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2 days ago
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The medtech IPO window is finally open. Or is it?
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. Editor's note: This is the first story in a two-part series on the medtech IPO landscape. The second story, a Q&A with Beta Bionics executives, will be published next week When Ceribell went public in October, the window for medtech initial public offerings was open just a crack — if not shut completely. Ceribell, which develops technology to diagnose patients with neurological disorders, led a rush of public offerings activity in just a few months, breaking a three-year drought in IPOs. The new public offerings prompted questions about whether the medical device industry could have another IPO moment after a 2021 spike. 'At that time, we debated potentially being the first med device IPO in a few years,' Ceribell CFO Scott Blumberg said in an emailed statement. 'Initially we, and I think a number of peers, saw greater appeal in letting another company take the risk of being first. In recent history, the fast followers had received premium valuations for being the first company to go public in a window.' Aaron DeGagne, a senior healthcare analyst with PitchBook, said the medtech industry's IPO decline followed the later stages of the COVID-19 pandemic, which had zero interest rates and more favorable market dynamics, and was pre-inflation. There were 51 IPOs in 2021, up from 24 the prior year, according to data from PitchBook, which includes private equity and venture capital offerings. 'But since then, it's been pretty tough,' DeGagne said. He highlighted Tempus AI as one of the few companies to go public during those years. The number of IPOs each year from 2020 to Q1 2025 This embedded content is not available in your region. There has been a small burst of IPOs in the few months since Ceribell went public late last year, when the company raised more than $207 million. Anteris Technologies, a heart valve developer, raised nearly $89 million when the company went public in December. Diabetes tech firm Beta Bionics followed in January, raising about $212 million, and Kestra Medical also raised $202 million when it went public in March. The latest activity could be a signal that the IPO drought ends this year, as more companies may be ready to test the market. 'Because the gap in IPO activity was so prolonged — just over three years — the quality of most mature medical device companies is extremely high,' Blumberg said. 'There are multiple medical device companies with profiles that should make them excellent IPO candidates, potentially even in a turbulent market.' John Babitt, a partner with EY, said that 'if the window is open in the second half of '25 … we'll see a decent amount of medtech IPOs.' While companies carefully select the right moment for an IPO, the recent public offerings could also inspire others to follow. Furthermore, Babitt said there was a long list of $100 million funding rounds in the first quarter of 2025 — a level he has not seen in his more than 25 years covering the industry — which is another indicator that companies may be ready. However, a volatile economy, beginning shortly after President Donald Trump took office in late January, complicates the moment. While tensions recently eased with a U.S.-China deal to reduce tariffs for 90 days, the uncertain economic environment could influence companies' decisions. Blumberg, who answered MedTech Dive's questions in April during the economic drop, said some companies may decide to wait. 'Depending on how things play out, some of these companies may elect to wait for calmer markets,' Blumberg said. 'I have no doubt that they will have ample funding opportunities and it is only a matter of time before we see a new class of very high-quality public medical device companies.' Companies typically go public as a way to pay out private investors and raise money after demonstrating solid fundamental financials. It's not a simple decision to make, however — going public is a long and challenging process that can take the better part of a year, require dozens of meetings with banks and potential investors, and should only happen when a company has the correct financials and leadership team in place. Ceribell first decided to pursue an IPO in 2024 — about nine months before the actual IPO date — after preparing for about three years. Babitt said one of the key factors for companies is to have reliable visibility into their revenue streams, and they must demonstrate that visibility to institutional investors, along with about a $50 million run rate. Companies that do not have good revenue visibility tend to struggle once public, he added, which was the case for some companies in the 2021 IPO spike. Companies that had $30 million or $40 million in sales but didn't have visibility and were unable to grow revenue by double digits in a quarter were 'punished, quite frankly,' said Babitt, who did not name specific firms. One of the biggest challenges after going public, along with forecasting and delivering on growth every quarter, is being vulnerable to market dynamics that are largely out of your hands. 