Mercer Capital's Value Focus: Medtech & Device Industry | Q3 2019 | Article: Five Trends to Watch in the Medical Device Industry

VALUE FOCUS
Medtech & Device Industry
Third Quarter 2019
This quarterly update includes a broad outlook that divides the healthcare industry into four sectors: (1) Biotechnology & Life Sciences (2) Medical
Devices (3) Healthcare Technology and (4) Large, Diversified Healthcare Companies. The update also includes a review of market performance,
valuation multiple trends, operating metrics, and other market data as well as an overview of recent venture capital activity in the industry.
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private equity and venture capital funds involved in the sector. Please contact us to discuss how we may be of help.
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Five Trends to Watch in the Medical
Device Industry 1
Stock Market Performance 13
Revenue Multiples 14
EBITDA Multiples 15
Select Operating Metrics 16
Public Medical Device Companies 17
Venture Capital 21

© 2019 Mercer Capital // www.mercercapital.com 1
Mercer Capital’s Value Focus: Medtech Device Industry Third Quarter 2019
Five Trends
to Watch
The medical device manufacturing industry produces equipment designed to diagnose and treat patients
within global healthcare systems. Medical devices range from simple tongue depressors and bandages, to
complex programmable pacemakers and sophisticated imaging systems. Major product categories include
surgical implants and instruments, medical supplies, electro-medical equipment, in-vitro diagnostic equipment
and reagents, irradiation apparatuses, and dental goods.
The following outlines five structural factors and trends that influence demand and supply of medical devices
and related procedures.
Demographics
The aging population, driven by declining fertility rates and increasing life expectancy, represents a major
demand driver for medical devices. The U.S. elderly population (persons aged 65 and above) totaled 49 million
in 2016 (15% of the population). The U.S. Census Bureau estimates that the elderly will roughly double by
2060 to 95 million, representing 23% of the total population.
in the Medical
Device Industry
Sujan Rajbhandary, CFA
sujanr@mercercapital.com
Daniel McLeod
mcleodd@mercercapital.com
1
U.S. Population Distribution by Age Group
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2060
2017
1960
0 - 17 18 - 44 45 - 64 65 - 84 85 and Over
Source: U.S. Census Bureau

0 - 17
23%
18 - 44
36%
45 - 64
26%
65 - 84
13%
85 and
Over
2%
Source: US Census Bureau, Centers for Medicare and Medicaid Services,
Office of the Actuary, National Health Statistics Group
0 - 17
11%
18 - 44
21%
45 - 64
33%
65 - 84
27%
85 and
Over
8%
U.S. Population
Distribution by Age
U.S. Healthcare Cost
Distribution by Age
Source: U.S. Census Bureau, Centers for Medicare and Medicaid Services, Office of the Actuary,
National Health Statistics Group
The elderly account for nearly one third of total healthcare consumption. Personal healthcare spending for the
population segment was $19,000 per person in 2014, five times the spending per child ($3,700) and almost
triple the spending per working-age person ($7,200).
According to United Nations projections, the global elderly population will rise from approximately 607
million (8.2% of world population) in 2015 to 1.8 billion (17.8% of world population) in 2060. Europe’s elderly
are projected to reach approximately 29% of the population by 2060, making it the world’s oldest region.
While Latin America and Asia are currently relatively young, these regions are expected to undergo drastic
transformations over the next several decades, with the elderly population expected to expand from less than
8% in 2015 to more than 21% of the total population by 2060.

