying margin
improvement of at least 50 basis
points in the core business, along
with a $70 million to $75 million
contribution from Lima, resulting in
estimated adjusted EBITDA of $365
million to $380 million.
Adjusted earnings per share
forecasted to be $2.50 to $2.65, with
an adjusted tax rate of
approximately 21%.
Enovis demonstrated strong
financial performance in 2023, with
strategic initiatives positioning the
company for continued growth and
value creation in 2024.
Overview
Sources: Yahoo Finance
40
2020
2021
2022
2023
TTM
Consolidated Cashflows ($th)
$ 301,935
$ 356,099
$ (55,861)
$ 134,988
$ 134,988
Operating Cash Flow
$ (175,079)
$ (320,476)
$ (176,388)
$ (242,467)
$ (242,467)
Investing Cash Flow
$ (131,651)
$ 584,906
$ (465,127)
$ 127,797
$ 127,797
Financing Cash Flow
$ 101,069
$ 719,370
$ 24,295
$ 44,832
$ 44,832
End Cash Position
$ 59,377
$ 47,188
$ 31,360
$ 12,515
$ 12,515
Income Tax Paid Supplemental Data
$ 104,620
$ 85,487
$ 37,089
$ 16,328
$ 16,328
Interest Paid Supplemental Data
$ (114,785)
$ (104,237)
$ (105,450)
$ (122,223)
$ (122,223)
Capital Expenditure
$ 3,500
$ 745,179
$ 5,814
$ 1,776
$ 1,776
Issuance of Capital Stock
$ 860,681
$ 991,494
$ 515,000
$ 915,000
$ 915,000
Issuance of Debt
$ (978,997)
$ (1,117,526)
$ (2,106,161)
$ (697,805)
$ (697,805)
Repayment of Debt
$ 187,150
$ 251,862
$ (161,311)
$ 12,765
$ 12,765
Free Cash Flow
Enovis Healthcare Consolidated Cashflows
Enovis is generating positive
operating cash flows, while also
investing in strategic initiatives to
support growth (like their
acquisition of LIMA) and managing
financing activities to maintain a
strong financial position. Enovis
demonstrated strong financial
performance in the fourth quarter
and fiscal year 2023, with net sales
growing by 11% and 9% year over
year, respectively.
Notably, organic growth contributed
significantly to this performance,
indicating the company's ability to
drive revenue without solely relying
on acquisitions.
However, Enovis is taking on large
sums of debt, and may be slightly
overleveraged. High levels of debt
could potentially constrain the
company's flexibility in pursuing
future investments, withstand
economic downturns, or navigate
unforeseen challenges.
Overview
Sources: Yahoo Finance
41
Enovis Financial Highlights
Adjusted Gross Margin: 58.6%, up 150 basis points YOY
Adjusted EBITDA margin: 18% in the fourth quarter
Fourth quarter sales: $455 million, representing an 11% YOY increase
Debt Coverage: ENOV's debt is well covered by operating cash flow (29%)
Forecasted EBITDA for 2024: Estimated range of $365 million to $380 million
Forecasted adjusted earnings per share for 2024: Range of $2.50 to $2.65
Although Enovis’ stock has been slightly volatile in the past 15
months, the revenue guidance's upper end signals confidence in
the company's ability to capitalize on market opportunities, while
the lower end hints at potential caution amid uncertain economic
conditions or industry challenges. Additionally, the inclusion of
recent acquisitions in the EBITDA estimate suggests strategic
expansion efforts, potentially bolstering the company's
competitive position in the market.
$40
$45
$50
$55
$60
$65
$70
1/6/23 4/6/23 7/6/23 10/6/23 1/6/24
Financial Performance and Expectation ENOV Stock Outlook
Sources: Filings
42
Enovis Valuation Analysis
ENOV
Revenue: $1.7bn
EV: $3.67bn
EV / Revenue: 2.14
EV/Revenue
14.8x
2.5x
2.1x
1.7x
1.4x
.x 2.x 4.x 6.x 8.x 10.x 12.x 14.x 16.x
Glaukos
LivaNova
Enovis
Integra LifeSciences Holdings
Envista Holdings
Peer Average 5.1x
In assessing the valuation of Enovis (ENOV), particularly in light of its negative earnings trajectory, another important valuation metric is
the value-to-revenue ratio. Enovis displays an enterprise value-to-revenue ratio of 2.1x, notably lower than the industry's average of 5.1x.
According to this metric, the discrepancy hints at a potential undervaluation, especially when factoring in Enovis’ current 10.2% YOY
sales growth. However, because other companies in the industry—and the overall market—have compounded positive earnings in recent
years (compared to Enovis’ compounding negative earnings), this suggests that investors are allocating a lesser premium for each dollar
of Enovis' revenue stream. Another potentially due to the steeper amounts of debt that Enovis has recently taken on as leverage.
-55.50% 13.50% 13.40%
-75.00%
-50.00%
-25.00%
0.00%
25.00%
Enovis Industry Market
Annual Earnings (Last 5 Years)
43
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
44
Bankruptcy Overview
Bankruptcy allows a company to restructure its debts and financial
obligations, potentially reducing the overall debt burden. This can
provide the company with a fresh start financially. By shedding
unprofitable assets and streamlining operations prior to filing for
bankruptcy, companies have already taken steps to improve its
financial position.
Chapter 7 Bankruptcy: Also known as "liquidation bankruptcy,"
Chapter 7 involves the sale of a debtor's non-exempt assets by a
trustee to repay creditors. Once the assets are liquidated, the
debtor is relieved of most debts, providing a fresh start financially.
Chapter 11 Bankruptcy: Referred to as "reorganization
bankruptcy," Chapter 11 allows businesses to restructure their
debts while continuing operations. It involves developing a plan to
repay creditors over time, often through renegotiating contracts,
selling assets, or seeking new financing.
Chapter 13 Bankruptcy: Primarily designed for individuals with
regular income, Chapter 13 allows debtors to reorganize their
debts and create a repayment plan spanning three to five years.
Debtors can retain their assets while repaying creditors according
to the plan approved by the bankruptcy court.
439
496 515
479 471
537 545
368
334
538
32
29
61
41 47
53
94
38
38
104
0
100
200
300
400
500
600
700
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Non-PE/VC Portfolio Company PE/VC Portfolio Company
In 2023, bankruptcy filings by private equity- and venture capital-backed
companies in the US soared to a record-high of 104, marking a 174%
increase from the 38 filings in 2022, while the overall US company
bankruptcy rate surged to 642 filings, a 73% rise from the previous year,
amidst challenges posed by inflation, higher interest rates, and reduced
pandemic-era stimulus spending.
Bankruptcy Overview US PE/VC Portfolio Company Total Bankruptcies
45
Rite Aid Teetering Bankruptcy
Source: Bloomberg "Rite Aid Advisers Rake in Millions Through Bankruptcy. Opioid Victims Brace For Nothing."
Rite Aid Corporation, once a major player in the pharmacy sector, is now
grappling with the repercussions of its bankruptcy amid mounting opioid
litigation. With over 1,600 opioid lawsuits unresolved, the company’s
bankruptcy filing has put a hold on litigation and prioritized repayment to
secured creditors like Bank of America and Wells Fargo, potentially leaving
opioid claimants without recourse.
The bankruptcy process has accumulated at least $200 million in advisory
fees, adding to the financial burden. Despite this, Rite Aid’s executive
compensation has remained high, with the CEO drawing $300,000 monthly
and anticipated exit payouts of up to $20 million. Liabilities have surpassed
assets by over $1 billion, signaling deep insolvency. As Rite Aid negotiates a
deal to avoid liquidation and contemplates closing over 600 stores, the
future for stakeholders, particularly opioid victims, remains uncertain. The
company is due in New Jersey court to potentially finalize its restructuring
plan, which may dictate the financial fate of the numerous parties involved.
2/28/21
2/28/22
2/28/23
Current
RADCQ - USD $
519mn
202mn
11.4mn
5.67mn
Equity Value
-52.02%
-60.99%
-94.40%
-50%
Market Cap Growth
6.41B
5.87B
6.06B
6.49B
Enterprise Value
0.02
0.01
0
0
Price/Sales
5.24
-0.31
-0.11
--
Price/Book
0.26
0.24
0.26
0.26
Enterprise
Value/Revenue
-116.52
-22.96
-13.94
-13.74
Enterprise
Value/EBITDA
RADCQ Debt Overtime
46
Invitae Bankruptcy
12/31/22
3/31/23
6/30/23
9/30/23
Current
NVTAQ – USD ($)
451.79M
351.91M
301.44M
163.68M
4.58M
Market Cap
1.62B
1.56B
1.54B
1.42B
1.26B
Enterprise Value
122M
117M
120M
121M
127.8M
Revenue
-2.91%
-5.12%
-11.78%
-9.21%
4.75%
YOY Revenue Growth
--
--
--
--
--
Forward P/E
0.83
0.62
0.53
0.31
0.01
Price/Sales
2.88
3.46
--
--
--
Price/Book
13.21
13.26
12.8
11.72
2.61
Enterprise Value/Revenue
-30.39
-10.61
-9.2
-1.56
-0.98
Enterprise Value/EBITDA
$-
$10
$20
$30
$40
$50
$60
1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24
Invitae Corporation is a medical genetics
company specializing in comprehensive
genetic testing services for various medical
conditions. Their tests identify inherited
genetic mutations, aiding in diagnosis,
treatment, and prevention decisions for
patients and healthcare providers.
Leveraging advanced technology and
expertise in genetics, Invitae aims to
improve healthcare outcomes globally by
providing accurate and actionable genetic
information. Additionally, the company
engages in research collaborations to
further understanding in the field of
medical genetics.
NVTAQ Historical Prices
47
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
48
Tenet Healthcare divesture of Assets
Asset Divesture
• Novant Health: Tenet sold three hospitals in South Carolina to Novant
Health for approximately $2.4bn in cash
• Announcement Date: November 17th, 2024
• Closed Date: February 01st, 2024
• Hospitals: Coastal Carolina Hospital, Hilton Head Hospital, and East Cooper
Medical Center
• The sale to Novant Health resulted in after-tax proceeds of approximately $1.75
billion, alongside a pre-tax book gain of $1.6 billion
Brief introduction of Tenet Healthcare (NYSE:THC)
• Company: Tenet Healthcare Corporation operates as a diversified healthcare
services company in the United States. The company operates through two
segments: Hospital Operations and Services, and Ambulatory Care
• Hospital Operations & Services: The company provides a wide range of
medical services through its hospitals, outpatient centers, and surgical
hospitals, and specializes in acute care, surgical services, and diagnostic
imaging
• Conifer Health Solutions : Tenet's subsidiary, offers revenue cycle
management and value-based care services, supporting the company's mission
to improve healthcare outcomes and accessibility
• Ambulatory Care: This segment includes the operations of the company’s
subsidiary USPI Holding Company, Inc. which held indirect ownership interests
in ambulatory surgery centers and surgical hospitals
Deal Rationale
• Strategic Rationale: Tenet Healthcare's recent hospital deals are part of a
broader strategy to optimize its portfolio, streamline operations and
concentrate on markets with more significant presence or strategic advantage
• Conifer Health Solutions: A key component of Tenet's strategy involves
leveraging its subsidiary, Conifer Health Solutions, to provide revenue cycle
management services. As part of the transactions, Conifer has expanded its
contracts to offer comprehensive revenue cycle management for the divested
hospitals, such as the 15-year contract in the South Carolina deal and the
partnership with Adventist Health
• These agreements not only ensure a continued revenue stream for Tenet but
also strengthen Conifer's position in the market as a provider of essential
healthcare services, enhancing the overall value of Tenet's portfolio
• UCI Health: Tenet sold four hospitals in Orange County and Los Angeles
County and its operations to UCI Health for approximately $975mn in cash
• Announcement Date: February 01st, 2024
• Closed Date: April 01st, 2024
• Hospitals: Fountain Valley Regional Hospital, Lakewood Regional Medical
Center, Los Alamitos Medical Center, and Placentia-Linda Hospital
• The transaction with UCI Health yielded about $800 million in after-tax
proceeds and is estimated to record a pre-tax book gain of $500 million
• Adventist Health: Tenet sold two hospitals in Central California to
Adventist Health for $550mn in cash
• Announcement Date: February 29th, 2024
• Closed Date: April 01st, 2024
• Hospitals: Sierra Vista Regional Medical Center, Twin Cities Community
Hospital
• The deal with Adventist Health brought in after-tax proceeds of around $450
million and is anticipated to result in a pre-tax book gain of approximately
$275 million.
49
FTC Blocks Novant’s Acquisition
Updated Service Area
65%
Target Hospitals
E. Lake Norman Market Analyst’s Commentary
GA
AL
MI
TN
ME
NY
PA
OH
WV
VA
FL
IN
KY
MS
NC
SC
North Carolina Service Area
Hospital Images
Novant would control approximately 65%
of the market share. That strong position
could’ve led to decreased competition,
which often results in higher prices and
reduced quality of care. By maintaining a
competitive landscape, the FTC's
intervention helps ensure that healthcare
remains accessible and affordable, while
also protecting the jobs and wages of
those within the healthcare sector.
Lake Norman Regional
Medical Center – Mooresville
Davis Regional Medical Center
in Statesville – Statesville
Before Others After
50
Major Mergers & Acquisitions
AI Revolution
Virtual Care
M&A
Increase
Non-
Traditional
Players' Entry
Startup-
Centric Deals
Focus on
Mental
Health
Expansion of
Remote
Monitoring
Monitoring reimbursement to new
healthcare centers is expected to drive
acquisitions of digital health companies
specializing in remote monitoring
solutions
There's a growing emphasis on mental
health, leading to increased interest in
digital health companies offering
teletherapy platforms, mental health
apps, and management tools
Artificial intelligence is becoming central
in healthcare, fueling a surge in
mergers and acquisitions for companies
leading AI integration in health tech
Startups are attractive targets due to their
innovation and market potential, leading to
increased deal activity in the healthcare
tech space
Tech giants and private equity firms are
increasingly investing in healthcare
software and IT, likely resulting in more
M&A activities
The rising popularity of virtual care is
expected to drive more M&A activities,
underscoring its importance in the
evolving health tech landscape. Overall,
the M&A environment in healthcare
software and IT demonstrates a dynamic
landscape shaped by technological
advancements, regulatory changes, and a
focus on digital health solutions.
Strategic M&A activities are expected to
be pivotal in shaping the future of
healthcare technology.
51
Major Mergers & Acquisitions
Financial Impact and Outlook
Agreement to Sell California Hospitals to
UCI Health
Sale of South Carolina Hospitals to Novant
Health
• For the year ended December 31, 2023, the four
hospitals and related operations included in the
sale to UCI Health generated revenues of
approximately $1 billion
• Pre-tax income from these operations was
approximately $29 million, with Adjusted EBITDA
of approximately $71 million
• The company estimates recording a pre-tax book
gain of approximately $500 million from this
transaction
• Additionally, Tenet expects a favorable impact on
income tax expense in 2024 of approximately
$190 million due to a reduction in interest
expense limitations resulting from these
transactions
• The company's Adjusted EBITDA for the year
ended December 31, 2023, is anticipated to
exceed the high end of its guidance range, driven
by strong surgical growth at United Surgical
Partners International (USPI)
• Further details on financial performance will be
provided during the announcement of fourth-
quarter and full-year results on February 8, 2024
• Tenet has entered into a definitive agreement with
UCI Health to sell four hospitals and related
operations in Orange County and Los Angeles
County, California, for approximately $975 million
in cash
• The hospitals included in this agreement are
Fountain Valley Regional Hospital, Lakewood
Regional Medical Center, Los Alamitos Medical
Center, and Placentia-Linda Hospital
• The hospitals included in this agreement are
Fountain Valley Regional Hospital, Lakewood
Regional Medical Center, Los Alamitos Medical
Center, and Placentia-Linda Hospital
• Tenet will retain net working capital related to
pre-closing operations, and Conifer Health
Solutions will continue to provide revenue cycle
management services during the transition period
• The transaction is expected to be completed in the
spring of 2024, subject to customary regulatory
approvals, clearances, and closing conditions.
