Few medtechs go public, but those that do, do nicely

Most medtechs that listed this year priced their IPOs at a premium, and most saw their shares appreciate.


The party’s not over exactly, but the booze is running out and somebody’s turned the music down. Last year 29 medical device companies listed on stock exchanges; in the first six months of 2019, just eight medtechs went public. 

At least the sizes of the offerings were respectable. Last year’s total of $6.7bn was distorted by Siemens Healthineers’ vast Frankfurt listing – without that, the total raised was $1.6bn. The first half of 2019 has already seen a total of $1.3bn raised through IPOs, so the few that did feel able to go out met with a receptive audience.

Switzerland, Australia and Korea

Just like last year, the largest single deal is European. Swiss orthopaedics company Medacta Group stayed with its home exchange, raising SFr547m ($588m) in April in what was the Six Swiss’s first IPO of the year. The founding Siccardi family have retained control of the company with its free float amounting to about 30% of its shares. 

Medacta, which makes implants for hips, knees and spines, among other applications, had revenues of around $307m last year, putting it in the top 15 orthopaedics companies.  

IPOs by year, 2014-19
Year IPO count Total raised ($m) Average size ($m)
2014 33 1,529 46.3
2015 21 1,244 59.2
2016 12 2,354 196.1
     2016 (excluding Convatec) 11 406 36.9
2017 10 241 24.1
2018 29 6,719 231.7
     2018 (excluding Healthineers) 28 1,594 56.9
H1 2019 8 1,334 166.8
Source: EvaluateMedTech.

If Medacta is the winner in terms of float size Australian group Next Science, which makes polymer gels that are designed to disrupt the structure of bacterial biofilms in an effort to help reduce reliance on antibiotics, beats all when it comes to share price appreciation. Its stock rose 311% from its float in April to the end of June – but perhaps this is not the extraordinary achievement it first appears given that the company went out at a price of just one Australian dollar per share. 

Indeed it is reassuring that these debutante companies are benefitting, overall, from the positive sentiment in the market that most of medtech has enjoyed so far this year (Mid cap device makers find rewards in cancer and diabetes, July 5, 2019). Five of the eight groups have seen their stock rise, and the increases are much more dramatic than the share price fall. Moreover, all but two of the companies managed to hit the values deal bankers had pitched.

H1 2019's medtech IPOs
Date Company Amount raised ($m) Offering price Stock Exchange Discount/ premium Share price change to Jun 28
Apr 4 Medacta Group 588 SFr104 Six Swiss Exchange 8%  (23%)
Jun 27 Adaptive Biotechnologies 345 $20 Nasdaq 25% 142%
Apr 4 Silk Road Medical 120 $20 Nasdaq 25% 142%
Mar 7 Shockwave Medical 111 $17 Nasdaq 13% 236%
May 2 Transmedics 105 $16 Nasdaq 0% 81%
Feb 11 Sequana Medical 32 €8.50 Euronext  (3%)  (25%)
Apr 18 Next Science 25 A$1 Australian Securities Exchange 0% 311%
Feb 1 Innotherapy 8 KRW18000 Korea Exchange  (11%)  (37%)
Source: EvaluateMedTech.

One of the exceptions here, Innotherapy, which had to take an 11% haircut to get its tiny offering away and still saw its value drop 37% to mid-year, is remarkable in another way. 

The developer of bioadhesive surgical sealants is the only Korean float so far this year – remarkable considering seven companies went out on Korean exchanges in 2018 (Medtech IPOs rocketed just as stock markets faltered, January 22, 2019). This alone might count for the downturn in the number of flotations so far in 2019, though the US governmental shutdown that kicked the year off cannot have helped either. 

Even so, half of the action, in terms of both number of deals and total cash raised, was outside the US. This is a huge difference from biopharma, where the IPO scene is still US-led, but par for the course in the medtech sector, where listings have been more or less evenly split between the US and non-US markets for the past three years.

For companies seeking growth capital, the IPO market is uncomfortably reminiscent of the VC situation. Those that can do a deal tend to succeed quite nicely – but the number of deals being done is falling. 

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