0%
5%
10%
15%
20%
25%
30%
35%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
Africa Asia Europe Lat Am Caribbean
North America Oceania World
Source: United Nations, Department of Economic and Social Affairs, Population Division (2017). World Population Prospects: The 2019 Revision, custom data
acquired via website.
2
World Population 65 and Over (% of Total)
Healthcare Spending and the Legislative Landscape in the U.S.
Demographic shifts underlie the expected growth in total U.S. healthcare expenditure from $3.5 trillion in
2017 to $6.0 trillion in 2027, an average annual growth rate of 5.5%. While this projected average annual
growth rate is more modest than that of 7.0% observed from 1990 through 2007, it is more rapid than the
observed rate of 4.3% between 2008 and 2017. Projected growth in annual spending for Medicare (7.9%)
is expected to contribute substantially to the increase in national health expenditure over the coming decade.
Healthcare spending as a percentage of GDP is expected to expand from 17.9% in 2017 to 19.4% by 2027.
Since inception, Medicare has accounted for an increasing proportion of total U.S.healthcare expenditures.
Medicare currently provides healthcare benefits for an estimated 60 million elderly and disabled people,
constituting approximately 15% of the federal budget in 2018. Medicare represents the largest portion of total
healthcare costs, constituting 20% of total health spending in 2017. Medicare also accounts for 25% of hospital
spending, 30% of retail prescription drugs sales, and 23% of physician services.

U.S. Healthcare Consumption Payor Mix and as % of GDP
Average Spending Growth Rates, Medicare and Private Health Insurance
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0%
20%
40%
60%
80%
100%
1960 1990 2017 2027
HealthExpenditures
asa%ofGDP
PayorMix
Private Health Insurance Medicare / Medicaid
Out-of-Pocket Other
Source: Centers for Medicare Medicaid Services, Office of the Actuary
$24.7 B $674.2 B $3.5 T $6.0 T
Total
Expenditure
1.5%
3.5%
4.6%
4.3%
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
5%
Medicare Per Capita Spending Private Health Insurance Per Capita Spending
CAGR 2010 - 2017 CAGR 2017 - 2027
Source: Kaiser Family Foundation

Owing to the growing influence of Medicare in aggregate healthcare consumption, legislative developments
can have a potentially outsized effect on the demand and pricing for medical products and services. Net
mandatory benefit outlays (gross outlays less offsetting receipts) to Medicare totaled $591 billion in 2017, and
are expected to reach $1.3 trillion by 2028.
The Patient Protection and Affordable Care Act (“ACA”) of 2010 incorporated changes that are expected to
constrain annual growth in Medicare spending over the next several decades, including reductions in Medicare
payments to plans and providers, increased revenues, and new delivery system reforms that aim to improve
efficiency and quality of patient care and reduce costs. On a per person basis, Medicare spending is projected
to grow at 4.6% annually between 2017 and 2027, compared to 1.5% average annualized growth realized
between 2010 and 2017, and 7.3% during the 2000s.
As part ofACA legislation, a 2.3% excise tax was imposed on certain medical devices for sales by manufacturers,
producers, or importers. The tax had become effective on December 31, 2012, but met resistance from
industry participants and policy makers. In late 2015, Congress passed legislation promulgating a two-year
moratorium on the tax beginning January 2016. In January 2018, the moratorium suspending the medical
device excise tax was extended through 2019.

Third-Party Coverage and Reimbursement
The primary customers of medical device companies are physicians (and/or product approval committees
at their hospitals), who select the appropriate equipment for consumers (patients). In most developed
economies, the consumers themselves are one (or more) step removed from interactions with manufacturers,
and therefore pricing of medical devices. Device manufacturers ultimately receive payments from insurers,
who usually reimburse healthcare providers for routine procedures (rather than for specific components like the
devices used). Accordingly, medical device purchasing decisions tend to be largely disconnected from price.
Third-party payors (both private and government programs) are keen to reevaluate their payment policies to
constrain rising healthcare costs. Several elements of the ACA are expected to limit reimbursement growth for
hospitals, which form the largest market for medical devices. Lower reimbursement growth will likely persuade
hospitals to scrutinize medical purchases by adopting i) higher standards to evaluate the benefits of new
procedures and devices, and ii) a more disciplined price bargaining stance.
Consumers
Patients
Investors
Government
VC (incl. CVC)
Physicians
Customers
Physicians /
Surgeons
Hospitals
Researchers
Universities
Labs
Physicians
Device
Manufacturers
Regulators
FDA
Government
Payers
Government
insurers
Private insurers
3