• Tenet completed the sale of three hospitals in
South Carolina to Novant Health for approximately
$2.4 billion in cash. These Hospital, Hilton Head
Hospital, and East Cooper Medical Center
• After-tax proceeds from this transaction are
estimated to be approximately $1.75 billion
• After-tax proceeds from this transaction are
estimated to be approximately $1.75 billion
• The sale also involves affiliated physician
practices and other related hospital operations
• Conifer Health Solutions, a subsidiary of Tenet,
has entered an expanded fifteen-year contract to
provide comprehensive revenue cycle
management services for these operations
• The transaction has been completed, with the
proceeds contributing to Tenet's financial position
and strategic initiatives.
• Tenet Healthcare Corporation, a diversified healthcare services company based in Dallas, has recently undertaken significant
transactions involving the sale of hospitals in South Carolina and California
• These transactions reflect Tenet Healthcare's strategic efforts to optimize its portfolio, enhance financial flexibility, and focus on core
business areas, while also aligning with its mission to deliver quality healthcare services
52
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
53
By the end of 2023, HCA Healthcare, based in Nashville, Tennessee, operated 186
hospitals, up from 179 in 2019. In contrast, two other major for-profit health
systems, Community Health Systems (CHS) and Tenet Healthcare, have reduced the
number of hospitals they operate over the same period. HCA recently acquired
Trinity Regional Hospital Sachse in Texas, while Tenet finalized the sale of three
South Carolina hospitals to Novant Health and reached agreements to sell multiple
hospitals in California to UCI Health and Adventist Health. CHS is evaluating
potential sales that could generate over $1 billion in proceeds. Despite plans to sell
two North Carolina hospitals to Novant Health, CHS faces legal challenges from the
Federal Trade Commission. Over the past five years, CHS has seen its number of
hospitals decline from 102 to 71, HCA's has slightly increased, and Tenet's has
remained relatively stable at 61.
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
2/1/20
8/1/20
2/1/21
8/1/21
2/1/22
8/1/22
2/1/23
8/1/23
2/1/24
2021
2022
2023
(Dollars in millions)
Consolidated Data
83
80
71
Number of hospitals (at end of period)
13,28
9
12,83
2
11,90
2
Licensed beds (at end of period)(1)
11,62
9
10,93
6
10,23
4
Beds in service (at end of period)(2)
442,4
45
434,7
65
435,9
13
Admissions(3)
950,7
17
975,7
37
992,5
52
Adjusted admissions(4)
2,190,
405
2,052,
864
1,957,
536
Patient days(5)
5.00
4.70
4.50
Average length of stay (days)(6)
51.1
%
49.2
%
52.4
%
Occupancy rate (beds in service)(7)
$
12,
368
$
12,
211
$
12,
490
Net operating revenues
48.3
%
46.8
%
46.6
%
Net inpatient revenues as a % of net operating revenues
51.7
%
53.2
%
53.4
%
Net outpatient revenues as a % of net operating revenues
$
230
$
46
($133)
Net (loss) income attributable to Community Health Systems,
Inc.
Stockholders
1.9%
0.4%
(1.1)
%
Net (loss) income attributable to Community Health Systems,
Inc.
stockholders as a % of net operating revenues
$
1,
969
$
1,
466
$
1,
453
Adjusted EBITDA(8)
15.9
%
12.0
%
11.6
%
Adjusted EBITDA as a % of net operating revenues(8)
Liquidity Data
($131)
$
300
$
210
Net cash flows provided by (used in) operating activities
(1.1)
%
2.5%
1.7%
Net cash flows provided by (used in) operating activities as a
% of net operating revenues
($524)
($259)
($26)
Net cash flows used in investing activities
($514)
($430)
($264)
Net cash flows used in financing activities
Healthcare Services Performance Highlights - HCA
Tenet
HCA
HCA's Growth vs. CHS and Tenet's Strategic Divestitures
Source: HBR "Tenet Healthcare and Conifer Health Solutions."
54
Healthcare Services Performance Highlights - UMPC
o Operating loss of $198.3 million with a -0.7% operating margin.
o Revenue of $27.7 bn, representing gains in volumes, revenues, and
plan membership
o Expenses increased by approximately 10% compared to 2022, with a
notable rise in insurance claims expenses by 13.6%
o Inpatient activity grew by 3%, while outpatient and physician revenue per
workday increased by 10% and 9% respectively
Overview and Strategic Outlook:
o UPMC for Life insurance membership increased by 15,500 in
2023, maintaining leadership in Western Pennsylvania's
Medicare Advantage plans
o The healthcare system saw improvements in its investing and finance
activities, with a gain of $424.8mn compared to a loss in 2022.
o Total long-term obligations increased to $6.6bn, while days cash on
hand remained stable at 109 days
UPMC's Strategic Investments and Growth Initiatives:
o Despite the operating loss and increased expenses, UPMC's strategic
investments in new facilities like the Mercy Pavilion and ongoing
construction projects such as the UPMC Presbyterian facility indicate a
focus on growth and specialized care services
o The construction of the $1.5bn UPMC Presbyterian facility, set for
completion in 2026, reflects UPMC's commitment to expanding healthcare
infrastructure and meeting patient needs in Pittsburgh
UPMC's Financial Performance in 2023:
Trailing 12 Months Operating EBITDA
Net Patient Service Revenue Breakdown
Commercial
37%
Medicare
41%
Medical
Assistance
16%
Self-Pay/Other
6%
856
902
785
482 494
0
200
400
600
800
1000
22-Dec 23-Mar 23-Jun 23-Sep 23-Dec
*Leader in MA
plans
*dollars in
millions
Source: Fierce Healthcare & UMPC Filings
55
Company Performance - Mayo Clinic
Mayo Clinic's
Financial
Performance
in 2023:
• Reported revenue of $17.9 billion, showcasing a significant
increase from $16.3 billion in 2022.
• Achieved a "mission-sustaining" 6% operating margin,
surpassing expenses by over $1 billion
• Net medical service revenue grew by 8.8% year over year
to $15.1 billion, reflecting strong performance in core
healthcare services
• Engaged in a record-breaking 2,500 clinical trials during the
year, demonstrating Mayo Clinic's dedication to advancing
medical research and patient care
• Allocated $1.18 billion toward capital expenditure projects,
including the "Bold. Forward. Unbound. in Rochester"
initiative, Mayo Clinic's largest capital investment for
innovative healthcare technologies
• Continued investment in the multiuser Mayo Clinic Platform,
leveraging data to accelerate healthcare innovation and
improve patient outcomes
Innovation
and Strategic
Initiatives:
2,500
Clinical
Trails
Company Information
Rochester, MN
Headquarters:
1864
Founded:
Gianrico Farrugia
CEO:
Dennis E. Dahlen
CFO:
Key Metrics
7.94%
Net Income Margin:
7.44x
Interest Coverage Ratio:
1.05x
Current Ratio:
11.66x
EBITDA Coverage Ratio:
0.87%
WC as a % of Sales:
32%
Debt Ratio
Source: Fierce Healthcare & Mayo Clinic Filings
56
Company Performance - Trinity Health
Trinity Health's
Financial Turnaround
in 2024:
 Six-month operating losses reduced from $270.3 million in the previous year to $38.6 million, improving the operating margin
from -2.6% to -0.3%.
 Operational performance shifted from a loss in the first fiscal quarter to a gain in the most recent quarter, showcasing a positive
trajectory.
 Year-over-year bottom line improvement from a $70.5 million loss to a $669.1 million net income, signaling significant
financial progress.
Revenue Growth &
Strategic Initiatives:
 Six-month operating revenue increased by 11.3% year over year to $11.6 billion, driven by acquisitions such as MercyOne, North
Ottawa Community Health System, and Genesis Health System.
 Excluding acquisitions and divestiture impacts, revenues still grew by 5.5%, attributed to stronger patient volumes, strategic
payer negotiations, and an improved case mix.
 Trinity Health diversified its business segments and implemented cost management initiatives to achieve balanced performance
amid challenges
Acquisitions
FY 24
FY 23
(dollars in mn)
(38.6)
($270.3)
Operating Loss
$11,633.3
$10,456.8
Operating Revenue
-0.3%
-2.6%
Operating Margin
4.7%
2.9%
Operating Cash Flow
Margin
Results from Operations
*For the six month periods ended December 31
Source: Fierce Healthcare & Trinity Health Filings
57
Company Performance - Providence
Alaska
4%
Washington
31%
Montana
2%
Oregon
23%
California
35%
Texas/New Mexico
5%
Alaska
Washington
Montana
Oregon
California
Texas/New Mexico
$26.5bn
Hospitals
68%
Health Plans
11%
Physician and
Outpatient
13%
Long-term Care
6%
Other
2%
Hospitals
Health Plans
Physician and Outpatient
Long-term Care
Other
$26.5bn
Operating Revenue
by Patient Type
Operating Revenue
by Patient Type
Providence Health & Services, a not-for-profit Catholic healthcare system
headquartered in Renton, Washington, operates across seven states,
comprising 51 hospitals, over 800 non-acute facilities, and numerous
assisted living facilities in the western United States. Founded by the
Sisters of Providence in 1859, Providence merged with St. Joseph Health
in 2016, expanding its reach and impact in delivering healthcare services.
Providence’s revenue breakdown by facility/patient type reveals a
diversified revenue stream for the organization, with hospitals generating
the highest revenue, followed by health plans and outpatient services.
Although the company does not generate annual net positive earnings, it’s
revenue streams and continual growth suggests a balanced approach
consistent with other healthcare delivery companies, encompassing both
inpatient and outpatient care, as well as insurance services. The
significant revenue contribution from hospitals underscores the
importance of acute care services, while the presence of health plans
indicates a focus on insurance and managed care, contributing to the
overall financial stability of the organization.
Source: Providence
58
Envois Performance
Annual Details
Q4 Details
Financial Metric
$1.7bn
$455mn, up 11%
Sales
8%
8%
Organic Growth
58.20%
Increased by 150 basis points to 58.6%
Adjusted Gross Margin
16%, up 70 basis points
18%, down 30 basis points
Adjusted EBITDA Margin
$2.40
$0.79, up 10%
Adjusted EPS
9% YOY
10% compared to prior year
Earnings Growth
Strategic Highlights
Navigating Future Growth
 Envois corporation achieved double-digit
growth in the Recon segment, with strong
demand and share gains
 The company's P&R segment showed stable
growth in the low to mid-single digits, driven by
strong commercial execution
 Significant progress was made in reshaping
the business mix towards Recon and leveraging
EGX capabilities for operational productivity
and margin improvement
 The acquisition of Lima was highlighted
as transformative, providing opportunities for
sustained operating margin expansion and
strong double-digit organic growth momentum
across all segments
 Revenue expected in the range of $2.05 billion
to $2.15 billion
 Double-digit growth projected
for Recon segment against a normalized
market backdrop, with stable P&R growth in
the low to mid-single digits
 Anticipated underlying margin improvement of
at least 50 basis points in the core business,
along with a $70 million to $75
million contribution from Lima, resulting in
estimated adjusted EBITDA of $365 million
to $380 million
 Adjusted earnings per
share forecasted to be $2.50 to $2.65, with an
adjusted tax rate of approximately 21%
Merged
Recon
& EGX Synergies
Source: Envois "Enovis Announces Fourth Quarter and Full Year 2023 Results."
59
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
60
Value-Based Care (VBC)
$2.50 $3.03 $3.67
$4.44
$5.38
$6.52
$7.89
$9.56
$11.58
$14.02
$16.99
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
• Florida Blue partners with Sanitas to run a value-based primary care center in
Jacksonville, Florida
• Florida Blue has been operating for 80 years, serving all 67 Florida counties
• The clinic will service individuals 50 years and older and Medicare enrollees.
The companies will deal with changes brought by the ACA act.
• With this partnership, it’s important to cater to the elder population in Florida,
as there are 4.9mn adults, making up 21% of the population and 5mn
Medicare eligible people across the state of Florida
Deal Background
• Services include preventive and primary care, onsite pharmacy dispensing,
chronic condition management, mental health services, labs and imaging, and
community engagement activities
• Aims to incorporate behavioral healthcare into the practice, as there has been
a rise in behavioral healthcare since the COVID-19 pandemic. Overall, this has
created a demand for more virtual behavioral health services such as
telepsychiatry
Services Provided
Historically, healthcare services has run a FFS model; Healthcare practitioners
charge every time a patient comes in for a service, not accounting for the quality
of care. Cons of this system is that it allows for practitioners to manipulate the
system and keep on requesting patients for check ups, even if not
necessary/doctors will avoid litigations by consistently request to see patients
Now, with the VBC(value based care) model, it benefits not only patients, but
doctors as well, by measuring the health of the patient and their improvement
over time, allowing doctors have an incentive to care about the patients health
Medicare is a good space for the company, as Medicare enrollment increased
significantly following the “Silver Tsunami” boom
ACA act policies since Biden-Harris Administration has allowed eligibility for $10,
creating a 33% increase from last year
Selected Commentary – Why There is a VBC Shift
VBC Healthcare Services Market Size 2022-2032 (USD $bn)
Source: Fierce Healthcare
61
Shift from Inpatient to Outpatient Centers
• Hospitals end 2023 with year-high margins and shortened average
stays, with margins overall up by 15%
• On a single month basis, operating margin index rose from 3.2% to
4.6%
• The healthcare system has had to adjust their services to better meet
patients' preferences, as the average length of stay has dropped 4%
• Lower acute care is shifted outside the hospital setting
• Outpatient revenue has increased from 2022 to 2023
• Shift to outpatient centers due to reimbursement changes, patient
preference, increased availability for care to be delivered in these
settings, and further digitalization
hgfffd
Key Metrics Types of Outpatient Care
• There has been a shift to outpatient centers due to high number of
patient volume and longer stays results in higher operating costs for
hospitals = cannot keep up with high demand
• Since the pandemic, the shift to telehealth services catalyzes doctors to
target diseases earlier on, leading to shorter hospital stays
• Medical technology has significantly advanced, resulting in many
procedures in to be performed in outpatient setting such as minimally
invasive surgeries
• With VBC, it incentivizes more outpatient services due to healthcare
providers offering care in the most efficient and effective setting
Commentary
Emergency Departments
Also known as ERs. They provide a broad
range of emergency services to higher-acuity
patients
Specialized Outpatient Clinics
Facilities for providing care in specialist areas
such as cardiology and urology, among others
Ambulatory Surgery Center (ACS)
Facilities that specialize in same-day discharge
of patients post surgery. ASCs can be either
hospital-associated or freestanding
Primary Care Clinics
Patients are seen by their primary care
physician's. There has been a shift in the care
due to VBC, as patients see the doctor for a
shorter # of visits
Retail Clinics
Also known as convenient care clinics, these
are walk-in clinics offering preventative health
services and treatment for uncomplicated
illnesses
Source: Fierce Healthcare
62
NYC Accelerates Therapeutic Unit Construction Amid Rikers Closure
Initiative
Overview
 Construction of new therapeutic facilities at hospitals in Manhattan,
Brooklyn, and the Bronx, totaling $718mn
 Creation of over 350 outposted therapeutic housing beds for
incarcerated individuals
 Guarding of the facilities by the Department of Correction (DOC)
and partnership with NYC Health + Hospitals/Bellevue, Woodhull,
and North Central Bronx
 Funding of $14mn to support trauma-informed care, substance use
education, and other initiatives
 Aims to address challenges such as design security issues and
mayoral turnover to move the project forward
 Allocation of $14mn for trauma-informed care and substance use
education initiatives
 Expected benefits include improved access to specialized medical
care and enhanced safety for incarcerated individuals
 Emphasis on operational readiness through staffing and
preparation for post-construction operationalization
 - Overcoming challenges like design security issues
and mayoral turnover to advance the $718mn
project for new therapeutic facilities
 - Allocating $14mn towards trauma-informed care
and substance use education initiatives, enhancing
support for justice-involved individuals
 - Expected benefits include improved access to
specialized medical care, heightened safety, and
focused care for serious mental illness and
substance use disorder
 - Emphasis on operational readiness through
staffing and preparation for seamless post-
construction operationalization, ensuring effective
implementation of the new facilities
Conclusion
$718mn
Total Cost
Focus
Areas
Addressed
Other
Health
Challenges
Substance Abuse
Mental
Health
Key Components
and Impact
Source: Fierce Healthcare
63
Congress Passes Healthcare Spending Bill
 The Senate voted 75 to 22 to approve a $460
billion spending package, preventing a partial
government shutdown
 The package keeps a portion of the federal
government funded until September and received
bipartisan support.