'There's a lack of control that's frustrating,' Beta Bionics CEO Sean Saint said. 'The market moves, and all of a sudden, our stock moves for zero reason associated with anything with Beta Bionics.' Saint explained that macroeconomic factors move the stock for a number of reasons, including Beta Bionics being a smaller stock, a new entrant to public markets and investors not yet building up complete positions. 'For those reasons, we've become more volatile than the market as a whole,' he added. 'We understand why that is, but it doesn't change the fact that we have zero control over it.' Companies that recently held public offerings — and chose their go-public dates months ahead of time — quickly learned that lesson. Stock prices for the new companies have mostly struggled for much of the year as macroeconomic conditions have whiplashed the U.S. economy under the Trump administration, largely due to its tariff strategy. Ceribell, Beta Bionics and Anteris all saw their stock prices decline in late March and April when tariff tensions were high. The lack of control, Babitt said, is why 'you want high-quality candidates from whatever sector to be out there, so that their story truly hasn't changed; their revenue profile truly hasn't changed.' Closing stock prices for Kestra Medical, Ceribell, Beta Bionics and Anteris Technologies from Oct. 10, 2024, to May 27. This embedded content is not available in your region. Babitt said companies that work with EY have not decided to cancel their planned IPOs because of recent volatility. The question of whether the medical device industry's IPO window is open has a complicated answer. The four public offerings in as many months could be a sign that more companies are ready — the IPOs themselves could also inspire activity. Or companies could delay to let the economy settle for a little while longer. The lengthy timeline of a public offering could also mean that companies that planned in January, or sometime in the first quarter, to go public will not actually begin selling shares until 2026, regardless of economic conditions. PitchBook's DeGagne said 2025 will likely not be the IPO moment others believe it could be. Medline Industries is rumored to be looking to go public in the near future, a company DeGagne is watching, along with Heart Flow, which develops artificial intelligence for coronary artery disease. Medtronic also announced that it plans to spin off its diabetes business and take the company public through an IPO within the next 18 months. 'We could see some additional listings here and there. But I think a lot of companies are still comfortable kind of waiting on the sidelines for now,' DeGagne said. Babitt sees it differently. EY has already worked with several companies that plan to go public. Kestra and Beta Bionics also upsized their expectations at the last minute. For example, Beta Bionics originally planned to raise about $114 million but ultimately raised more than $200 million. 'Everybody took notice of that,' Babitt said. An IPO window does need a stable market to remain open, otherwise good candidates will wait or could even pursue other avenues like M&A. As tariff tensions ease with China, and the stock market rebounds, that moment could be here. 'I'm optimistic with the second half,' said Babitt. Recommended Reading Beta Bionics raises $204M in IPO Sign in to access your portfolio
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3 days ago
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Zimmer hires former Nevro CEO Kevin Thornal
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. Name: Kevin Thornal New title: Group president for global businesses and the Americas, Zimmer Biomet Previous title: President and CEO, Nevro Zimmer Biomet named Kevin Thornal to the newly created position of group president for global businesses and the Americas, effective July 1, the orthopedics device maker said Tuesday. Thornal was president and CEO of spinal cord stimulation company Nevro from April 2023 until it was acquired by Globus Medical last month for about $250 million. Before that, he was group president of global diagnostic solutions at Hologic, where he held a series of leadership positions beginning in 2014. Before joining Hologic, Thornal worked in sales, marketing and business development at Stryker for 10 years, including as head of North American sales for its interventional spine business. In his new role, Thornal will oversee the Americas commercial organization and lead business strategy and execution for the global knees, hips, S.E.T. and data, technology and enabling solutions units. Thornal will receive an annual base salary of $850,000, with a bonus opportunity in 2025 equal to 100% of his salary on a prorated basis, if performance goals are achieved, Zimmer said in a securities filing. He will also receive restricted stock units valued at $2.65 million and performance-based restricted stock units valued at $2.65 million. In connection with Thornal's appointment, Mark Bezjak will remain president of the Americas but will no longer be an executive officer, according to the filing. Bezjak was promoted to president of the Americas from president of North America in September 2023, shortly after CEO Ivan Tornos became Zimmer's top executive.