The transition of the healthcare delivery paradigm from fee-for-service (FFS) to value models is expected
to lead to fewer hospital admissions and procedures, given the focus on cost-cutting and efficiency. In
2015, the Department of Health and Human Services (HHS) announced goals to have 85% and 90% of
all Medicare payments tied to quality or value by 2016 and 2018, respectively, and 30% and 50% of total
Medicare payments tied to alternative payment models (APM) by the end of 2016 and 2018, respectively. A
report issued by the Health Care Payment Learning Action Network (LAN), a public-private partnership
launched in March 2015 by HHS, found that 34% of payments were tied to APMs, a 5% increase from 2016
to 2017.
Some expressed concern that the shift toward value-based care would encounter difficulties with the current
administration. In November 2017, the CMS partially canceled bundled payment programs for certain joint
replacement and cardiac rehabilitation procedures. However, indications are that the CMS supports value-
based care and wants pilot programs to accelerate. Ultimately, lower reimbursement rates and reduced
procedure volume will likely limit pricing gains for medical devices and equipment.
The medical device industry faces similar reimbursement issues globally, as the EU and other jurisdictions
face increasing healthcare costs, as well. A number of countries have instituted price ceilings on certain
medical procedures, which could deflate the reimbursement rates of third-party payors, forcing down product
prices. Industry participants are required to report manufacturing costs and medical device reimbursement
rates are set potentially below those figures in certain major markets like Germany, France, Japan, Taiwan,
Korea, China and Brazil. Whether third-party payors consider certain devices medically reasonable or
necessary for operations, this presents a hurdle that device makers and manufacturers must overcome in
bringing their devices to market.

Competitive Factors and Regulatory Regime
Historically, much of the growth for medical technology companies has been predicated on continual product
innovations that make devices easier for doctors to use and improve health outcomes for the patients.
Successful product development usually requires significant RD outlays and a measure of luck. However,
viable new devices can elevate average selling prices, market penetration, and market share.
Government regulations curb competition in two ways to foster an environment where firms may realize an
acceptable level of returns on their RD investments. First, firms that are first to the market with a new product
can benefit from patents and intellectual property protection giving them a competitive advantage for a finite
period. Second, regulations govern medical device design and development, preclinical and clinical testing,
premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and
promotions, sales and distribution, export and import, and post market surveillance.
Regulatory Overview in the U.S.
In the U.S., the FDA generally oversees the implementation of the second set of regulations. Some relatively
simple devices deemed to pose low risk are exempt from the FDA’s clearance requirement and can be marketed
in the US without prior authorization. For the remaining devices, commercial distribution requires marketing
authorization from the FDA, which comes in primarily two flavors.
New Device
Clearance or
Approval
to
Market
Device
Class II
510(k)
FDA Determines
Substantial Equivalence
de novo
510(k)
PMA
Clinical Data
Satisfies FDA
Class I
Class III
Low Risk
Predicate
Device
No Predicate
Device
Moderate Risk
High Risk
4

»» The premarket notification (“510(k) clearance”) process requires the manufacturer to
demonstrate that a device is “substantially equivalent” to an existing device (“predicate
device”) that is legally marketed in the U.S. The 510(k) clearance process may occasionally
require clinical data, and generally takes between 90 days and one year for completion. In
November 2018, the FDA announced plans to change elements of the 510(k) clearance
process. Specifically, the FDA plan includes measures to encourage device manufacturers
to use predicate devices that have been on the market for no more than 10 years. The FDA
also announced in its statements plans to finalize guidance establishing an alternative 510(k)
pathway in early 2019. This alternative pathway would allow manufacturers of certain “well-
understood device types” to demonstrate substantial equivalence through objective safety and
performance criteria.
»» The premarket approval (“PMA”) process is more stringent, time-consuming and expensive.
A PMA application must be supported by valid scientific evidence, which typically entails
collection of extensive technical, preclinical, clinical and manufacturing data. Once the PMA
is submitted and found to be complete, the FDA begins an in-depth review, which is required
by statute to take no longer than 180 days. However, the process typically takes significantly
longer, and may require several years to complete.
Pursuant to the Medical Device User Fee Modernization Act (MDUFA), the FDA collects user fees for the
review of devices for marketing clearance or approval. The current iteration of the Medical Device User Fee
Act (MDUFA IV) came into effect in October 2017. Under MDUFA IV, the FDA is authorized to collect almost
$1 billion in user fees, an increase of more than $320 million over MDUFA III, between 2017 and 2022.