 President Biden signed the measure, providing
financial stability and continuity for federal
agencies
 The bipartisan spending bill includes provisions
to mitigate cuts to physician Medicare pay and
delay disproportionate share hospital
(DSH) payment reductions
 It increases annual funding for community
health centers and outlines funding for federal
agencies like the Food and Drug
Administration and the Department of Veterans
Affairs
 Provider groups like the American Medical
Association and hospital groups welcome the bill
but express concerns about short-term patches
rather than comprehensive Medicare payment
reforms
 Provider groups applaud the bill's provisions to delay cuts and increase funding
for essential healthcare programs
 Some express disappointment that the bill only provides short-term solutions
and urge Congress to focus on permanent Medicare payment reforms
 The bill also includes extensions for incentive payments for certain healthcare
programs and funding for programs like the National Health Service Corps and
the Teaching Health Center Graduate Medical Education program
 Senate Finance Committee Chair Ron Wyden expresses disappointment over
missed opportunities for major healthcare reforms but supports the package for
providing certainty to health programs and providers
Projected US Healthcare Expenditures as a % of GDP
17.80% 17.80% 17.90% 18.00%
18.20%
18.50%
18.70%
18.90%
19.20%
19.40%
17.00%
18.00%
19.00%
20.00%
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
*Annual % Change 2023-2024 is 1.08%
Mixed Reactions to Bipartisan Healthcare Funding Bill
Bipartisan
Spending Package
Clears Senate,
Averts Governme
nt shutdown
What The Bill
Includes
Source: Fierce Healthcare
64
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
65
Major Bankruptcies
 Sientra, Inc. initiates Chapter 11 filing to enable the strategic sale of its business under Bankruptcy Code Section 363
 The company secures $22.5 million debtor-in-possession financing to support ongoing operations and facilitate the sale process
 Objective is to streamline the sale process, attract potential buyers, and ensure operational continuity during the transition
 Chapter 11 filing allows for an expedited sale while providing protection and support for the company's assets and operations
 Sientra aims to maintain customer service levels and product accessibility throughout the Chapter 11 process
 Despite the restructuring, Sientra remains committed to providing
quality service, continuous manufacturing, and access to its products
 Strategic sale under Chapter 11 reinforces Sientra's dedication to
customers and the sustainability of its business operations
 The focus remains on delivering innovative solutions and ensuring
customer satisfaction throughout the restructuring process
 Sientra engages reputable legal counsel such as Kirkland & Ellis LLP and
Pachulski Stang Ziehl & Jones to navigate the Chapter 11 process
 Financial advisors, including Stifel / Miller Buckfire, provide expertise in
financial restructuring and asset sales negotiations
 Expertise is leveraged to manage third-party motions, ensure compliance
with regulatory requirements, and optimize the sale process.
Sientra Submits to Bankruptcy
Legal & Financial Support
Financial Stability & Customer Focus
Winning Bidders & Consideration
Tiger Aesthetics,
LLC
Tiger Aesthetics Medical, LLC emerged successful in
bidding for certain assets related to Sientra's breast
reconstruction and augmentation business. They
agreed to pay $42.5 million in cash and assume
liabilities, including cure costs for contracts and all
warranties for breast implants sold prior to the closing
date
$42.5mn Nuance Intermediary, LLC won the bid for
substantially all of Sientra's assets used in its
BIOCORNEUM scar treatment business. They offered
$8 million in cash consideration and agreed to assume
certain liabilities, including cure costs for certain
contracts
$8mn
Nuance
Intermediary
LLC
Source: Bloomberg "Sientra Files for Chapter 11 Bankruptcy, Seeks Sale of Business."
66
Major Bankruptcies
Adventist Health Tillamook Shuts Down Three Doors
Crisis in
Healthcare
 The closure of three medical offices by Adventist Health in Oregon
exemplifies reflects a broader theme of operational challenges faced by
healthcare institutions in sustaining services amidst escalating provider
shortages
 These shortages are part of a national predicament, where 39.8% of
healthcare facilities see new hires leave within a year
 Additionally, the high turnover rates, with hospitals turning over 105% of
their staff over five years
17.80% 19.50%
25.90%
22.70%
20.70%
16.10% 16.70%
22%
19.90%
17.20%
CY2019 CY2020 CY2021 CY2022 CY2023
All Employees FT/PT Only
 Adventist Health Tillamook, based in California, has announced
plans to close three medical offices located in rural Oregon communities
 The decision comes after years of efforts to recruit
qualified medical providers to these areas, which have been challenging
despite collaborations with renowned recruiting firms
Breaking Down the Data
 National Turnover Trends: Hospital turnover has decreased by 2.0%, now at 20.7%,
though most hospitals hover around a 22.2% rate. Despite this decline, the median and
mode turnover rates remain higher, at 22.2%
 Variability by Size: Turnover rates range from 7.5% to 34.2%, indicating significant
differences based on hospital size
 Performance Extremes: The best-performing hospitals (top 10%) have turnover rates at
or below 16.2%, while the lowest performers (bottom 10%) see rates above 27.2%
Source: NSI "NSI National Health Care Retention & RN Staffing Report"
Hospital Turnover Rate
Hospital full/Part Time
Turnover
Hospital Turnover
Metric
14.00%
16.20%
90th Percentile
15.50%
18.80%
75th Percentile
17.50%
22.20%
Median
20.70%
24.80%
25th Percentile
23.20%
27.20%
10th Percentile
17.20%
20.70%
National
Average
67
Tenet Healthcare Profile
12/31/22
3/31/23
6/30/23
9/30/23
12/31/23
Current
Quarterly Metrics
5.28B
6.06B
8.26B
6.69B
7.67B
10.20B
Market Cap
19.16B
20.28B
22.58B
20.80B
21.66B
23.98B
Enterprise Value
9.55
15.72
21.25
14.26
17.25
17.87
Trailing P/E
8.22
10.67
14.14
10.11
12.25
16.13
Forward P/E
3.61
1.88
2.49
2.56
1.07
2.24
PEG Ratio (5yr expected)
0.29
0.34
0.46
0.35
0.39
0.52
Price/Sales
4.04
5.3
6.7
4.98
5.24
6.35
Price/Book
3.84
4.04
4.44
4.11
4.03
1.17
Enterprise Value/Revenue
25.45
24.79
27.81
26.14
22.52
7.08
Enterprise Value/EBITDA
$102.50
Current Price
$51.04 - $104.71
52 Week Range
210,622
Daily Trading Volume
10.27B
Market Cap (USD)
2.07
Beta
17.99
PE Ratio (TTM)
5.71
EPS (TTM)
1
5 5
3
6
10 10
1
11
3 3
12
0
5
10
15
20
Dec Jan Feb Mar
Sell
Underperform
Hold
Buy
Strong Buy
Bank Recommendations
Bank Recommendations
68
Life Sciences
5
Performance Highlights
I.
8
Clinical Trial Updates
II.
10
Current Events
III.
18
Mergers & Acquisitions
IV.
Information Technology
27
Performance Highlights
I.
30
Current Events
II.
37
Company Case Study
III.
44
Bankruptcies
IV.
48
Mergers & Acquisitions
V.
Services
53
Performance Highlights
I.
60
Current Events
II.
65
Bankruptcies
IV.
69
Mergers & Acquisitions
V.
69
M&A Overview
Health System M&A
Northwell Health merging with Nuvance Health, forming a 28-
hospital nonprofit system
Tenet Healthcare's sell-off of hospitals to UCI Health and Adventist
Health
UCSF Health's acquisition of two San Francisco hospitals from
Dignity Health
Everside Health and Marathon Health merger
Merakey and Elwyn's called-off merger
Mercy's acquisition of Ascension Via Christi Hospital Health System
M&A
• Elevance Health's paused acquisition of BCBSLA.
• SCAN Group and CareOregon's mutual call-off of merger talks.
• CareSource's letter of intent to affiliate with Common Ground
Healthcare Cooperative.
Guthrie Clinic acquiring Our Lady of Lourdes Memorial Hospital
WellSpan Health's agreement to acquire Evangelical Community
Hospital
HCA Healthcare subsidiary's purchase of Trinity Regional Hospital
Sachse
UT Health East Texas acquiring six urgent care clinics.
Fulton County Hospital joining Baxter Health
Ascension Health's sale of Our Lady of Lourdes Memorial Hospital to
Guthrie Clinic
Hospital Ownership Changes & Acquisitions
Healthcare Payer Affiliations & Mergers
Source: Fierce Healthcare "Nonprofits Aspirus Health, St. Luke's Duluth close 19-hospital merger."
70
Healthcare Services M&A
 Aspirus Health and St. Luke's Duluth signed a definitive agreement for
their merger after announcing a letter of intent
 The merger closed successfully, creating a 19-hospital entity spanning
Minnesota, Wisconsin, and Michigan's Upper Peninsula
 Aspirus will make several capital investments in St. Luke’s care
facilities, including committing capital to expand care offerings for the
St. Luke’s network and capital for strategic investments, which will
include maintaining the shared residency program St. Luke’s has with
the University of Minnesota Medical School in Duluth
Aspirus Health & St. Luke's Duluth Merger
Regulatory Compliance & Future
Strategic Integration
Financial & Operational Impact
 Regulatory Approval: Merger subjected to
thorough scrutiny, including review by
Minnesota's Attorney General
 Employment Integration: Commitment to
honoring existing contracts and retaining St.
Luke's employees ensures smooth transition
 Growth Potential: Merged entity poised to
leverage resources for accelerated investment,
aligning with industry trends towards
consolidation for enhanced efficiency and
service delivery
 Strategic Vision: Merger aimed at improving
care collaboration, patient outcomes, and
resource distribution
 Operational Changes: Integration under
Aspirus brand ensures continuity, with St.
Luke's co-presidents retaining roles for
stability
 Community Impact: Patients receive
seamless care from existing providers,
benefiting from increased access to capital
and technology platforms
 Financial Commitment: Aspirus Health
committed to investing $300 million into St.
Luke's strategic projects over eight years as
part of the merger
 Operational Scale: The combined
organization now includes 130 outpatient
locations, almost 14,000 employees, and
various healthcare services
Source: Fierce Healthcare "Nonprofits Aspirus Health, St. Luke's Duluth close 19-hospital merger."