Yahoo
23-05-2025
- Business
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Cost cuts, production shifts: How medtech firms are managing tariffs
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. Medical device makers are leaning on their global manufacturing footprints to shift production and inventory as they navigate fluid tariff policies. Large medtech manufacturers are mostly avoiding potentially costly strategies such as reducing sales staff or investments in research and development, analysts said in interviews with MedTech Dive. Price increases are a last resort. Rather, companies are focused on managing discretionary expenses and exemptions. 'They are not taking away from their sales team, advertising or R&D,' said Rebekuh Eley, healthcare analyst at tax and consulting firm RSM. 'They're moving ahead with that. It's more on the operational side.' Intuitive Surgical, for example, manufactures about 80% of its surgical instruments and accessories in Mexico. However, most of the products are certified under the U.S.-Mexico-Canada Agreement and therefore exempt from current import tariffs, CFO Jamie Samath said in an April earnings call. Intuitive reduced its 2025 profit margin forecast due to tariff pressures. Nevertheless, Samath said the company is pushing ahead with manufacturing expansion plans, including increasing instrument production in Mexico, to support its growth in the medium term. The surgical robot maker recently opened two manufacturing facilities in California that will also house R&D teams, along with a factory in Georgia. New plants are planned in Germany and Bulgaria. Intuitive, said outgoing CEO Gary Guthart, will 'optimize our production costs and rebalance product flows within our existing manufacturing and supply chain footprint as policies begin to stabilize.' Other device makers, such as Boston Scientific and Abbott, said they are expanding U.S. manufacturing to support long-term growth while taking more immediate actions to mitigate tariff exposure. Boston Scientific recently opened a new site in Georgia and increased manufacturing investments in both Minnesota and Malaysia, said CEO Mike Mahoney. The company expects to absorb a $200 million hit this year from tariffs. Abbott, which anticipates a tariff impact of 'a few hundred million dollars' in 2025, is investing in manufacturing and R&D in Illinois and Texas to expand its transfusion business that makes devices to screen blood donations, according to CEO Robert Ford. Meanwhile, Siemens Healthineers last week unveiled $150 million in new projects to expand production in the U.S., including relocating manufacturing operations for its Varian business to California from Mexico. And Roche Diagnostics this month announced a $550 million expansion in Indianapolis to produce continuous glucose monitors. Cardinal Health was one company that announced layoffs as a mitigation strategy for a tariff hit of up to $300 million. While some firms will be less pressured by tariffs than others, top medtech companies together project a financial impact from tariffs totaling more than $2 billion, based on the current 10% general tariff rate and higher China-specific duties, according to a recent analysis by PitchBook. The report cited research that found more than $60 billion worth of medical devices and components are manufactured overseas and imported into the U.S. annually. For startups, tariffs are likely to raise input costs and extend time to profitability, with the surrounding uncertainty bringing even more challenges that could delay initial public offerings until broader market conditions stabilize, PitchBook said. Last week, the U.S. and China rolled back for 90 days a large portion of the steep tariffs each imposed on the other in recent months. Before that, many medtech companies said the effects of the U.S.-China trade war accounted for a significant part of the impact on their outlooks. With the new pause, 'the most pessimistic outcome seems to be off the table,' said PitchBook healthcare analyst Aaron DeGagne. RSM's Eley said medtech companies will look at passing costs on to customers only after they've exhausted all other measures. 'They're trying to do what they can do internally first, without raising prices, and then they will raise the prices,' she said. On Wednesday, Medtronic's new CFO, Thierry Piéton, said the company built its expectations on two potential scenarios. The low end of its projected tariff impact assumes current bilateral U.S. and China tariffs, in place during the pause, remain throughout its fiscal 2026, which began in late April. The high end assumes the higher rates resume after the pause. The company ultimately forecast a tariff charge in a range of $200 million to $350 million for the year. In another development, Treasury Secretary Scott Bessent this week said the U.S. will reinstate other country-specific reciprocal tariffs first announced April 2 if deals are not reached during a 90-day pause. As companies get a better handle on tariff-related costs, including whether customers grow more cautious about capital equipment purchases, some could revise initial financial guidance, PitchBook's DeGagne said. Those that gave forecasts in wide ranges have more flexibility, he added, but 'at some point, they need to provide a better number.' Whether the 90-day pause on new tariffs with China is 'an uncertainty-clearing event' is far from clear, Morgan Stanley analysts said in a report Sunday. 'Trade tensions are likely to remain elevated,' the analysts wrote. 'The administration is still investigating tariffs on pharmaceuticals, semiconductors, and copper, among other products. It is also unclear if the template of negotiations between the US and China can work for other regions, especially Europe.' Recommended Reading US signals reciprocal tariffs will return for some countries Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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17-05-2025
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Dexcom CEO says CGMs fit MAHA agenda ‘very nicely'; Tandem preps for new products