Regulatory Overview Outside the U.S.
The European Union (EU), along with countries such as Japan, Canada, and Australia all operate strict
regulatory regimes similar to that of the FDA, and international consensus is moving towards more stringent
regulations. Stricter regulations for new devices may slow release dates and may negatively affect companies
within the industry.
Medical device manufacturers face a single regulatory body across the EU. In order for a medical
device to be allowed on the market, it must meet the requirements set by the EU Medical Devices Directive.
Devices must receive a Conformité Européenne (CE) Mark certificate before they are allowed to be sold
in that market. This CE marking verifies that a device meets all regulatory requirements, including EU
safety standards. A set of different directives apply to different types of devices, potentially increasing the
complexity and cost of compliance.
Emerging Global Markets
Emerging economies are claiming a growing share of global healthcare consumption, including medical
devices and related procedures, owing to relative economic prosperity, growing medical awareness, and
increasing (and increasingly aging) populations. As global health expenditure continues to increase, sales
to countries outside the U.S. represent a potential avenue for growth for domestic medical device companies.
According to the World Bank, all regions (except Sub-Saharan Africa and South Asia) have seen an increase
in healthcare spending as a percentage of total output over the last two decades.
Global medical devices sales are estimated to increase 6.4% annually from 2016 to 2020, reaching nearly
$440 billion according to the International Trade Administration.While the Americas are projected to remain the
world’s largest medical device market, the Asia/Pacific and Western Europe markets are expected to expand
at a quicker pace over the next several years.
5

Global Medical Device Market
$167 $177 $187 $198 $209
$69
$73
$78
$83
$89
$15
$16
$17
$18
$19
$10
$11
$12
$13
$13
$80
$85
$93
$101
$106
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2016 2017 2018 2019 2020
$BillionsinSales
Americas Asia / Pacific Central / Eastern Middle East / Africa Western Europe
Source: Worldwide Medical Devices Forecast to 2020, 2016 ITA Medical Devices Top Markets Report
Global Device Sales
6.4% CAGR
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
East Asia
Pacific
European
Union
Middle East
North Africa
North
America
South Asia Sub-Saharan
Afr ica
Wor ld
2000 2010 2016
Source: The World Bank
World Health Expenditure as a % of GDP

Summary
Demographic shifts underlie the long-term market opportunity for medical device manufacturers. While
efforts to control costs on the part of the government insurer in the U.S. may limit future pricing growth for
incumbent products, a growing global market provides domestic device manufacturers with an opportunity
to broaden and diversify their geographic revenue base. Developing new products and procedures is risky
and usually more resource intensive compared to some other growth sectors of the economy. However,
barriers to entry in the form of existing regulations provide a measure of relief from competition, especially
for newly developed products.

The industry generally outperformed the overall market during the twelve months ended June 2019. The SP 500
returned 8.2% over the twelve month period. Medical Devices was the only sector in the industry to underperform the
index in that period. However, during the 2Q19, only the biotechnology and healthcare technology sectors outperformed
the SP 500.
»» A market-capitalization weighted index of companies included in our biotechnology and life sciences
sector increased 12.7% over the twelve-month period ended June 2019. The top performer of the group
was IQVIA Holdings, which posted a 61.2% return. IQV provides data analytics and contract research
services to the life sciences industry.
»» The medical device sector posted the lowest returns of the group by returning 7.0% for the twelve months
ended June 2019. The group’s best performer was Boston Scientific, which returned 31.4%. BSX
manufactures medical devices used in interventional medical specialties.
»» The healthcare technology sector returned 43.3% over the period, the most of any sector. Veeva Systems
increased 110.9% over the period and was responsible for the largest returns of the group. VEEV provides
cloud-based software and data management services to the life sciences industry.
»» The large, diversified sector returned 19.3% over the year. The top performer within the group was
Danaher, which increased 44.8% during the period. DHR manufactures products for the life sciences,
diagnostics, dental, and other commercial markets.
Stock Market
Performance
Historical Stock Price Performance
-20%
0%
20%
40%
60%
Jun 28, 2018 Sep 27, 2018 Dec 27, 2018 Mar 28, 2019 Jun 27, 2019
Biotechnology Life Sciences Medical Devices Healthcare Technology Large, Diversified SP 500
Individual sub-sector performance represented by market capitalization weighted indices for each group.
Data Source: Bloomberg LP; Mercer Capital Analysis