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Healthcare Feb. & Mar. Healthcare Newsletter

  • 1. CONFIDENTIAL WALL STREET MASTERMIND Sector Spotlight: February & March Recap Sector Leads | Media & Entertainment Jagger Lambert | Media & Entertainment James Conception | Technology Pan | Technology Teddy | Healthcare Nina Chhor | Healthcare Joe Ames
  • 2. CONFIDENTIAL WALL STREET MASTERMIND Healthcare Contributors | Group Lead Nina Chhor | Group Lead Joe Ames | Analyst Lance Heinan | Analyst Wyatt Rose | Analyst Shreyas Sridharan | Analyst Lucas Scicluna
  • 3. 3 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 4. 4 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 5. 5 Amylyx Pharmaceuticals disclosed on 3/8 that their Relyvrio product failed to meet the trial’s main or secondary goals The Cambridge-based biotechnology company was constructed entirely around Relyvrio, which had received approval from the Food and Drug Administration in fall of 2022. Wall Street analysts projected that Relyvrio could achieve annual revenues of $1b+ at its peak Although the FDA wanted an additional, larger-scale study, pressure from ALS patients and activists led the agency to backtrack, ultimately paving the path for its previous approval in 2022 As of September 2023, nearly 4,000 of roughly 30,000 (12.5%) US ALS patients were on Relyvrio Amylyx Pharmaceuticals’ ALS Drug Fails Company Information Cambridge, MA Headquarters: 2013 Founded: Joshua Cohen & Justin Klee CEO: James Frates CFO: AMLX Ticker: $185.7m Market Cap: $371.4m Total Cash: $380.1m LTM Sales: $- $5.00 $10.00 $15.00 $20.00 $25.00 2/1/2024 2/15/2024 2/29/2024 3/14/2024 AMLX Post Feb-1 Stock Performance Data release date ~82% plunge in stock price Firstly, the move represents a critical strike to Amylyx, whose fate rested firmly in the hands of its Relyvrio product. Co-founders and Co-CEOs Joshua Cohen and Justin Klee pledged to the FDA that they would pull their product from the market should confirmatory tests fail – a decision which is expected to come within the next eight weeks Perhaps the larger issue comes for the state of the US ALS treatment market where only three other treatments remain. Of the three, the Biogen treatment is targeted towards a small portion of the population with certain genetic mutations, while the other two (Radicava and Riluzole) have shown modest effects on either function or survival Ultimately for Amylyx, the signs point towards a significant restructuring, as the company’s $371m in cash may not even keep the lights on through the end of the calendar year Relyvrio Fails Confirmatory Trial Commentary Sources: Biopharma Dive,
  • 6. 6 NodThera’s Parkinson’s Update Company Information Boston, MA | Edinburgh, UK Headquarters: 2016 Founded: Dr. Alan P. Watt CEO: Dr. Thomas Jaecklin CMO: Private Ticker: Approval News Sources: Biopharma Dive, Crunchbase, NodThera’s Website, Fierce Biotech NodThera focuses on targeting the NLRP3 inflammasome – which are believed to be a key driver of many chronic diseases such as: 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 NT-0796 Parkinson's NT-0796 Obesity NT-0249 Neuro Development Candidate Additional Peripheral/ Neuro Development Candidates Discovery IND-Enabling Phase 1 Phase 2 Current Portfolio NodThera’s NT-0796 was found to reduce key neuroinflammatory and inflammatory biomarkers in Parkinson’s disease patients to the levels found in healthy elderly controls over a period od 28 days NT-0796 is taken orally, and inhibits the NLRP3 inflammasome protein complex, which is amongst proteins that, when misfolded, is believed to form toxic aggregates that activate inflammasomes, leading to nerve cell damage and death Experts believe that these agents could be useful in treating a variety of neurodegenerative diseases, MASH (liver illness), and even obesity itself. NT-0796 was shown back in February to cause weight loss at nearly the same rate as Wegovy in obese mice (19% vs 21.5%) The news could put NodThera on the radar of larger pharmaceutical companies looking to deploy their war chests on orphan drug makers CNS Heart GI Skin Liver Kidney Lung Pancreas Bone/Joints Alzheimer’s, Parkinson’s, Huntington’s, Stroke/TBI Alzheimer’s, Parkinson’s, Huntington’s, Stroke/TBI IBS Urticaria, Hidradenitis, Suppurativa Hepatitis, NASH Nephritis, Lupus Nephritis, CKD Severe Asthma, Cystic Fibrosis Pancreatitis, Diabetes Osteoarthrosis, Osteopenia, Gout
  • 7. 7 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 8. 8 Upcoming Clinical Trials Description Current Stage Product Company Small interfering RNA treatment for Transthyretin amyloidosis cardiomyopathy Phase 3 HELIOS-B TIGIT Antibody treatment for Lung Cancer Phase 3 Skyscraper-01 Antibody-drug conjugate treatment for Lung Cancer Phase 3 Evoke-01 Small molecule (BTK inhibitors) treatment for Multiple Sclerosis Phase 3 Gemini-1 & Gemini-2 Gene therapy treatment for Duchenne muscular dystrophy Phase 3 NCT04281485 Base editing CRISPR treatment for Sickle Cell Disease Phase 1-2 Beacon CAR T-cell therapy for relapsed/refractory large B- cell lymphoma Phase 2 ALPHA2 Investigational allogeneic MukltiTAA T-cell therapy for post-transplant acute myeloid leukemia Phase 2 ARTEMIS Sources: Biopharma Dive, ClincialTrials.gov, CGTLive
  • 9. 9 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 10. 10 J&J Legal Controversies JNJ PBM Lawsuit Overview Opioid Deaths per 100,000 0 5 10 15 20 25 30 35 1998 2002 2006 2010 2014 2018 2022 Heroin Commonly Prescribed Opioids Other Synthetic Opioids Any Opioid First Wave (1998 – 2010) Rise in Prescription opioid overdoses Second Wave (2010 – 2014) Rise in heroin overdoses Third Wave (2014 – 2019) Rise in fentanyl overdoses Fourth Wave (2019-) Rise in psychostimulant drugs Commentary • Aggressive marketing and sales tactics by pharmaceutical companies promoted the widespread use of opioids for chronic pain, leading to a surge in prescriptions and subsequent misuse • The liberal prescribing practices contributed to a growing public health crisis as overdoses from prescription opioids, like OxyContin and Vicodin, soared • As prescription opioid regulations tightened and sales were scrutinized, users turned to more readily available substances like heroin. The illicit sale of fentanyl, often misrepresented or mixed with other drugs, surged in the market, leading to a catastrophic rise in overdose deaths due to its extreme potency Employee Health Plan JNJ negotiates prices with Express Scripts and other PMB's Pays for Provides to JNJ is being accused of failing to negotiate lower prices on behalf of their employee health plan, causing employees to pay more Opioid Settlements Companies offering employee health plans have a fiduciary duty to those plans in their negotiations with PMBs. That is to say that they must ensure that they gain the most favorable terms for their employees: • On top of their PMB lawsuit issues, JNJ recently settled a legal suit brought by Washington State for ~$149.5mn in accordance with their role in fueling the ongoing Opioid Epidemic • $123.3 of this $149.5mn will be used to combat the current epidemic (including fentanyl) • The entire sum will be paid in one year, with the proposed JNJ settlement featuring $98.9mn paid over the course of nine years Sources: Washington State Attorney General’s Report, US Center for Disease Control Reports
  • 11. 11 o Oncology R&D Spend ($b) Oncology’s Research Boom Commentary $129.0 $148.0 $167.0 $189.0 $196.0 $218.0 $251.0 $295.0 $340.0 $375.0 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Projected CAGR: 10.5% Current CAGR: 11.1% R&D Spend CAGR by Cancer Type (2018 – 2022) 62% 23% 23% 17% 16% 12% 12% 10% 5% 4% 0% SCLC Ovarian Kidney Multiple Myeloma NSCLC Breast Other Prostate NHL CRC CML High growth attributed to expansion of PD-1 Inhibitors Account for 53% of all oncology sales • Oncology has proven to be an area of extensive emphasis for life science investment. Companies rely on revenue from other drugs in order to fund high-risk, high-reward projects such as those in oncology, gene therapy, and other rare diseases known as orphan drugs • Following President Biden’s State of the Union address, he doubled-down on his desire to strengthen the Price Negotiation component of the Inflation Reduction Act • This would result in lost revenue (either via reduced prices or excessively punitive taxes) which would impact the ability of large pharmaceutical companies to invest in R&D • The move likely will drive R&D and improvements in rare diseases towards VC-backed startups Sources: Biopharma Dive
  • 12. 12 Oncology’s Research Boom Valuation Key Product & Treatment Target Acquirer $43bn ADCETRIS, PADCEV, TIVDAK, TUKSYA $21bn ADCs for Breast Cancer $10bn ADCs for Ovarian Cancer Mega Deals ― Larger deals in oncology represent the premiums that the products could yield for these companies when they come to market ― Gaining approval for a specific type of cancer medicine can be thought of similar to the Arms Race during the Cold War Defying the Market ― 2023 was a rough year for M&A, but oncology and pharmaceutical M&A as a whole prevailed ― Q4 2023 saw $84.2b of total deal value within the pharmaceutical landscape as a whole Moving Beyond COVID ― Many pharmaceutical companies have been forced to look for revenue streams beyond the COVID vaccine ― Many made the mistake of selling the vaccine on a demand versus a government-contract basis Major Oncology Deals Since 2020 Sources: Biopharma Dive, Pharmaceutical Technology 0 5 10 15 20 25 30 $- $10.0 $20.0 $30.0 $40.0 Q3 2021 Q4 Q1 2022 Q2 Q3 Q4 Q1 2023 Q2 Q3 Q4 Deal Volume Deal Volume ($b) Deal Value Deal Volume Immuno-Oncology M&A Pfizer – Seagen ($43b) Commentary
  • 13. 13 President Biden’s Proposal to Strengthen Medicare’s Pricing Power Support for Current IRA Provisions Strengthening Provisions 84% 82% 81% 87% 89% 89% 86% 79% 77% 70% 75% 80% 85% 90% Capping monthly O.O.P costs for Insulin Annual limit on O.O.P. prescription drug costs Authorize Fed. Gov. to negotiate some drug prices Total Democratic-Leaning Republican-Leaning Commentary Sources: Biopharma Dive, Kaiser Family Foundation More Qualifying Drugs ― President Biden looking to expand government- negotiable drug count from 20 to 50 per annum Increased O.O.P. Cap ― Expand current cap to $2,000 on O.O.P expenses to private insurers ― Also looking to extend a $2 cost-sharing limit for high-value generic drugs • While the proposals are overwhelmingly popular with most polled Americans, analysts strongly doubt the ability of the President to get these provisions through a heavily-divided Congress • Pharmaceutical companies have argued that the existing provisions will handcuff their ability to innovate through production of new, higher-risk products • The argument of these large pharmaceutical companies is that they use profits from their most successful drugs to fund R&D for new projects • The current provision shave been challenged in court, with PhRMA and AstraZeneca already losing their initial bids and others making their appeals heard
  • 14. 14 Bayer Opts to Retain Monstanto Legal Troubles ― Monsanto’s Roundup, the most popular and profitable weed killer ever sold, has led to over $11B in legal payouts ― There are over 30,000 pending lawsuits against Roundup, including 4,000 multidistrict litigation cases in California Impulse Buy ― Werner Baumann had spent less than two weeks as CEO for Bayer when he extended the offer ― The deal came despite largescale skepticism from investors regarding Bayer’s plan to go into agribusiness to stabilize revenue Rising Leverage ― Following the Monsanto acquisition, Bayer’s debt skyrocketed from $15B to over $50B ― Bayer’s book value of equity dropped from $54B to $40B in June 2020 following legal settlements Commentary 1901 Monsanto founded in St. Louis, MO, by John Francis Queeny 1974 Monsanto brought glyphosate to market under trade name Roundup 1983 Monsanto scientists among first to genetically modify a plant cell 1993 Searle division filed patent for Celebrex, the first FDA-approved selective COX-2 inhibitor 1985 Monsanto acquired G.D. Searle & Company – a pharmaceutical and agriculture company 2000 Pharmacia spun off agro- business subsidiary into “new Monsanto” 1999 Monsanto agreed to merge with Pharmacia & Upjohn 2016 Werner Baymann becomes CEO of Bayer; makes bid for Bayer 10 days later 2018 Bayer closes acquisition of Monsanto for $63B 2018 Monsanto ordered to pay $289.2M in damages related to Roundup 2022 Analysts’ estimate total Roundup liability to Bayer between €5B and €25B 2023 Bill Anderson becomes CEO of Bayer in June; previously was CEO of Roche’s pharma division 2023 Bayer begins exploring potential spinoff of Monsanto in summer 2023 2023 In Q3 Bayer’s Net Debt/EBITDA ratio approaches 6x, up from over 3x in Q2 2023 Bayer opts to retain Monsanto in early March; opting to spend 2-3 years restructuring Sources: Wall Street Journal, Bloomberg, Macrotrends
  • 15. 15 Obesity Drug Planned Coverage $0.5bn $0.8bn $1.5bn $5.1bn $7.6bn $13.0bn $19.1bn $25.0bn $31.3bn $39.1bn $44.0bn $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E US Obesity Drug Market Projections ($bn) 1) Increase in commercial coverage 2) Significant mfg. capacity expansion 1) Increase in commercial penetration 2) Start of Medicare coverage 53% proj. CAGR 2022-2030 Sources: J.P. Morgan “The increase in appetite for obesity drugs” (November 2023), Fierce Healthcare “Demand for GLP-1 drugs is growing” (June 2023) Note: Planned coverage survey also included 7% of respondents per category who were unsure of the plan’s status regarding weight loss medications Commentary 43% 28% 22% 41% 28% 19% 49% 31% 20% 0% 10% 20% 30% 40% 50% 60% Currently Covered Considering Coverage Not Considering Coverage All Employer Health Plan Plan Coverage of Obesity Drugs • The market for obesity drugs continues to rise rapidly, and is expected to expand even further as more and more health plans opt to provide coverage • At the current rate, the main concern is how quickly and efficiently can the pharmaceutical companies produce these products • Major companies will soon follow incorporate inorganic growth to their GLP-1 production capabilities in efforts to meet the demand within the market
  • 16. 16 Analyst Consensus Projections Viking Therapeutics' GLP-1 Rise Company Information San Diego, California Headquarters: 2012 Founded: Brian Lian CEO: Gregory Zante CFO: VKTX Ticker: Public Market Information $8.28 – $99.41 52 Week Low/High: $77.35 Share Price: 94.3M Shares Outstanding: $8.69B Market Cap: 0.93 Short Ratio: Key Metrics 22.2x Price/Book (LTM) 7.0x Price/Book (2023) $362.1M Cash Balance $63.8M 2023 R&D Expense $(0.71) $(0.90) $(0.91) $(1.05) $(1.50) $(1.27) $(1.75) $(1.50) $(1.25) $(1.00) $(0.75) $(0.50) $(0.25) $- 2021A 2022A 2023A 2024E 2025E 2026E EPS History (Actual & Projections) Stock Performance Since February 1 $- $25.00 $50.00 $75.00 $100.00 2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024 VK2735 Phase II clinical trial results announced Stock rallies 120% VKTX announces $550M stock offering Stock drops 15% Sources: KoyFin
  • 17. 17 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 18. 18 Healthcare BioTech Acquisitions EV/Revenue EV/EBITDA Premium Price Per Share Purchase Price Target EBITDA Date Company Acquired Acquirer 97% $21.00 $2,000M 3/19/24 Fusion Pharmaceuticals AstraZeneca N/A N/A $800M 3/14/24 Amolyt Pharma AstraZeneca N/A N/A $90M 3/13/24 IFM Due Novartis 27% $32.50 $4,300M 2/12/24 CymaBay Gilead 18% € 68.00 €2,700M 2/5/24 Morphosys Novartis N/A $30.00 1700M 1/23/24 Inhibrx Sanofi 4% $43.00 $348M 1/17/24 Taro Pharmaceutical Sun Pharma N/A N/A $1,000M 1/9/24 Aiolos Bio GSK 105% $28.00 $2,000M 1/8/24 Ambryx Biopharma Johnson & Johnson 118% $23.00 $680M 1/8/24 Harpoon Therapeutics Merck & Co. N/A N/A $250M 1/8/24 Calypso Novartis Sources: Biopharma Dive
  • 19. 19 2024 2023 2022 2021 2020 2019 2018 Deal Value 3 11 26 15 9 10 11 < $500M 2 6 6 4 7 4 5 $500M - $999M 5 13 8 12 8 9 3 $1B - $4.99B 0 4 1 2 1 2 3 $5B - $9.9B 0 4 2 2 3 4 2 $10B+ 2024 2023 2022 2021 2020 2019 2018 Premium 2 5 5 4 2 1 1 0% to 24% 1 5 6 2 3 2 2 25% to 49% 0 5 4 3 4 6 6 50% to 74% 0 7 4 4 3 1 2 75% to 99% 2 6 7 3 5 6 2 100% + Healthcare BioTech Acquisitions Leading Facilitator ― Biopharma M&A has driven the vast majority of deal activity in an otherwise frozen market over the last year ― There is immense competition with orphan and specialty-drug markets At a Premium ― Premiums held strong in 2023 despite more difficult financing conditions and a tighter regulatory environment Crystal Ball ― New cause-based treatments such as CRISPR, GLP-1’s, , and CAR-T Cell Therapies will lead to even greater M&A competition ― Despite not being popular amongst analysts, the shift to cure-based treatments is likely to dominate the next decade of major players within healthcare – leading to weakened market position for traditional giants such as Pfizer and JNJ Commentary Sources: Biopharma Dive
  • 21. 21 Analyst Consensus Projections Novo Nordisk Company Overview Company Information Bagsvaerd, Denmark Headquarters: 1923 Founded: Lars Jorgensen CEO: Karsten Knudsen CFO: NVO Ticker: Public Market Information $75.56 - $138.28 52 Week Low/High: $126.46 Share Price: 4.48B Shares Outstanding: $569.0B Market Cap: 0.88 Short Ratio: Key Metrics 33.9x EV/EBITDA 16.2x EV/Sales $30.2B Cash Balance $32.4B 2023 R&D Expense $10.40 $12.26 $18.67 $3.35 $4.06 $4.82 $- $5.00 $10.00 $15.00 $20.00 2021A 2022A 2023A 2024E 2025E 2026E EPS History (Actual & Projections) Stock Performance Since February 1 $100.00 $125.00 $150.00 2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024 Phase I Amycretin results show 13.1% weight reduction Stock rallies 8% Sources: KoyFin
  • 22. 22 Analyst Consensus Projections Catalent Company Overview Company Information Somerset, NJ Headquarters: 2007 Founded: Alessandro Maselli CEO: Matti Masanovich CFO: CTLT Ticker: Public Market Information $31.45 - $67.54 52 Week Low/High: $56.45 Share Price: 94.3M Shares Outstanding: $10.2B Market Cap: 3.08 Short Ratio: Key Metrics 38.7x EV/EBITDA 3.7xx EV/Sales $229.0M Cash Balance $17.0M 2023 R&D Expense $3.15 $2.74 $(1.41) $0.51 $1.48 $2.00 $(5.00) $(2.50) $- $2.50 $5.00 $7.50 2021A 2022A 2023A 2024E 2025E 2026E EPS History (Actual & Projections) Stock Performance Since February 1 $25.00 $50.00 $75.00 2/1/2024 2/15/2024 2/29/2024 3/14/2024 3/28/2024 NVO announces $63.50 per share cash tender offer Stock rallies 9% Sources: KoyFin
  • 23. 23 Novo’s Production Capabilities • Used for the treatment of type 2 diabetes. It's a GLP-1 receptor agonist that enhances glucose- dependent insulin release Victoza • Also for type 2 diabetes, it's another GLP-1 Ozempic • A fast-acting insulin used by people with diabetes to control blood sugar levels NovoRapid • A long-acting insulin used for both type 1 and type 2 diabetes, known for its flexible dosing schedule Tresiba 92.6% Novo’s Key Products Segmentation & Geographic Distribution Global Locations 93% 7% 55% 22% 12% 7% 4% Leading Facilitator ― Biopharma M&A has driven the vast majority of deal activity in an otherwise frozen market over the last year ― There is immense competition with orphan and specialty-drug markets At a Premium ― Premiums held strong in 2023 despite more difficult financing conditions and a tighter regulatory environment Commentary Diabetes & Obesity Rare Disease Other China USA EMEA Canada Strategy & Operations Production & Manufacturing Research & Development Sources: Zymewire, SEC Filings
  • 24. 24 Catalent’s Business Model  Expanded capabilities through acquisitions of Aptuit, Micron Technologies, and Paragon Bioservices Inc.  Entered into partnerships for oncology development, cannabinoid-derived medicines, and COVID-19 vaccine manufacturing  Continued investment in R&D, including the acquisition of MaSTherCell for cell therapy development Wockh… Others, 17% Sandoz Int'l, 12% Jubilant, 13% Recipharm AB, 13% Catalent, 13% Abbot Labs, 8% Bachem Holding, 8% Eurofins Scientific, 4% Simtra BioPharma, 4% PolyPeptide Group, 4% *Figure shows Cavalent’s outsourcing counterparties (by drug percentage) for obesity treatments Catalent Growth History Outlook  Headquarters in Somerset, New Jersey  Global provider of delivery technologies, drug manufacturing, biologics, and consumer health products  Employs over 14,000 professionals worldwide, including 2,400 scientists and technicians  Generated over $3 billion in annual revenue in fiscal year 2020  Formed in April 2007 through the acquisition of Cardinal Health's pharmaceutical technologies and services segment by affiliates of the Blackstone  Expanded through acquisitions of companies like PCI, R.P. Scherer Corporation, and Magellan Laboratories Inc.  Went public in 2014 and listed on the New York Stock Exchange (NYSE) as CTLT  Announced acquisition by Novo Holdings A/S for $16.5 billion in February 2024  Scaling up production for obesity and diabetes drugs Wegovy and Ozempic to meet increasing demand  Strong financial performance, with consistent revenue growth and significant investments in future growth initiatives Outsourcing Counterparties Sources: Global Data, Pharma Intelligence Center Drugs by Manufacturer Database
  • 25. 25 Leveraging Catalent Major Obesity Drug Manufacturing Sources Optimizing the Supply Chain Sources: Novo Nordisk, GlobalData, Pharma Intelligence Center Facility Name Source Type Manufacturing Source Drug Novo Nordisk (Zealand, Denmark) In-House API Wegovy Novo Nordisk (Clayton, North Carolina) In- House Novo Nordisk (Hovestaden, Denmark) In-House Dose Catalent (Bruxelles-Capitale, Belgium) Outsourced Novo Nordisk (Hovestaden, Denmark) In-House Packaging Eli Lilly (Fegersheim, France) In-House Dose Mounjaro Eli Lilly (Toscano, Italy) In-House Eli Lilly (Indianapolis, Indiana) In-House Novo Nordisk (Zealand, Denmark) In-House API Ozempic Novo Nordisk (Hovestaden, Denmark) In-House Novo Nordisk (Hovestaden, Denmark) In-House Dose Novo Nordisk (Centre, France) In-House Novo Nordisk (Clayton, North Carolina) In-House Novo Nordisk (Hovestaden, Denmark) In-House Packaging Novo Nordisk (Clayton, North Carolina) In-House Note: through acquiring Catalent, Novo Nordisk is moving towards inorganically meeting the strong demand for both Ozempic and Wegovy. The move accelerates the timeline given the alternative option is through capital investment in existing and new facilities.