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. Dexcom CEO Kevin Sayer touted the company's recent efforts to expand coverage of CGMs for people with Type 2 diabetes. On a May 1 earnings call, the CEO told investors that all three major U.S. pharmacy benefit managers now cover the company's G7 glucose monitor for anyone with diabetes. Dexcom expects to have coverage for nearly 6 million people with Type 2 diabetes who don't take insulin by the end of the year. 'While this still represents only a portion of this 25 million-person population in the U.S., we often see smaller and customized plans quickly follow suit of the larger PBM formularies,' Sayer said. Dexcom will seek coverage from Medicare for people with diabetes who don't take insulin. The company is working to gather evidence from a randomized controlled trial to submit a request to the Centers for Medicare and Medicaid Services, Sayer said. Wolfe Research analyst Mike Polark on the earnings call noted comments by Health and Human Services Secretary Robert F. Kennedy Jr. supporting CGMs. Food and Drug Administration Commissioner Martin Makary has also suggested making the devices more widely available. 'We're very pleased with the comments of the administration,' Sayer said, adding that the company thinks its devices 'fit the Make America Healthy agenda very nicely.' Dexcom reported revenue of $1.04 billion in the first quarter, a 12% increase year over year. Tandem is seeking Europe's CE mark for its newer, smaller Mobi insulin pump, CEO John Sheridan said in an April 30 earnings call. Tandem received FDA clearance for the device in 2023. The company plans to launch Mobi outside of the U.S. with multiple sensor integrations by the year's end, Sheridan said. In February, Tandem received an expanded FDA indication for its Control-IQ+ algorithm for Type 2 diabetes. The algorithm pairs data from glucose monitors with the company's insulin pumps for automated dosing. Tandem hopes to launch the newer version of that algorithm internationally by the end of the year, pending regulatory approval, Sheridan said. The CEO also provided an update on Tandem's efforts to develop an insulin patch pump. The company is working on a tubeless feature for its Mobi pump that is now in verification testing and manufacturing buildout, Sheridan said. Meanwhile, the company has moved development of the Sigi patch pump that it acquired in 2022 to San Diego. Insulet, which received an expanded indication last year for its Omnipod 5 patch pump, said people with Type 2 diabetes represent a growing portion of new patients. Eric Benjamin, chief product and customer experience officer, told investors on May 8 that people with Type 2 diabetes made up more than 30% of new starts in the first quarter, an increase from 25% in the fourth quarter. The company grew revenue by nearly 29% to $569 million in the first quarter, compared to the year-ago period, and named longtime medtech executive Ashley McEvoy as CEO. Insulet estimated in February that the Type 2 indication expands the total addressable market for its patch pumps in the U.S. to more than 5.5 million people with Type 2 diabetes who take insulin. About 2.5 million of those people take multiple daily injections of insulin. Insulet estimated the market is less than 5% penetrated. Benjamin expects the company could double or triple that number, telling investors, 'Right now, we're making that market.' Recommended Reading New Insulet CEO Ashley McEvoy sets priorities Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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13-05-2025
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Solventum's projected $100M tariff hit prevents earnings increase
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. By the numbers Q1 net sales: $2.07 billion 2.6% increase year over year Net income: $137 million 42% decrease year-over-year 3M spinout Solventum has estimated that tariffs will wipe $80 million to $100 million from its earnings this year. The company made the prediction during a first-quarter earnings call on Thursday. Solventum is assuming China has a 125% tariff on U.S. imports. The tariff on goods flowing from the U.S. to China accounts for half of the forecast impact. Solventum is also assuming that the 10% tariff on goods traded between the U.S. and Europe stays in place and does not rise. That tariff represents one-third of the forecast impact. CFO Wayde McMillan said on an earnings call that 'minimal imports from China to the U.S.' and trade between the U.S. and Mexico and Canada makes up the rest of the anticipated impact. The company has received exemptions under the United States-Mexico-Canada Agreement to mitigate the impact of tariffs on trade within North America. The exemptions are one of several mitigating actions Solventum has taken. McMillan said the company is continuing to optimize inventory and its teams are 'heavily focused on sourcing options all across our supply chain.' Solventum is also looking at 'thoughtful pricing strategies where we think that makes sense for the long-term business,' the CFO said. CEO Bryan Hanson added on the call that tariffs have given 'a higher sense of urgency' to the company's existing efforts to regionalize its supply chains. The potential to reduce the impact of tariffs by rethinking supply and pricing, as well as by working with trade associations to secure exemptions, led Hanson to discourage analysts from extrapolating the 2026 impact from this year's figures. Even so, Stifel analysts lowered their forecasts for 2026 to reflect tariffs. The analysts said in a note to investors that, although Solventum offered no formal guidance for 2026, 'it feels like a sensible approach to contemplate at least some impact given the uncertain tariff environment.' Hanson said the anticipated impact of tariffs this year prevented Solventum from raising its earnings per share guidance. Solventum raised its full-year organic revenue guidance but kept its EPS forecast of $5.45 to $5.65. The company expects tariffs to hurt EPS by a range of 35 cents to 45 cents. Recommended Reading Solventum cuts 800 positions Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