4.85x
3.65x
3.98x
4.48x 4.33x 4.09x
4.43x 4.64x
4.23x
4.21x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
9.00x
4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
75% Quartile Median 25% Quartile
Biotechnology Life Sciences
EV / Trailing LTM Revenue
Healthcare Technology
Medical Devices
Large, Diversified
7.61x
5.19x
4.32x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
9.00x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
5.27x
4.71x
4.28x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
8.97x
6.28x
3.80x
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
Median Revenue multiples from each MCM group. Data source: Bloomberg
Revenue Multiples
9.62x
5.91x
4.29x
0.00x
2.00x
4.00x
6.00x
8.00x
10.00x
12.00x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017

4.85x
3.65x
3.98x
4.48x 4.33x 4.09x
4.43x 4.64x
4.23x
4.21x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
7.00x
8.00x
9.00x
4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
75% Quartile Median 25% Quartile
EV / Trailing LTM EBITDA
Medical Devices
Large, Diversified
52.9x
18.6x
17.6x
0.0x
10.0x
20.0x
30.0x
40.0x
50.0x
60.0x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
30.0x
18.3x
10.0x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
20.5x
14.1x
9.8x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017
Median EBITDA multiples from each MCM group. Data source: Bloomberg
EBITDA Multiples
36.7x
23.6x
17.6x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
45.0x
2Q 20191Q 20194Q 20183Q 20182Q 20181Q 20184Q 20173Q 2017

Median measures for each group. | Data Source: Bloomberg
TTM Gross Margin TTM Operating Margin TTM RD / Revenue TTM EBITDA Margin
Sector 2Q 2019 1Q 2019 2Q 2019 1Q 2019 2Q 2019 1Q 2019 2Q 2019 1Q 2019
Biotechnology Life Sciences 68.9% 69.1% 24.9% 22.9% 15.4% 17.3% 30.4% 27.9%
Medical Devices 67.3% 67.2% 18.0% 17.9% 6.5% 6.5% 28.5% 27.2%
Healthcare Technology 59.1% 59.2% 6.4% 5.3% 10.0% 10.3% 21.0% 16.5%
Large, Diversified 55.5% 55.7% 18.0% 16.9% 8.0% 7.9% 26.0% 25.3%
Overall Median 64.8% 64.9% 17.0% 16.5% 7.7% 7.8% 27.1% 26.3%
Revenue Growth L-T FWD Op. Earn.
Growth
Debt / EV Debt / EBITDA
Sector Q / Q Y / Y 2Q 2019 1Q 2019 2Q 2019 1Q 2019 2Q 2019 1Q 2019
Biotechnology Life Sciences 6.1% 0.8% 14.4% 14.4% 6.6% 7.0% 1.3 1.4
Medical Devices 4.2% 1.4% 11.7% 11.7% 10.5% 9.4% 1.6 1.8
Healthcare Technology 3.5% 3.5% 14.7% 14.7% 8.0% 7.5% 1.6 1.6
Large, Diversified 5.0% 0.6% 11.2% 11.2% 14.6% 14.8% 2.4 2.4
Overall Median 5.2% 1.0% 13.2% 13.0% 9.6% 10.2% 1.6 1.8
Select
Operating
Metrics