  • 26. 26 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 27. 27 Public HCIT Company Performances Return YTD Jan 2024 Company 19.37% $ 327.97 $ 274.76 HCA Healthcare (HCA) 17.67% $ 89.83 $ 76.34 GE HealthCare Technologies (GEHC) 16.38% $ 67.32 $ 57.84 Boston Scientific (BSX) -6.26% $ 27.46 $ 29.29 Pfizer (PFE) 0.34% $ 52.33 $ 52.15 Bristol-Myers Squibb (BMY) 12.13% $ 530.22 $ 472.86 McKesson (MCK) -26.05% $ 7.95 $ 10.75 Veradigm (MDRX) 8.71% $ 60.27 $ 55.44 Enovis Corp. (ENOV) 19.37% 17.67% 16.38% -6.26% 0.34% 12.13% -26.05% 8.71% -50% -40% -30% -20% -10% 0% 10% 20% 30% January-24 February-24 March-24 HCA GEHC BSX PFE BMY MCK MDRX ENOV 2024 YTD Returns HCA Healthcare, GE HealthCare Technologies, and Boston Scientific have all exhibited strong positive returns, indicating robust growth and investor confidence in their respective businesses. On the other hand, Pfizer and Veradigm are the only two to post negative YTD returns. Veradigm is facing both growth challenges and gross margin pressures while Pfizer’s stock continues to drop due to stymied revenue streams from its COVID-19 vaccine. Pfizer currently sits well below its 200-day moving average. Both Bristol-Myers Squibb and Enovis have maintained stability with a marginal positive return, failing to keep pace with the top 3 performers (HCA, GEHC, and BSX). Additionally, McKesson and Enovis Corp. have seen moderate to positive returns, demonstrating relative resilience and growth potential within their respective segments of the healthcare industry. Overall, these returns reflect the diverse performance within the healthcare sector, influenced by a range of factors including company performance, industry dynamics, and broader market conditions.
  • 28. 28 IT Expansion in Healthcare HCIT Developments Sector Company Name Company Therapeutic Devices and Engineering Medical Devices Meditronic Translational Medicines and Analytics Biotech Bristol Myers Squibb Health Systems and Process Automation Consumer HealthTech Access Healthcare Diagnostics and Laboratory Automation Biotech Bio-Rad Laboratories Medicine IT and Supply Chain Innovation Biotech Teva Pharmaceuticals Digital Platform and Data Management Biotech PCI Pharma Services Healthcare and Treatment Devices Medical Devices Boston Scientific Treatment and Billing Automation Software & Data Tebra Healthcare Career and Recruitment Software & Data Relias AI and Data Integration in Healthcare Software & Data ConcertAI
  • 29. 29 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 30. 30 HCIT Current Events Cybersecurity in Healthcare The Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) has proposed a comprehensive system for reporting cyber incidents across 16 critical sectors, following the Cyber Incident Reporting for Critical Infrastructure Act of 2022. The proposed rule aims to establish a standardized framework for reporting cyber incidents across critical healthcare sectors. The healthcare sector, due to its importance and historical targeting, would face expanded reporting requirements under the rule. Research indicates significant disruptions to healthcare delivery due to ransomware attacks, with the agency previously launching the Ransomware Vulnerability Warning Pilot to mitigate such threats. The goal is to balance qualitative benefits and implementation costs, focusing primarily on hospital reporting to safeguard healthcare delivery.  Significant short-term compliance costs  Long-term benefits associated with improved cybersecurity resilience and public trust  Enhanced incident reporting can lead to more efficient incident response processes and damage mitigation  Moderating risk of prolonged disruptions to critical infrastructure and services  Timely and transparent reporting of cyber incidents  Advancement of public trust and retention The Need for Cybersecurity in Healthcare Financial Implications Sources: Healthcare It News
  • 31. 31 18.9% 16.3% 14.4% 13.0% 12.8% 5% 10% 15% 20% 25% 30% 35% 40% 45% $0 $5 $10 $15 $20 $25 $30 $35 2022 2023 2024 2025 2026 Healthcare Cloud Spending ($B) Percent Change YOY HCIT Current Events Tech giants and private equity firms are increasingly investing in healthcare software and IT, likely resulting in more M&A activities. Startups are attractive targets due to their innovation and market potential, leading to increased deal activity in the healthcare tech space. This influx of investment signifies a broader recognition of the immense value and growth opportunities within the healthcare technology sector, driving consolidation and competition among key players aiming to capitalize on its potential. Virtual Healthcare Non-Traditional Players and Startups The surge in telehealth and virtual care's popularity is anticipated to fuel a wave of M&A activities, highlighting their pivotal role in shaping the evolving health tech ecosystem. With healthcare software and IT navigating through dynamic landscapes influenced by technological breakthroughs, regulatory shifts, and a pronounced focus on digital health solutions, strategic M&A endeavors are poised to redefine the future of healthcare technology. Importantly, studies show that people are mostly satisfied with their virtual experiences. Telehealth Patient Satisfaction Healthcare Cloud Spending Projections The Percent Change YOY is forecasted to slightly decrease year-over-year due to concerns surrounding data security and healthcare integrity issues. Sources: Single Care Blog
  • 32. 32 AI-Based System Reduces Claim Denials Source: HealthcareITnews "AI-based system reduces claims denials for Community Medical Centers of Fresno" Integration & Impact AI System Streamlines Claims Processing and Enhances Efficiency at Community Medical Centers  Over the last decade, payer tactics have escalated denials, intensifying the workload  Historical workflows were insufficient, prompting a search for innovative solutions  Initiated in late 2022, a vendor-suggested AI system was beta-tested to predict denials and assess recovery potential, using Community Medical Centers' own data  The system integrates directly with the existing EHR, eliminating the need for extra programming Outcomes Solution Business Need • Impact: Achieved a 22% reduction in one type of denial and an 18% reduction in another within the first six months, translating to over 30 hours per week of saved work for the follow-up staff. • Benefits: The AI tool not only reduced the number of denials but also optimized staff workflows, allowing for more focus on appeal work and enhancing overall operational efficiency. • Key Takeaways: Ensure staff buy- in and introduce new tools gradually. Select AI technologies that align with your specific needs and are trained on relevant data to truly benefit from the AI's capabilities.  Strategy: Adopted an AI- based system offered by their clearinghouse vendor, designed to predict denials before claim submission and score incoming denials by their probability of recovery.  Implementation: The system seamlessly integrated with the existing EHR, requiring no additional programming. It focused on predicting specific types of denials and providing actionable insights to address potential issues preemptively and guide follow-up actions effectively.  Context: Community Medical Centers of Fresno faces a continuous struggle with claims denials, a common issue in healthcare. The volume of denials has increased due to payers employing delay tactics, burdening the team with additional workload.  Objective: To efficiently manage the heightened level of claims denials by seeking innovative solutions that streamline workflows, improve denial management, and prevent denials upfront, without adding complexity to existing processes.
  • 33. 33 AI Nurses & Future of the Field  Partners: Nvidia and Hippocratic AI  Objective: Introduce generative AI nurses to healthcare, enhancing efficiency and accessibility  Cost Comparison: AI nurses work for $9/hour vs. U.S. Average registered nurses' cost of $38/hour, which is a 76% decrease in wage cost  Operational Savings: Significant reduction in labor costs for healthcare Collaboration Overview + Impact Industry Context  Nurse Strikes: Over 32,000 nurses striked in 2023, highlighting workforce challenges  AI as a Solution: Addresses worker shortages predating the COVID-19 pandemic Future of Healthcare AI Market Response & Testing  Validation: Tested by thousands of nurses and hundreds of doctors.  Adoption: Currently being tested by over 40 healthcare providers nationwide  Cost of Healthcare Access: Trending towards zero due to scalable AI solutions  Ethical Consideration: Adheres to "first, do no harm" principle, engaging humans when necessary  Addressing Shortages: Aims to mitigate the projected global shortfall of 10 million health workers by 2030, particularly in underserved areas Innovative Patient Interaction  Emotional Connection Optimization: Utilizing Nvidia's AI for "super-low-latency voice interactions" enhances patient engagement by making conversations with AI healthcare agents more natural and responsive, which is critical for building trust and rapport in a clinical context  Inference Latency Improvements: Every 0.5-second improvement in the AI's response time can increase patient emotional connection by 5- 10%, showcasing the importance of speed in patient-AI communication for effective healthcare delivery Source: Business Insider "Nvidia's new AI nurses treat patients for $9 an hour"
  • 34. 34 Telemed Market Discussion Trends  Telemedicine is projected to have a compound annual growth rate (CAGR) of 24.0% from 2023 to 2030, as global market size will reach $83.5 billion in 2022  Telemedicine’s innovative model will help tackle the shortage of healthcare providers in rural areas, particularly in countries such as China and India  Leading providers have obtained patents for their technologies, indicating potential for augmented innovation and competition in the field  There have been enormous efforts to make changes to telehealth laws, and some states have passed laws to make payment parity requirements permanent Risks & Uncertainties  The industry faces regulatory burdens, reimbursement issues, and technological challenges, which are critical to address for continued growth  There is concern regarding the uncertainty surrounding virtual care reimbursement, as well as the potential impact of evolving regulatory and legal frameworks on telehealth solutions  As telemedicine gains further traction worldwide, competition is will intensify, as companies are striving to gain market share in an emerging industry.  The future of telehealth is facing uncertainties due to the evolving post-pandemic legal, legislative, and regulatory environment, as well as economic and restructuring challenges in the industry Sources: McKinsey “Telehealth: A quarter-trillion-dollar post-COVID-19 reality” Virtual Visit Dollars Saved ($bn) $1250 $1004 $35 $165 $35 $12 ~$250bn of all Medicare, Medicaid, and Commercial Outpatient spend could be virtualized 20% ED/UCs 33% Office Visits 35% HH Services 2% Tech-enabled Med Admin % of visits per category virtualized
  • 35. 35 Ambience Healthcare $70M Series B Company Description  Ambience Healthcare’s mission is to supercharge clinicians from breakthrough generative AI technology. The Ambience AI operating system consists of a holistic suite of applications, which helps to alleviate clinician burnout, improve overall system efficiency, and enable high-quality care.  The company’s flagship product, Autoscribe, offers state-of-the-art speech recognition, real-time documentation, and custom-built AI to embed into EMR workflows and generate notes within seconds and customize to individual preferences to reflect each provider's style and voice. Series B Financing  Ambience Healthcare has raised $70M of Series B primarily from OpenAI and Kleiner Perkins on February 6, 2024, putting pre-money evaluation at $230M. Optum Ventures, Memorial Hermann Foundation, Andreessen Horowitz and several undisclosed investors also participated in the round.  The recent funding will accelerate the product roadmap, build dedicated teams for health system partners, and further develop AI foundation models for medicine. The platform covers a wide range of ambulatory specialties and subspecialties, including cardiology, oncology, pediatrics, and emergency care. Major Customers Core Products & Specialties Founded Industry Headquarters Status 2020 Healthcare IT San Francisco, CA Privately Held AutoScribe - AI medical scribe AutoCDI - coding and compliance AutoAVS - after-vist summaries AutoRefer - handoffs within specialists AutoPrep intelligent pre-charting Sources: TechCrunch, Pitchbook
  • 36. 36 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 37. 37 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 Current Quarterly Metrics 2.90bn 2.91bn 3.50bn 2.88bn 3.06bn 3.24bn Market Cap 3.17bn 3.23bn 3.83bn 3.31bn 3.49bn 3.67bn Enterprise Value 13.87 -- -- -- -- -- Trailing P/E 21.98 24.1 28.99 20.12 21.14 22.73 Forward P/E -- 1.88 3.87 -- -- 1.9 PEG Ratio (5yr expected) 0.74 1.85 2.19 1.76 1.83 1.92 Price/Sales 0.85 0.85 1.02 0.83 0.89 0.96 Price/Book 7.75 7.94 8.94 7.94 7.67 2.22 Enterprise Value/Revenue 56.75 116.51 101.4 92.78 50.96 22.32 Enterprise Value/EBITDA Enovis Healthcare Profile $60.21 Current Price $43.04 - $66.14 52 Week Range 154,423 Daily Trading Volume 3.24B Market Cap (USD) 2.06 Beta -- PE Ratio (TTM) -1.00 EPS (TTM) 2 4 5 2 5 6 4 1 1 0 2 4 6 8 10 12 14 Jan Feb Mar Sell Underperform Hold Buy Strong Buy Enovis (ENOV) Bank Recommendations Sources: Yahoo Finance
  • 38. 38 Enovis Healthcare Consolidated Balance Sheet 2020 2021 2022 2023 Consolidated Balance Sheet ($th) $ 7,351,549 $ 8,515,912 $ 4,273,248 $ 4,509,334 Total Assets $ 3,763,675 $ 3,854,479 $ 823,447 $ 1,088,633 Total Liabilities Net Minority Interest $ 3,587,874 $ 4,661,433 $ 3,449,801 $ 3,420,701 Total Equity Gross Minority Interest $ 5,747,556 $ 6,696,003 $ 3,488,085 $ 3,884,556 Total Capitalization $ 3,543,387 $ 4,617,378 $ 3,448,085 $ 3,418,392 Common Stock Equity $ 178,925 $ 78,485 $ 75,540 $ 70,252 Capital Lease Obligations $ (1,434,600) $ 1,529,092 $ 353,770 $ 230,136 Net Tangible Assets $ 550,171 $ 1,279,695 $ 229,824 $ 526,912 Working Capital $ 5,774,630 $ 6,703,704 $ 3,707,364 $ 3,884,556 Invested Capital $ (1,434,600) $ 1,529,092 $ 353,770 $ 230,136 Tangible Book Value $ 2,410,168 $ 2,164,811 $ 334,819 $ 536,416 Total Debt $ 2,134,175 $ 1,406,074 $ 234,984 $ 429,973 Net Debt $ 39,499 $ 52,083 $ 54,229 $ 54,597 Share Issued $ 39,499 $ 52,083 $ 54,229 $ 54,597 Ordinary Shares Number Enovis exhibits a solid foundation and financial position as depicted by its balance sheet. With a significant total asset base, the company demonstrates substantial resources at its disposal. Its total liabilities, while present and notable, are relatively lower compared to its assets, indicating a favorable debt- to-asset ratio. Despite carrying this notable level of debt, Enovis maintains a solid foundation of tangible assets, suggesting stability and operational support. Otherwise, the company’s liquidity positions Enovis well to seize growth opportunities and withstand potential economic challenges in the dynamic healthcare technology sector. Enovis' balance sheet highlights its ability to effectively manage its capital structure, with a significant portion of equity financing contributing to its overall financial health. Overview Sources: Yahoo Finance
