Bryan Hughes, Managing Director and lead of PMCF’s Healthcare team, authored the Medical Product Outsourcing article “Will a Wave of Medtech Spinoffs Hurt the Supply Base?” In the publication, he shared his thoughts on whether or not the flurry of med tech spinoff transactions will create further dislocation across the supply chain in the near term.
“In the near term, a spinoff’s strategic and financial benefits must outweigh dis-synergies and management distractions in order to create shareholder value,” commented Bryan. “While the strategic and financial benefits will impact suppliers longer-term, management distractions and focus of resources on carve-out mechanics likely has the greatest impact today.”
Bryan provided additional context on how several med tech companies, including GE Healthcare and Zimmer ZimVie, were able to achieve successful spinouts starting with a well-defined plan to achieve a specific growth rate and hit certain EBITDA or operating income targets.
Excerpt:
| Across all U.S. industries the number of announced spinoffs surged by more than 30% last year. In each case, company management framed the spinoffs or divestitures as the logical conclusion of ongoing portfolio optimization initiatives. As COVID-19 continues to transition from pandemic to endemic, many medical device companies have experienced below-average or slowing growth and as a consequence, investors have shifted their focus from growth to profitability. |
Read the full article: Will a Wave of Medtech Spinoffs Hurt the Supply Base?