Price ∆ Stock Price EV TTM Rev
TTM
EBITDA FWD EBITDA
EV /
Rev.
EV /
EBITDA
EV /
FWD EBITDA
2Q 2019 1Q 2019 2Q 2018 Qtrly Annual 2Q 2019 2Q 2019 2Q 2019 FY 2020 FY 2021 2Q 2019 2Q 2019 2020 2021
Alexion Pharmaceuticals Inc ALXN $131 $135 $111 -3.1% 17.5% $30,107 $4,499 $2,384 $3,016 $3,224 6.69x 12.6x 10.0x 9.3x
Biogen Inc BIIB 234 236 274 -1.1% -14.6% 45,397 14,072 7,771 7,833 7,459 3.23x 5.8 5.8 6.1
Bio-Rad Laboratories Inc BIO 313 306 250 2.3% 25.0% 9,006 2,289 379 414 473 3.94x 23.8 21.8 19.0
BioMarin Pharmaceutical Inc BMRN 86 89 81 -3.6% 5.6% 15,541 1,533 (56) 57 214 10.13x nm 271.1 72.7
Sartorius Stedim Biotech DIM 158 127 90 24.4% 74.5% 14,685 1,523 475 419 477 9.64x 30.9 35.1 30.8
Eurofins Scientific SE ERF 442 414 527 6.7% -16.2% 11,844 6,805 1,214 800 922 1.74x 9.8 14.8 12.8
Gilead Sciences Inc GILD 68 65 75 3.9% -10.4% 82,137 22,357 11,172 11,158 11,980 3.67x 7.4 7.4 6.9
Illumina Inc ILMN 368 311 236 18.5% 55.7% 52,807 3,404 1,036 1,142 1,376 15.51x 51.0 46.3 38.4
Incyte Corp INCY 85 86 83 -1.2% 2.0% 16,634 2,006 374 513 693 8.29x 44.5 32.4 24.0
IQVIA Holdings Inc IQV 161 144 98 11.9% 64.0% 42,720 10,706 2,249 2,381 2,617 3.99x 19.0 17.9 16.3
Lonza Group AG LONN 337 310 235 8.7% 43.3% 28,634 10,846 3,053 1,602 1,782 2.64x 9.4 17.9 16.1
Mettler-Toledo International Inc MTD 840 723 575 16.2% 46.1% 21,776 2,964 802 821 901 7.35x 27.2 26.5 24.2
Regeneron Pharmaceuticals Inc REGN 313 411 344 -23.8% -9.1% 29,547 7,237 2,762 3,263 3,692 4.08x 10.7 9.1 8.0
Vertex Pharmaceuticals Inc VRTX 183 184 163 -0.3% 12.5% 43,774 3,454 1,072 1,710 2,140 12.67x 40.9 25.6 20.5
Waters Corp WAT 215 252 199 -14.5% 8.4% 15,119 2,406 855 852 908 6.28x 17.7 17.7 16.6
($Millions, except per share figures)
Data Source: Bloomberg
Public Medical Device Companies

Public Medical Device Companies (continued)
TTM
EBITDA FWD EBITDA
EV /
Rev.
EV /
EBITDA
EV /
FWD EBITDA
Medical Devices
Terumo Corp 4543 $30 $31 $51 -2.5% -42.2% $22,836 $5,326 $1,297 $164,520 $180,656 4.29x 17.6x 0.1x 0.1x
Sysmex Corp 6869 65 60 90 7.9% -27.3% 12,922 2,600 699 85,640 92,372 4.97x 18.5 0.2 0.1
Olympus Corp 7733 11 11 38 2.2% -70.7% 14,009 7,235 1,164 159,443 174,267 1.94x 12.0 0.1 0.1
ABIOMED Inc ABMD 260 286 291 -8.8% -10.5% 19,846 690 201 301 348 28.75x 98.5 66.0 57.0
Align Technology Inc ALGN 274 284 251 -3.7% 9.0% 21,168 2,189 576 607 763 9.67x 36.7 34.9 27.7
Baxter International Inc BAX 82 81 65 0.7% 25.9% 44,535 11,080 2,513 2,700 3,112 4.02x 17.7 16.5 14.3
Boston Scientific Corp BSX 43 38 27 12.0% 57.3% 69,486 10,078 2,752 3,259 3,661 6.89x 25.2 21.3 19.0
Coloplast A/S COLOB 113 110 85 2.9% 33.5% 24,016 2,667 955 6,227 6,819 9.00x 25.1 3.9 3.5
Edwards Lifesciences Corp EW 185 191 140 -3.4% 32.4% 38,141 3,964 1,222 1,369 1,547 9.62x 31.2 27.9 24.6
Hologic Inc HOLX 48 48 37 -0.8% 28.5% 15,704 3,287 1,041 1,073 1,151 4.78x 15.1 14.6 13.6
IDEXX Laboratories Inc IDXX 275 224 191 23.1% 43.9% 24,633 2,291 627 654 735 10.75x 39.3 37.7 33.5
Intuitive Surgical Inc ISRG 525 571 413 -8.1% 27.1% 57,799 4,040 1,418 1,693 1,901 14.31x 40.8 34.1 30.4
ResMed Inc RMD 122 104 98 17.4% 23.9% 17,363 2,455 736 914 994 7.07x 23.6 19.0 17.5
Smith Nephew PLC SN/ 22 20 19 9.4% 16.0% 20,972 9,853 2,983 1,471 1,603 2.13x 7.0 14.3 13.1
Stryker Corp SYK 206 198 161 4.1% 27.8% 83,939 14,204 4,054 4,218 4,649 5.91x 20.7 19.9 18.1
Wright Medical Group NV WMGI 30 31 20 -5.2% 50.3% 4,798 892 118 158 201 5.38x 40.8 30.4 23.9
Zimmer Biomet Holdings Inc ZBH 118 128 109 -7.8% 8.0% 32,712 7,872 2,616 2,661 2,835 4.16x 12.5 12.3 11.5