  • 39. 39 2020 2021 2022 2023 TTM Consolidated Income Statement ($th) $ 1,120,700 $ 1,426,188 $ 1,563,101 $ 1,707,197 $ 1,707,197 Total Revenue $ 517,060 $ 648,513 $ 693,718 $ 716,418 $ 716,418 Cost of Revenue $ 603,640 $ 777,675 $ 869,383 $ 990,779 $ 990,779 Gross Profit $ 653,041 $ 831,789 $ 960,041 $ 1,039,153 $ 1,039,153 Operating Expense $ (49,401) $ (54,114) $ (90,658) $ (48,374) $ (48,374) Operating Income $ (52,824) $ (29,112) $ (24,052) $ (19,749) $ (19,749) Net Non-Operating Interest Income Expense $ (16,781) $ (38,555) $ 112,641 $ 995 $ 995 Other Income Expense $ (119,006) $ (121,781) $ (2,069) $ (67,128) $ (67,128) Pretax Income $ (44,579) $ (19,528) $ 36,120 $ (13,289) $ (13,289) Tax Provision $ 42,625 $ 71,657 $ (13,292) $ (33,261) $ (33,261) Net Income Common Stockholders $ 42,625 $ 71,657 $ (13,292) $ (33,261) $ (33,261) Diluted NI Available to Com Stockholders $ 1 $ 1 $ (0) $ (1) $ (1) Basic EPS $ 1 $ 1 $ (0) $ (1) $ (1) Diluted EPS $ 45,589 $ 51,141 $ 53,168 $ 54,495 $ 54,393 Basic Average Shares $ 45,589 $ 51,141 $ 53,168 $ 54,495 $ 54,393 Diluted Average Shares $ (66,182) $ (62,799) $ (71,178) $ (65,709) $ (65,709) Total Operating Income as Reported $ 1,170,101 $ 1,480,302 $ 1,653,759 $ 1,755,571 $ 1,755,571 Total Expenses $ 42,625 $ 71,657 $ (13,292) $ (33,261) $ (33,261) Net Income from Continuing & Discontinued Operation $ (67,078) $ (74,501) $ (127,059) $ (34,585) $ (34,585) Normalized Income $ 52,824 $ 29,112 $ 24,052 $ 19,749 $ 19,749 Interest Expense $ (52,824) $ (29,112) $ (24,052) $ (19,749) $ (19,749) Net Interest Income $ (66,182) $ (92,669) $ 21,983 $ (47,379) $ (47,379) EBIT $ 180,047 $ 170,250 $ 241,693 $ 169,721 $ 169,721 EBITDA $ 374,137 $ 502,514 $ 600,309 $ 632,835 $ 632,835 Reconciled Cost of Revenue $ 246,229 $ 262,919 $ 219,710 $ 217,100 $ 217,100 Reconciled Depreciation $ (77,573) $ (106,874) $ (39,722) $ (54,369) $ (54,369) Net Income from Continuing Operation Net Minority Interest $ (16,781) $ (38,555) $ 110,553 $ (24,668) $ (24,668) Total Unusual Items Excluding Goodwill $ (16,781) $ (38,555) $ 110,553 $ (24,668) $ (24,668) Total Unusual Items $ 196,828 $ 208,805 $ 131,140 $ 194,389 $ 194,389 Normalized EBITDA $ - $ - $ - $ - $ - Tax Rate for Calcs $ (6,286) $ (6,182) $ 23,216 $ (4,884) $ (4,884) Tax Effect of Unusual Items Enovis Healthcare Consolidated Income Statement Revenue expected in the range of $2.05 billion to $2.15 billion in 2024. Double-digit growth projected for Recon segment against a normalized market backdrop, with stable P&R growth in the low to mid-single digits. Anticipated underlying margin improvement of at least 50 basis points in the core business, along with a $70 million to $75 million contribution from Lima, resulting in estimated adjusted EBITDA of $365 million to $380 million. Adjusted earnings per share forecasted to be $2.50 to $2.65, with an adjusted tax rate of approximately 21%. Enovis demonstrated strong financial performance in 2023, with strategic initiatives positioning the company for continued growth and value creation in 2024. Overview Sources: Yahoo Finance
  • 40. 40 2020 2021 2022 2023 TTM Consolidated Cashflows ($th) $ 301,935 $ 356,099 $ (55,861) $ 134,988 $ 134,988 Operating Cash Flow $ (175,079) $ (320,476) $ (176,388) $ (242,467) $ (242,467) Investing Cash Flow $ (131,651) $ 584,906 $ (465,127) $ 127,797 $ 127,797 Financing Cash Flow $ 101,069 $ 719,370 $ 24,295 $ 44,832 $ 44,832 End Cash Position $ 59,377 $ 47,188 $ 31,360 $ 12,515 $ 12,515 Income Tax Paid Supplemental Data $ 104,620 $ 85,487 $ 37,089 $ 16,328 $ 16,328 Interest Paid Supplemental Data $ (114,785) $ (104,237) $ (105,450) $ (122,223) $ (122,223) Capital Expenditure $ 3,500 $ 745,179 $ 5,814 $ 1,776 $ 1,776 Issuance of Capital Stock $ 860,681 $ 991,494 $ 515,000 $ 915,000 $ 915,000 Issuance of Debt $ (978,997) $ (1,117,526) $ (2,106,161) $ (697,805) $ (697,805) Repayment of Debt $ 187,150 $ 251,862 $ (161,311) $ 12,765 $ 12,765 Free Cash Flow Enovis Healthcare Consolidated Cashflows Enovis is generating positive operating cash flows, while also investing in strategic initiatives to support growth (like their acquisition of LIMA) and managing financing activities to maintain a strong financial position. Enovis demonstrated strong financial performance in the fourth quarter and fiscal year 2023, with net sales growing by 11% and 9% year over year, respectively. Notably, organic growth contributed significantly to this performance, indicating the company's ability to drive revenue without solely relying on acquisitions. However, Enovis is taking on large sums of debt, and may be slightly overleveraged. High levels of debt could potentially constrain the company's flexibility in pursuing future investments, withstand economic downturns, or navigate unforeseen challenges. Overview Sources: Yahoo Finance
  • 41. 41 Enovis Financial Highlights Adjusted Gross Margin: 58.6%, up 150 basis points YOY Adjusted EBITDA margin: 18% in the fourth quarter Fourth quarter sales: $455 million, representing an 11% YOY increase Debt Coverage: ENOV's debt is well covered by operating cash flow (29%) Forecasted EBITDA for 2024: Estimated range of $365 million to $380 million Forecasted adjusted earnings per share for 2024: Range of $2.50 to $2.65 Although Enovis’ stock has been slightly volatile in the past 15 months, the revenue guidance's upper end signals confidence in the company's ability to capitalize on market opportunities, while the lower end hints at potential caution amid uncertain economic conditions or industry challenges. Additionally, the inclusion of recent acquisitions in the EBITDA estimate suggests strategic expansion efforts, potentially bolstering the company's competitive position in the market. $40 $45 $50 $55 $60 $65 $70 1/6/23 4/6/23 7/6/23 10/6/23 1/6/24 Financial Performance and Expectation ENOV Stock Outlook Sources: Filings
  • 42. 42 Enovis Valuation Analysis ENOV Revenue: $1.7bn EV: $3.67bn EV / Revenue: 2.14 EV/Revenue 14.8x 2.5x 2.1x 1.7x 1.4x .x 2.x 4.x 6.x 8.x 10.x 12.x 14.x 16.x Glaukos LivaNova Enovis Integra LifeSciences Holdings Envista Holdings Peer Average 5.1x In assessing the valuation of Enovis (ENOV), particularly in light of its negative earnings trajectory, another important valuation metric is the value-to-revenue ratio. Enovis displays an enterprise value-to-revenue ratio of 2.1x, notably lower than the industry's average of 5.1x. According to this metric, the discrepancy hints at a potential undervaluation, especially when factoring in Enovis’ current 10.2% YOY sales growth. However, because other companies in the industry—and the overall market—have compounded positive earnings in recent years (compared to Enovis’ compounding negative earnings), this suggests that investors are allocating a lesser premium for each dollar of Enovis' revenue stream. Another potentially due to the steeper amounts of debt that Enovis has recently taken on as leverage. -55.50% 13.50% 13.40% -75.00% -50.00% -25.00% 0.00% 25.00% Enovis Industry Market Annual Earnings (Last 5 Years)
  • 43. 43 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 44. 44 Bankruptcy Overview Bankruptcy allows a company to restructure its debts and financial obligations, potentially reducing the overall debt burden. This can provide the company with a fresh start financially. By shedding unprofitable assets and streamlining operations prior to filing for bankruptcy, companies have already taken steps to improve its financial position. Chapter 7 Bankruptcy: Also known as "liquidation bankruptcy," Chapter 7 involves the sale of a debtor's non-exempt assets by a trustee to repay creditors. Once the assets are liquidated, the debtor is relieved of most debts, providing a fresh start financially. Chapter 11 Bankruptcy: Referred to as "reorganization bankruptcy," Chapter 11 allows businesses to restructure their debts while continuing operations. It involves developing a plan to repay creditors over time, often through renegotiating contracts, selling assets, or seeking new financing. Chapter 13 Bankruptcy: Primarily designed for individuals with regular income, Chapter 13 allows debtors to reorganize their debts and create a repayment plan spanning three to five years. Debtors can retain their assets while repaying creditors according to the plan approved by the bankruptcy court. 439 496 515 479 471 537 545 368 334 538 32 29 61 41 47 53 94 38 38 104 0 100 200 300 400 500 600 700 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Non-PE/VC Portfolio Company PE/VC Portfolio Company In 2023, bankruptcy filings by private equity- and venture capital-backed companies in the US soared to a record-high of 104, marking a 174% increase from the 38 filings in 2022, while the overall US company bankruptcy rate surged to 642 filings, a 73% rise from the previous year, amidst challenges posed by inflation, higher interest rates, and reduced pandemic-era stimulus spending. Bankruptcy Overview US PE/VC Portfolio Company Total Bankruptcies
  • 45. 45 Rite Aid Teetering Bankruptcy Source: Bloomberg "Rite Aid Advisers Rake in Millions Through Bankruptcy. Opioid Victims Brace For Nothing." Rite Aid Corporation, once a major player in the pharmacy sector, is now grappling with the repercussions of its bankruptcy amid mounting opioid litigation. With over 1,600 opioid lawsuits unresolved, the company’s bankruptcy filing has put a hold on litigation and prioritized repayment to secured creditors like Bank of America and Wells Fargo, potentially leaving opioid claimants without recourse. The bankruptcy process has accumulated at least $200 million in advisory fees, adding to the financial burden. Despite this, Rite Aid’s executive compensation has remained high, with the CEO drawing $300,000 monthly and anticipated exit payouts of up to $20 million. Liabilities have surpassed assets by over $1 billion, signaling deep insolvency. As Rite Aid negotiates a deal to avoid liquidation and contemplates closing over 600 stores, the future for stakeholders, particularly opioid victims, remains uncertain. The company is due in New Jersey court to potentially finalize its restructuring plan, which may dictate the financial fate of the numerous parties involved. 2/28/21 2/28/22 2/28/23 Current RADCQ - USD $ 519mn 202mn 11.4mn 5.67mn Equity Value -52.02% -60.99% -94.40% -50% Market Cap Growth 6.41B 5.87B 6.06B 6.49B Enterprise Value 0.02 0.01 0 0 Price/Sales 5.24 -0.31 -0.11 -- Price/Book 0.26 0.24 0.26 0.26 Enterprise Value/Revenue -116.52 -22.96 -13.94 -13.74 Enterprise Value/EBITDA RADCQ Debt Overtime
  • 46. 46 Invitae Bankruptcy 12/31/22 3/31/23 6/30/23 9/30/23 Current NVTAQ – USD ($) 451.79M 351.91M 301.44M 163.68M 4.58M Market Cap 1.62B 1.56B 1.54B 1.42B 1.26B Enterprise Value 122M 117M 120M 121M 127.8M Revenue -2.91% -5.12% -11.78% -9.21% 4.75% YOY Revenue Growth -- -- -- -- -- Forward P/E 0.83 0.62 0.53 0.31 0.01 Price/Sales 2.88 3.46 -- -- -- Price/Book 13.21 13.26 12.8 11.72 2.61 Enterprise Value/Revenue -30.39 -10.61 -9.2 -1.56 -0.98 Enterprise Value/EBITDA $- $10 $20 $30 $40 $50 $60 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 1/1/24 Invitae Corporation is a medical genetics company specializing in comprehensive genetic testing services for various medical conditions. Their tests identify inherited genetic mutations, aiding in diagnosis, treatment, and prevention decisions for patients and healthcare providers. Leveraging advanced technology and expertise in genetics, Invitae aims to improve healthcare outcomes globally by providing accurate and actionable genetic information. Additionally, the company engages in research collaborations to further understanding in the field of medical genetics. NVTAQ Historical Prices
  • 47. 47 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 48. 48 Tenet Healthcare divesture of Assets Asset Divesture • Novant Health: Tenet sold three hospitals in South Carolina to Novant Health for approximately $2.4bn in cash • Announcement Date: November 17th, 2024 • Closed Date: February 01st, 2024 • Hospitals: Coastal Carolina Hospital, Hilton Head Hospital, and East Cooper Medical Center • The sale to Novant Health resulted in after-tax proceeds of approximately $1.75 billion, alongside a pre-tax book gain of $1.6 billion Brief introduction of Tenet Healthcare (NYSE:THC) • Company: Tenet Healthcare Corporation operates as a diversified healthcare services company in the United States. The company operates through two segments: Hospital Operations and Services, and Ambulatory Care • Hospital Operations & Services: The company provides a wide range of medical services through its hospitals, outpatient centers, and surgical hospitals, and specializes in acute care, surgical services, and diagnostic imaging • Conifer Health Solutions : Tenet's subsidiary, offers revenue cycle management and value-based care services, supporting the company's mission to improve healthcare outcomes and accessibility • Ambulatory Care: This segment includes the operations of the company’s subsidiary USPI Holding Company, Inc. which held indirect ownership interests in ambulatory surgery centers and surgical hospitals Deal Rationale • Strategic Rationale: Tenet Healthcare's recent hospital deals are part of a broader strategy to optimize its portfolio, streamline operations and concentrate on markets with more significant presence or strategic advantage • Conifer Health Solutions: A key component of Tenet's strategy involves leveraging its subsidiary, Conifer Health Solutions, to provide revenue cycle management services. As part of the transactions, Conifer has expanded its contracts to offer comprehensive revenue cycle management for the divested hospitals, such as the 15-year contract in the South Carolina deal and the partnership with Adventist Health • These agreements not only ensure a continued revenue stream for Tenet but also strengthen Conifer's position in the market as a provider of essential healthcare services, enhancing the overall value of Tenet's portfolio • UCI Health: Tenet sold four hospitals in Orange County and Los Angeles County and its operations to UCI Health for approximately $975mn in cash • Announcement Date: February 01st, 2024 • Closed Date: April 01st, 2024 • Hospitals: Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical Center, and Placentia-Linda Hospital • The transaction with UCI Health yielded about $800 million in after-tax proceeds and is estimated to record a pre-tax book gain of $500 million • Adventist Health: Tenet sold two hospitals in Central California to Adventist Health for $550mn in cash • Announcement Date: February 29th, 2024 • Closed Date: April 01st, 2024 • Hospitals: Sierra Vista Regional Medical Center, Twin Cities Community Hospital • The deal with Adventist Health brought in after-tax proceeds of around $450 million and is anticipated to result in a pre-tax book gain of approximately $275 million.
