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Medical Alley Reports $15 Billion in M&A Activity in 2019’s First Half

Acquisitions by UnitedHealth Group and 3M made up the bulk of M&A activity.

Medical Alley Reports $15 Billion in M&A Activity in 2019’s First Half
UnitedHealth Group's $4.3 billion acquisition of DaVita bolstered M&A activity in the first half of the year.

Trade group Medical Alley Association on Monday reported that its members have spent more than $15 billion on mergers and acquisitions in the second quarter.

Two major acquisitions made up the lion’s share of that total: UnitedHealth Group’s $4.3 billion acquisition of DaVita Medical Group, and 3M’s $6.7 billion acquisition of wound-care company Acelity Inc. Also in the second quarter, UnitedHealth agreed to buy health care payments firm Equian LLC for $3.2 billion.

The second quarter saw a series of smaller acquisitions, as well. For instance, Marlborough, Mass.-based Boston Scientific reached an agreement to buy Vertiflex Inc. for $465 million in cash.

“Given that the trend of consolidation in healthcare seems likely to continue, there is plenty of upside left for innovative companies that see acquisition as their path to exit rather than a public offering,” Medical Alley Association officials wrote in the organization’s 2019 first half investment report.

Medical Alley members completed more than a dozen deals in the second quarter, spokesperson Julia Coleman said in an email.

Meanwhile, investment activity remains strong, too: In 2019’s first half, investors provided more than $260 million for Minnesota’s early-stage companies. That’s the second greatest level of investment in the last five years, according to Golden Valley-based Medical Alley.

Still, there was “something of a downturn” in the number of companies seeking money in the second quarter. That stemmed from uncertainty over Minnesota’s angel tax credit program, which has finally been reinstated for another year.

“Companies, including many that would have otherwise raised rounds in Q2, can take advantage of the reinstatement as of July 1 and complete their raises,” Medical Alley officials noted. “Accordingly, we expect to see an active third quarter with more companies raising, particularly at lower dollar amounts. “

Respiratory device maker Nuvaira, which locked down a nearly $80 million investment earlier this year, led the pack.

CVRx and MicroOptx Medical each raised more than $16 million in the second quarter.

The median investment in the second quarter was about $1.7 million, according to Medical Alley.

In total, medical device startups drew $186 million in the first half. That marked the biggest chunk of investments among any health care sector in the association.

The report suggests keeping an eye on the "shrinking space between digital health and medical device products."

"Companies like Pops! Diabetes Care are already straddling the divide and, as connected products demonstrate increased value, we expect to see larger device companies investing in, and potentially acquiring, data-focused startups that can help them deliver actionable insights to patients or to caregivers quickly and precisely," Medical Alley said.

   Funds raised in 2019's first half
 Nuvaira  $79 million
 CVRx  $17.7 million
 MicroOptx  $16.8 million
 Vireo Health  $15 million
 Stemonix  $14.4 million
Source: Medical Alley Association
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