TTM
EBITDA FWD EBITDA
EV /
Rev.
EV /
EBITDA
EV /
FWD EBITDA
M3 Inc 2413 $18 $17 $45 8.9% -59.7% $14,503 $950 $266 $38,005 $43,749 15.26x 54.5x 0.4x 0.3x
Cerner Corp CERN 73 57 58 28.1% 26.4% 23,542 5,527 1,475 1,666 1,886 4.26x 16.0 14.1 12.5
Craneware PLC CRW 24 32 25 -23.6% -2.4% 795 139 43 24 25 5.72x 18.5 33.7 31.3
Evolent Health Inc EVH 8 13 14 -36.8% -44.2% 892 733 (5) (7) 52 1.22x nm -122.3 17.3
HMS Holdings Corp HMSY 32 30 17 9.4% 92.3% 2,825 626 163 187 202 4.51x 17.4 15.1 14.0
Inovalon Holdings Inc INOV 15 12 11 16.7% 36.9% 3,122 585 175 208 231 5.34x 17.8 15.0 13.5
Allscripts Healthcare Solutions
Inc
MDRX 12 10 12 21.9% -5.8% 2,762 1,841 463 303 333 1.50x 6.0 9.1 8.3
Medidata Solutions Inc MDSO 91 73 63 23.6% 44.1% 5,640 685 89 177 215 8.24x 63.1 31.9 26.3
NextGen Healthcare Inc NXGN 20 17 14 18.2% 45.8% 1,302 531 70 98 108 2.45x 18.6 13.3 12.0
Omnicell Inc OMCL 86 81 43 6.4% 98.2% 3,747 836 142 165 185 4.48x 26.4 22.7 20.3
Teladoc Health Inc TDOC 66 56 40 19.4% 64.8% 4,764 493 (29) 29 64 9.67x nm 161.7 74.8
Tabula Rasa HealthCare Inc TRHC 50 56 39 -11.5% 28.7% 1,308 249 19 40 57 5.25x 67.9 32.7 22.8
Vocera Communications Inc VCRA 32 32 23 0.9% 36.3% 908 177 (5) 21 32 5.14x nm 43.2 28.0
Veeva Systems Inc VEEV 162 127 73 27.8% 122.0% 9,891 768 193 404 476 12.88x 51.3 24.5 20.8