  • 49. 49 FTC Blocks Novant’s Acquisition Updated Service Area 65% Target Hospitals E. Lake Norman Market Analyst’s Commentary GA AL MI TN ME NY PA OH WV VA FL IN KY MS NC SC North Carolina Service Area Hospital Images Novant would control approximately 65% of the market share. That strong position could’ve led to decreased competition, which often results in higher prices and reduced quality of care. By maintaining a competitive landscape, the FTC's intervention helps ensure that healthcare remains accessible and affordable, while also protecting the jobs and wages of those within the healthcare sector. Lake Norman Regional Medical Center – Mooresville Davis Regional Medical Center in Statesville – Statesville Before Others After
  • 50. 50 Major Mergers & Acquisitions AI Revolution Virtual Care M&A Increase Non- Traditional Players' Entry Startup- Centric Deals Focus on Mental Health Expansion of Remote Monitoring Monitoring reimbursement to new healthcare centers is expected to drive acquisitions of digital health companies specializing in remote monitoring solutions There's a growing emphasis on mental health, leading to increased interest in digital health companies offering teletherapy platforms, mental health apps, and management tools Artificial intelligence is becoming central in healthcare, fueling a surge in mergers and acquisitions for companies leading AI integration in health tech Startups are attractive targets due to their innovation and market potential, leading to increased deal activity in the healthcare tech space Tech giants and private equity firms are increasingly investing in healthcare software and IT, likely resulting in more M&A activities The rising popularity of virtual care is expected to drive more M&A activities, underscoring its importance in the evolving health tech landscape. Overall, the M&A environment in healthcare software and IT demonstrates a dynamic landscape shaped by technological advancements, regulatory changes, and a focus on digital health solutions. Strategic M&A activities are expected to be pivotal in shaping the future of healthcare technology.
  • 51. 51 Major Mergers & Acquisitions Financial Impact and Outlook Agreement to Sell California Hospitals to UCI Health Sale of South Carolina Hospitals to Novant Health • For the year ended December 31, 2023, the four hospitals and related operations included in the sale to UCI Health generated revenues of approximately $1 billion • Pre-tax income from these operations was approximately $29 million, with Adjusted EBITDA of approximately $71 million • The company estimates recording a pre-tax book gain of approximately $500 million from this transaction • Additionally, Tenet expects a favorable impact on income tax expense in 2024 of approximately $190 million due to a reduction in interest expense limitations resulting from these transactions • The company's Adjusted EBITDA for the year ended December 31, 2023, is anticipated to exceed the high end of its guidance range, driven by strong surgical growth at United Surgical Partners International (USPI) • Further details on financial performance will be provided during the announcement of fourth- quarter and full-year results on February 8, 2024 • Tenet has entered into a definitive agreement with UCI Health to sell four hospitals and related operations in Orange County and Los Angeles County, California, for approximately $975 million in cash • The hospitals included in this agreement are Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical Center, and Placentia-Linda Hospital • The hospitals included in this agreement are Fountain Valley Regional Hospital, Lakewood Regional Medical Center, Los Alamitos Medical Center, and Placentia-Linda Hospital • Tenet will retain net working capital related to pre-closing operations, and Conifer Health Solutions will continue to provide revenue cycle management services during the transition period • The transaction is expected to be completed in the spring of 2024, subject to customary regulatory approvals, clearances, and closing conditions. • Tenet completed the sale of three hospitals in South Carolina to Novant Health for approximately $2.4 billion in cash. These Hospital, Hilton Head Hospital, and East Cooper Medical Center • After-tax proceeds from this transaction are estimated to be approximately $1.75 billion • After-tax proceeds from this transaction are estimated to be approximately $1.75 billion • The sale also involves affiliated physician practices and other related hospital operations • Conifer Health Solutions, a subsidiary of Tenet, has entered an expanded fifteen-year contract to provide comprehensive revenue cycle management services for these operations • The transaction has been completed, with the proceeds contributing to Tenet's financial position and strategic initiatives. • Tenet Healthcare Corporation, a diversified healthcare services company based in Dallas, has recently undertaken significant transactions involving the sale of hospitals in South Carolina and California • These transactions reflect Tenet Healthcare's strategic efforts to optimize its portfolio, enhance financial flexibility, and focus on core business areas, while also aligning with its mission to deliver quality healthcare services
  • 52. 52 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 53. 53 By the end of 2023, HCA Healthcare, based in Nashville, Tennessee, operated 186 hospitals, up from 179 in 2019. In contrast, two other major for-profit health systems, Community Health Systems (CHS) and Tenet Healthcare, have reduced the number of hospitals they operate over the same period. HCA recently acquired Trinity Regional Hospital Sachse in Texas, while Tenet finalized the sale of three South Carolina hospitals to Novant Health and reached agreements to sell multiple hospitals in California to UCI Health and Adventist Health. CHS is evaluating potential sales that could generate over $1 billion in proceeds. Despite plans to sell two North Carolina hospitals to Novant Health, CHS faces legal challenges from the Federal Trade Commission. Over the past five years, CHS has seen its number of hospitals decline from 102 to 71, HCA's has slightly increased, and Tenet's has remained relatively stable at 61. $- $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 2/1/20 8/1/20 2/1/21 8/1/21 2/1/22 8/1/22 2/1/23 8/1/23 2/1/24 2021 2022 2023 (Dollars in millions) Consolidated Data 83 80 71 Number of hospitals (at end of period) 13,28 9 12,83 2 11,90 2 Licensed beds (at end of period)(1) 11,62 9 10,93 6 10,23 4 Beds in service (at end of period)(2) 442,4 45 434,7 65 435,9 13 Admissions(3) 950,7 17 975,7 37 992,5 52 Adjusted admissions(4) 2,190, 405 2,052, 864 1,957, 536 Patient days(5) 5.00 4.70 4.50 Average length of stay (days)(6) 51.1 % 49.2 % 52.4 % Occupancy rate (beds in service)(7) $ 12, 368 $ 12, 211 $ 12, 490 Net operating revenues 48.3 % 46.8 % 46.6 % Net inpatient revenues as a % of net operating revenues 51.7 % 53.2 % 53.4 % Net outpatient revenues as a % of net operating revenues $ 230 $ 46 ($133) Net (loss) income attributable to Community Health Systems, Inc. Stockholders 1.9% 0.4% (1.1) % Net (loss) income attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues $ 1, 969 $ 1, 466 $ 1, 453 Adjusted EBITDA(8) 15.9 % 12.0 % 11.6 % Adjusted EBITDA as a % of net operating revenues(8) Liquidity Data ($131) $ 300 $ 210 Net cash flows provided by (used in) operating activities (1.1) % 2.5% 1.7% Net cash flows provided by (used in) operating activities as a % of net operating revenues ($524) ($259) ($26) Net cash flows used in investing activities ($514) ($430) ($264) Net cash flows used in financing activities Healthcare Services Performance Highlights - HCA Tenet HCA HCA's Growth vs. CHS and Tenet's Strategic Divestitures Source: HBR "Tenet Healthcare and Conifer Health Solutions."
  • 54. 54 Healthcare Services Performance Highlights - UMPC o Operating loss of $198.3 million with a -0.7% operating margin. o Revenue of $27.7 bn, representing gains in volumes, revenues, and plan membership o Expenses increased by approximately 10% compared to 2022, with a notable rise in insurance claims expenses by 13.6% o Inpatient activity grew by 3%, while outpatient and physician revenue per workday increased by 10% and 9% respectively Overview and Strategic Outlook: o UPMC for Life insurance membership increased by 15,500 in 2023, maintaining leadership in Western Pennsylvania's Medicare Advantage plans o The healthcare system saw improvements in its investing and finance activities, with a gain of $424.8mn compared to a loss in 2022. o Total long-term obligations increased to $6.6bn, while days cash on hand remained stable at 109 days UPMC's Strategic Investments and Growth Initiatives: o Despite the operating loss and increased expenses, UPMC's strategic investments in new facilities like the Mercy Pavilion and ongoing construction projects such as the UPMC Presbyterian facility indicate a focus on growth and specialized care services o The construction of the $1.5bn UPMC Presbyterian facility, set for completion in 2026, reflects UPMC's commitment to expanding healthcare infrastructure and meeting patient needs in Pittsburgh UPMC's Financial Performance in 2023: Trailing 12 Months Operating EBITDA Net Patient Service Revenue Breakdown Commercial 37% Medicare 41% Medical Assistance 16% Self-Pay/Other 6% 856 902 785 482 494 0 200 400 600 800 1000 22-Dec 23-Mar 23-Jun 23-Sep 23-Dec *Leader in MA plans *dollars in millions Source: Fierce Healthcare & UMPC Filings
  • 55. 55 Company Performance - Mayo Clinic Mayo Clinic's Financial Performance in 2023: • Reported revenue of $17.9 billion, showcasing a significant increase from $16.3 billion in 2022. • Achieved a "mission-sustaining" 6% operating margin, surpassing expenses by over $1 billion • Net medical service revenue grew by 8.8% year over year to $15.1 billion, reflecting strong performance in core healthcare services • Engaged in a record-breaking 2,500 clinical trials during the year, demonstrating Mayo Clinic's dedication to advancing medical research and patient care • Allocated $1.18 billion toward capital expenditure projects, including the "Bold. Forward. Unbound. in Rochester" initiative, Mayo Clinic's largest capital investment for innovative healthcare technologies • Continued investment in the multiuser Mayo Clinic Platform, leveraging data to accelerate healthcare innovation and improve patient outcomes Innovation and Strategic Initiatives: 2,500 Clinical Trails Company Information Rochester, MN Headquarters: 1864 Founded: Gianrico Farrugia CEO: Dennis E. Dahlen CFO: Key Metrics 7.94% Net Income Margin: 7.44x Interest Coverage Ratio: 1.05x Current Ratio: 11.66x EBITDA Coverage Ratio: 0.87% WC as a % of Sales: 32% Debt Ratio Source: Fierce Healthcare & Mayo Clinic Filings
  • 56. 56 Company Performance - Trinity Health Trinity Health's Financial Turnaround in 2024:  Six-month operating losses reduced from $270.3 million in the previous year to $38.6 million, improving the operating margin from -2.6% to -0.3%.  Operational performance shifted from a loss in the first fiscal quarter to a gain in the most recent quarter, showcasing a positive trajectory.  Year-over-year bottom line improvement from a $70.5 million loss to a $669.1 million net income, signaling significant financial progress. Revenue Growth & Strategic Initiatives:  Six-month operating revenue increased by 11.3% year over year to $11.6 billion, driven by acquisitions such as MercyOne, North Ottawa Community Health System, and Genesis Health System.  Excluding acquisitions and divestiture impacts, revenues still grew by 5.5%, attributed to stronger patient volumes, strategic payer negotiations, and an improved case mix.  Trinity Health diversified its business segments and implemented cost management initiatives to achieve balanced performance amid challenges Acquisitions FY 24 FY 23 (dollars in mn) (38.6) ($270.3) Operating Loss $11,633.3 $10,456.8 Operating Revenue -0.3% -2.6% Operating Margin 4.7% 2.9% Operating Cash Flow Margin Results from Operations *For the six month periods ended December 31 Source: Fierce Healthcare & Trinity Health Filings
  • 57. 57 Company Performance - Providence Alaska 4% Washington 31% Montana 2% Oregon 23% California 35% Texas/New Mexico 5% Alaska Washington Montana Oregon California Texas/New Mexico $26.5bn Hospitals 68% Health Plans 11% Physician and Outpatient 13% Long-term Care 6% Other 2% Hospitals Health Plans Physician and Outpatient Long-term Care Other $26.5bn Operating Revenue by Patient Type Operating Revenue by Patient Type Providence Health & Services, a not-for-profit Catholic healthcare system headquartered in Renton, Washington, operates across seven states, comprising 51 hospitals, over 800 non-acute facilities, and numerous assisted living facilities in the western United States. Founded by the Sisters of Providence in 1859, Providence merged with St. Joseph Health in 2016, expanding its reach and impact in delivering healthcare services. Providence’s revenue breakdown by facility/patient type reveals a diversified revenue stream for the organization, with hospitals generating the highest revenue, followed by health plans and outpatient services. Although the company does not generate annual net positive earnings, it’s revenue streams and continual growth suggests a balanced approach consistent with other healthcare delivery companies, encompassing both inpatient and outpatient care, as well as insurance services. The significant revenue contribution from hospitals underscores the importance of acute care services, while the presence of health plans indicates a focus on insurance and managed care, contributing to the overall financial stability of the organization. Source: Providence
  • 58. 58 Envois Performance Annual Details Q4 Details Financial Metric $1.7bn $455mn, up 11% Sales 8% 8% Organic Growth 58.20% Increased by 150 basis points to 58.6% Adjusted Gross Margin 16%, up 70 basis points 18%, down 30 basis points Adjusted EBITDA Margin $2.40 $0.79, up 10% Adjusted EPS 9% YOY 10% compared to prior year Earnings Growth Strategic Highlights Navigating Future Growth  Envois corporation achieved double-digit growth in the Recon segment, with strong demand and share gains  The company's P&R segment showed stable growth in the low to mid-single digits, driven by strong commercial execution  Significant progress was made in reshaping the business mix towards Recon and leveraging EGX capabilities for operational productivity and margin improvement  The acquisition of Lima was highlighted as transformative, providing opportunities for sustained operating margin expansion and strong double-digit organic growth momentum across all segments  Revenue expected in the range of $2.05 billion to $2.15 billion  Double-digit growth projected for Recon segment against a normalized market backdrop, with stable P&R growth in the low to mid-single digits  Anticipated underlying margin improvement of at least 50 basis points in the core business, along with a $70 million to $75 million contribution from Lima, resulting in estimated adjusted EBITDA of $365 million to $380 million  Adjusted earnings per share forecasted to be $2.50 to $2.65, with an adjusted tax rate of approximately 21% Merged Recon & EGX Synergies Source: Envois "Enovis Announces Fourth Quarter and Full Year 2023 Results."
