The J.P. Morgan Healthcare Conference in San Francisco, CA is always a great way to kick off the new year and an even better way to get a pulse on the industry for the coming year. As always, before moving forward you have to long back a bit. During the year there were quite a few people stating that 2022 was a down year for M&A Activities. As you know we strongly disagreed as stated in our webinar in the fall. From our conversations at J.P. Morgan and a recent report from CB Insights, that statement was confirmed. M&A is alive and well in our industry.

As J.P. Morgan continues to serve as the kick off for the new year and an energy revitalization for moving forward, what are the key takeaways our team came back with from this years 41st annual event?

Dealmaking:

• With economic pressure beginning to stabilize from the tumult of 2022, more M&A deals are on the horizon. That being said, more deals seems to be expected for smaller to mid-size companies than large corporations. This continues the trend we have seen in 2022.

• Beyond M&A, licensing and other forms of collaboration and deal structures will be common forms of dealmaking this year. As early stage companies are seeing the value of protecting assets before jumping into full acquisitions, expect to see more of these structures moving through the year.

• PE firms are still sitting on dry powder! Alignment between seller and buyer will be the difference in successful transactions.

• Large company spin-offs will create new potential acquirers, including GE Healthcare, J&J Consumer, and Medtronic’s Respiratory Business are prime examples.

Industry Trends:

• Though COVID testing demands seem generally to be dropping, an eye is being kept on the dynamic landscape of COVID in China.

• Potential surges could effect companies in the testing space, though those effects are not expected to disrupt in the way the pandemic originally did.

• Staffing shortages for skilled labor are likely to become more urgent than ever before and cause greater disruptions in the industry.

• Costs of providing healthcare is still going up but payouts are less and less for providers. To solve that dilemma, new solutions and services are expected to be introduced by large companies. Some of these are from outside the traditional healthcare industry and whom we may not previously have imagined entering a certain segment of our Industry.

• Supply chain is still a “hot” topic, though some improvements are being seen.

All in all, the 2023 J.P. Morgan Healthcare Conference was informative and tone-setting for the upcoming year, a valuable change from the last few years of pandemic effects impacting the show. With positive outlooks for small to middle market companies, whether with full acquisitions, partnerships or other deal structures, we encourage you to explore your options since there are many. If you are interested in discussing potential opportunities for your company, we are always happy to have a free and confidential conversation. Best of luck to all in 2023!