TTM
EBITDA FWD EBITDA
EV /
Rev.
EV /
EBITDA
EV /
FWD EBITDA
Large, Diversified
Agilent Technologies Inc A $75 $80 $67 -7.1% 11.6% $24,527 $5,019 $1,241 $1,289 $1,418 4.89x 19.8x 19.0x 17.3x
AbbVie Inc ABBV 73 81 95 -9.8% -23.2% 139,752 32,624 15,668 16,703 19,941 4.28x 8.9 8.4 7.0
Abbott Laboratories ABT 84 80 60 5.2% 40.4% 165,502 30,935 7,946 8,322 9,446 5.35x 20.8 19.9 17.5
Amgen Inc AMGN 184 190 170 -3.0% 8.1% 120,308 23,562 12,278 12,221 12,426 5.11x 9.8 9.8 9.7
Becton Dickinson and Co BDX 252 250 217 0.9% 16.3% 89,752 17,035 6,337 5,242 6,270 5.27x 14.2 17.1 14.3
Danaher Corp DHR 143 132 98 8.3% 46.0% 109,958 20,253 4,876 4,955 6,197 5.43x 22.5 22.2 17.7
Johnson Johnson JNJ 139 140 128 -0.4% 8.7% 383,349 81,325 30,015 29,765 32,283 4.71x 12.8 12.9 11.9
Medtronic PLC MDT 97 91 80 6.9% 21.4% 135,810 30,378 9,663 10,687 11,343 4.47x 14.1 12.7 12.0
Koninklijke Philips NV PHIA 43 41 38 6.4% 13.2% 44,018 42,716 7,396 3,341 3,688 1.03x 6.0 13.2 11.9
PerkinElmer Inc PKI 96 96 76 0.0% 27.2% 12,868 2,802 627 651 725 4.59x 20.5 19.8 17.7
Roche Holding AG ROG 281 276 229 2.0% 22.8% 252,301 117,620 47,642 24,190 24,886 2.15x 5.3 10.4 10.1
Siemens Healthineers AG SHL 42 42 41 0.8% 1.3% 45,393 15,989 3,233 2,925 3,152 2.84x 14.0 15.5 14.4
Thermo Fisher Scientific Inc TMO 294 274 206 7.3% 42.2% 135,038 24,868 6,457 6,550 7,146 5.43x 20.9 20.6 18.9

Venture
Capital
Venture Capital Investments in Biotechnology
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
$2.2
$2.4
Q1
2010Q2
2010Q3
2010Q4
2010Q1
2011Q2
2011Q3
2011Q4
2011Q1
2012Q2
2012Q3
2012Q4
2012Q1
2013Q2
2013Q3
2013Q4
2013Q1
2014Q2
2014Q3
2014Q4
2014Q1
2015Q2
2015Q3
2015Q4
2015Q1
2016Q2
2016Q3
2016Q4
2016Q1
2017Q2
2017Q3
2017Q4
2017Q1
2018Q2
2018Q3
2018Q4
2018Q1
2019Q2
2019
%ofTotalVCInvestment
AmountRaised($Billions)
Amount Raised % of Total VC Investment
Venture Capital Investments in Medical Devices
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
Q1
2010Q2
2010Q3
2010Q4
2010Q1
2011Q2
2011Q3
2011Q4
2011Q1
2012Q2
2012Q3
2012Q4
2012Q1
2013Q2
2013Q3
2013Q4
2013Q1
2014Q2
2014Q3
2014Q4
2014Q1
2015Q2
2015Q3
2015Q4
2015Q1
2016Q2
2016Q3
2016Q4
2016Q1
2017Q2
2017Q3
2017Q4
2017Q1
2018Q2
2018Q3
2018Q4
2018Q1
2019Q2
2019

Venture
Capital
Venture Capital Investments in Healthcare Technology
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
$0.0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.7
$0.8
Q1
2010Q2
2010Q3
2010Q4
2010Q1
2011Q2
2011Q3
2011Q4
2011Q1
2012Q2
2012Q3
2012Q4
2012Q1
2013Q2
2013Q3
2013Q4
2013Q1
2014Q2
2014Q3
2014Q4
2014Q1
2015Q2
2015Q3
2015Q4
2015Q1
2016Q2
2016Q3
2016Q4
2016Q1
2017Q2
2017Q3
2017Q4
2017Q1
2018Q2
2018Q3
2018Q4
2018Q1
2019Q2
2019

Mercer Capital
www.mercercapital.com

Mercer Capital's Value Focus: Medtech & Device Industry | Q3 2019 | Article: Five Trends to Watch in the Medical Device Industry

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