  • 59. 59 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 60. 60 Value-Based Care (VBC) $2.50 $3.03 $3.67 $4.44 $5.38 $6.52 $7.89 $9.56 $11.58 $14.02 $16.99 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 • Florida Blue partners with Sanitas to run a value-based primary care center in Jacksonville, Florida • Florida Blue has been operating for 80 years, serving all 67 Florida counties • The clinic will service individuals 50 years and older and Medicare enrollees. The companies will deal with changes brought by the ACA act. • With this partnership, it’s important to cater to the elder population in Florida, as there are 4.9mn adults, making up 21% of the population and 5mn Medicare eligible people across the state of Florida Deal Background • Services include preventive and primary care, onsite pharmacy dispensing, chronic condition management, mental health services, labs and imaging, and community engagement activities • Aims to incorporate behavioral healthcare into the practice, as there has been a rise in behavioral healthcare since the COVID-19 pandemic. Overall, this has created a demand for more virtual behavioral health services such as telepsychiatry Services Provided Historically, healthcare services has run a FFS model; Healthcare practitioners charge every time a patient comes in for a service, not accounting for the quality of care. Cons of this system is that it allows for practitioners to manipulate the system and keep on requesting patients for check ups, even if not necessary/doctors will avoid litigations by consistently request to see patients Now, with the VBC(value based care) model, it benefits not only patients, but doctors as well, by measuring the health of the patient and their improvement over time, allowing doctors have an incentive to care about the patients health Medicare is a good space for the company, as Medicare enrollment increased significantly following the “Silver Tsunami” boom ACA act policies since Biden-Harris Administration has allowed eligibility for $10, creating a 33% increase from last year Selected Commentary – Why There is a VBC Shift VBC Healthcare Services Market Size 2022-2032 (USD $bn) Source: Fierce Healthcare
  • 61. 61 Shift from Inpatient to Outpatient Centers • Hospitals end 2023 with year-high margins and shortened average stays, with margins overall up by 15% • On a single month basis, operating margin index rose from 3.2% to 4.6% • The healthcare system has had to adjust their services to better meet patients' preferences, as the average length of stay has dropped 4% • Lower acute care is shifted outside the hospital setting • Outpatient revenue has increased from 2022 to 2023 • Shift to outpatient centers due to reimbursement changes, patient preference, increased availability for care to be delivered in these settings, and further digitalization hgfffd Key Metrics Types of Outpatient Care • There has been a shift to outpatient centers due to high number of patient volume and longer stays results in higher operating costs for hospitals = cannot keep up with high demand • Since the pandemic, the shift to telehealth services catalyzes doctors to target diseases earlier on, leading to shorter hospital stays • Medical technology has significantly advanced, resulting in many procedures in to be performed in outpatient setting such as minimally invasive surgeries • With VBC, it incentivizes more outpatient services due to healthcare providers offering care in the most efficient and effective setting Commentary Emergency Departments Also known as ERs. They provide a broad range of emergency services to higher-acuity patients Specialized Outpatient Clinics Facilities for providing care in specialist areas such as cardiology and urology, among others Ambulatory Surgery Center (ACS) Facilities that specialize in same-day discharge of patients post surgery. ASCs can be either hospital-associated or freestanding Primary Care Clinics Patients are seen by their primary care physician's. There has been a shift in the care due to VBC, as patients see the doctor for a shorter # of visits Retail Clinics Also known as convenient care clinics, these are walk-in clinics offering preventative health services and treatment for uncomplicated illnesses Source: Fierce Healthcare
  • 62. 62 NYC Accelerates Therapeutic Unit Construction Amid Rikers Closure Initiative Overview  Construction of new therapeutic facilities at hospitals in Manhattan, Brooklyn, and the Bronx, totaling $718mn  Creation of over 350 outposted therapeutic housing beds for incarcerated individuals  Guarding of the facilities by the Department of Correction (DOC) and partnership with NYC Health + Hospitals/Bellevue, Woodhull, and North Central Bronx  Funding of $14mn to support trauma-informed care, substance use education, and other initiatives  Aims to address challenges such as design security issues and mayoral turnover to move the project forward  Allocation of $14mn for trauma-informed care and substance use education initiatives  Expected benefits include improved access to specialized medical care and enhanced safety for incarcerated individuals  Emphasis on operational readiness through staffing and preparation for post-construction operationalization  - Overcoming challenges like design security issues and mayoral turnover to advance the $718mn project for new therapeutic facilities  - Allocating $14mn towards trauma-informed care and substance use education initiatives, enhancing support for justice-involved individuals  - Expected benefits include improved access to specialized medical care, heightened safety, and focused care for serious mental illness and substance use disorder  - Emphasis on operational readiness through staffing and preparation for seamless post- construction operationalization, ensuring effective implementation of the new facilities Conclusion $718mn Total Cost Focus Areas Addressed Other Health Challenges Substance Abuse Mental Health Key Components and Impact Source: Fierce Healthcare
  • 63. 63 Congress Passes Healthcare Spending Bill  The Senate voted 75 to 22 to approve a $460 billion spending package, preventing a partial government shutdown  The package keeps a portion of the federal government funded until September and received bipartisan support.  President Biden signed the measure, providing financial stability and continuity for federal agencies  The bipartisan spending bill includes provisions to mitigate cuts to physician Medicare pay and delay disproportionate share hospital (DSH) payment reductions  It increases annual funding for community health centers and outlines funding for federal agencies like the Food and Drug Administration and the Department of Veterans Affairs  Provider groups like the American Medical Association and hospital groups welcome the bill but express concerns about short-term patches rather than comprehensive Medicare payment reforms  Provider groups applaud the bill's provisions to delay cuts and increase funding for essential healthcare programs  Some express disappointment that the bill only provides short-term solutions and urge Congress to focus on permanent Medicare payment reforms  The bill also includes extensions for incentive payments for certain healthcare programs and funding for programs like the National Health Service Corps and the Teaching Health Center Graduate Medical Education program  Senate Finance Committee Chair Ron Wyden expresses disappointment over missed opportunities for major healthcare reforms but supports the package for providing certainty to health programs and providers Projected US Healthcare Expenditures as a % of GDP 17.80% 17.80% 17.90% 18.00% 18.20% 18.50% 18.70% 18.90% 19.20% 19.40% 17.00% 18.00% 19.00% 20.00% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 *Annual % Change 2023-2024 is 1.08% Mixed Reactions to Bipartisan Healthcare Funding Bill Bipartisan Spending Package Clears Senate, Averts Governme nt shutdown What The Bill Includes Source: Fierce Healthcare
  • 64. 64 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 65. 65 Major Bankruptcies  Sientra, Inc. initiates Chapter 11 filing to enable the strategic sale of its business under Bankruptcy Code Section 363  The company secures $22.5 million debtor-in-possession financing to support ongoing operations and facilitate the sale process  Objective is to streamline the sale process, attract potential buyers, and ensure operational continuity during the transition  Chapter 11 filing allows for an expedited sale while providing protection and support for the company's assets and operations  Sientra aims to maintain customer service levels and product accessibility throughout the Chapter 11 process  Despite the restructuring, Sientra remains committed to providing quality service, continuous manufacturing, and access to its products  Strategic sale under Chapter 11 reinforces Sientra's dedication to customers and the sustainability of its business operations  The focus remains on delivering innovative solutions and ensuring customer satisfaction throughout the restructuring process  Sientra engages reputable legal counsel such as Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones to navigate the Chapter 11 process  Financial advisors, including Stifel / Miller Buckfire, provide expertise in financial restructuring and asset sales negotiations  Expertise is leveraged to manage third-party motions, ensure compliance with regulatory requirements, and optimize the sale process. Sientra Submits to Bankruptcy Legal & Financial Support Financial Stability & Customer Focus Winning Bidders & Consideration Tiger Aesthetics, LLC Tiger Aesthetics Medical, LLC emerged successful in bidding for certain assets related to Sientra's breast reconstruction and augmentation business. They agreed to pay $42.5 million in cash and assume liabilities, including cure costs for contracts and all warranties for breast implants sold prior to the closing date $42.5mn Nuance Intermediary, LLC won the bid for substantially all of Sientra's assets used in its BIOCORNEUM scar treatment business. They offered $8 million in cash consideration and agreed to assume certain liabilities, including cure costs for certain contracts $8mn Nuance Intermediary LLC Source: Bloomberg "Sientra Files for Chapter 11 Bankruptcy, Seeks Sale of Business."
  • 66. 66 Major Bankruptcies Adventist Health Tillamook Shuts Down Three Doors Crisis in Healthcare  The closure of three medical offices by Adventist Health in Oregon exemplifies reflects a broader theme of operational challenges faced by healthcare institutions in sustaining services amidst escalating provider shortages  These shortages are part of a national predicament, where 39.8% of healthcare facilities see new hires leave within a year  Additionally, the high turnover rates, with hospitals turning over 105% of their staff over five years 17.80% 19.50% 25.90% 22.70% 20.70% 16.10% 16.70% 22% 19.90% 17.20% CY2019 CY2020 CY2021 CY2022 CY2023 All Employees FT/PT Only  Adventist Health Tillamook, based in California, has announced plans to close three medical offices located in rural Oregon communities  The decision comes after years of efforts to recruit qualified medical providers to these areas, which have been challenging despite collaborations with renowned recruiting firms Breaking Down the Data  National Turnover Trends: Hospital turnover has decreased by 2.0%, now at 20.7%, though most hospitals hover around a 22.2% rate. Despite this decline, the median and mode turnover rates remain higher, at 22.2%  Variability by Size: Turnover rates range from 7.5% to 34.2%, indicating significant differences based on hospital size  Performance Extremes: The best-performing hospitals (top 10%) have turnover rates at or below 16.2%, while the lowest performers (bottom 10%) see rates above 27.2% Source: NSI "NSI National Health Care Retention & RN Staffing Report" Hospital Turnover Rate Hospital full/Part Time Turnover Hospital Turnover Metric 14.00% 16.20% 90th Percentile 15.50% 18.80% 75th Percentile 17.50% 22.20% Median 20.70% 24.80% 25th Percentile 23.20% 27.20% 10th Percentile 17.20% 20.70% National Average
  • 67. 67 Tenet Healthcare Profile 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 Current Quarterly Metrics 5.28B 6.06B 8.26B 6.69B 7.67B 10.20B Market Cap 19.16B 20.28B 22.58B 20.80B 21.66B 23.98B Enterprise Value 9.55 15.72 21.25 14.26 17.25 17.87 Trailing P/E 8.22 10.67 14.14 10.11 12.25 16.13 Forward P/E 3.61 1.88 2.49 2.56 1.07 2.24 PEG Ratio (5yr expected) 0.29 0.34 0.46 0.35 0.39 0.52 Price/Sales 4.04 5.3 6.7 4.98 5.24 6.35 Price/Book 3.84 4.04 4.44 4.11 4.03 1.17 Enterprise Value/Revenue 25.45 24.79 27.81 26.14 22.52 7.08 Enterprise Value/EBITDA $102.50 Current Price $51.04 - $104.71 52 Week Range 210,622 Daily Trading Volume 10.27B Market Cap (USD) 2.07 Beta 17.99 PE Ratio (TTM) 5.71 EPS (TTM) 1 5 5 3 6 10 10 1 11 3 3 12 0 5 10 15 20 Dec Jan Feb Mar Sell Underperform Hold Buy Strong Buy Bank Recommendations Bank Recommendations
  • 68. 68 Life Sciences 5 Performance Highlights I. 8 Clinical Trial Updates II. 10 Current Events III. 18 Mergers & Acquisitions IV. Information Technology 27 Performance Highlights I. 30 Current Events II. 37 Company Case Study III. 44 Bankruptcies IV. 48 Mergers & Acquisitions V. Services 53 Performance Highlights I. 60 Current Events II. 65 Bankruptcies IV. 69 Mergers & Acquisitions V.
  • 69. 69 M&A Overview Health System M&A Northwell Health merging with Nuvance Health, forming a 28- hospital nonprofit system Tenet Healthcare's sell-off of hospitals to UCI Health and Adventist Health UCSF Health's acquisition of two San Francisco hospitals from Dignity Health Everside Health and Marathon Health merger Merakey and Elwyn's called-off merger Mercy's acquisition of Ascension Via Christi Hospital Health System M&A • Elevance Health's paused acquisition of BCBSLA. • SCAN Group and CareOregon's mutual call-off of merger talks. • CareSource's letter of intent to affiliate with Common Ground Healthcare Cooperative. Guthrie Clinic acquiring Our Lady of Lourdes Memorial Hospital WellSpan Health's agreement to acquire Evangelical Community Hospital HCA Healthcare subsidiary's purchase of Trinity Regional Hospital Sachse UT Health East Texas acquiring six urgent care clinics. Fulton County Hospital joining Baxter Health Ascension Health's sale of Our Lady of Lourdes Memorial Hospital to Guthrie Clinic Hospital Ownership Changes & Acquisitions Healthcare Payer Affiliations & Mergers Source: Fierce Healthcare "Nonprofits Aspirus Health, St. Luke's Duluth close 19-hospital merger."
  • 70. 70 Healthcare Services M&A  Aspirus Health and St. Luke's Duluth signed a definitive agreement for their merger after announcing a letter of intent  The merger closed successfully, creating a 19-hospital entity spanning Minnesota, Wisconsin, and Michigan's Upper Peninsula  Aspirus will make several capital investments in St. Luke’s care facilities, including committing capital to expand care offerings for the St. Luke’s network and capital for strategic investments, which will include maintaining the shared residency program St. Luke’s has with the University of Minnesota Medical School in Duluth Aspirus Health & St. Luke's Duluth Merger Regulatory Compliance & Future Strategic Integration Financial & Operational Impact  Regulatory Approval: Merger subjected to thorough scrutiny, including review by Minnesota's Attorney General  Employment Integration: Commitment to honoring existing contracts and retaining St. Luke's employees ensures smooth transition  Growth Potential: Merged entity poised to leverage resources for accelerated investment, aligning with industry trends towards consolidation for enhanced efficiency and service delivery  Strategic Vision: Merger aimed at improving care collaboration, patient outcomes, and resource distribution  Operational Changes: Integration under Aspirus brand ensures continuity, with St. Luke's co-presidents retaining roles for stability  Community Impact: Patients receive seamless care from existing providers, benefiting from increased access to capital and technology platforms  Financial Commitment: Aspirus Health committed to investing $300 million into St. Luke's strategic projects over eight years as part of the merger  Operational Scale: The combined organization now includes 130 outpatient locations, almost 14,000 employees, and various healthcare services Source: Fierce Healthcare "Nonprofits Aspirus Health, St. Luke's Duluth close 19-hospital merger."