Medical Technology M&A Pulse – Q4 2023

Q4 2023: Cautious Optimism

• Concerns about a recession dominated economic discussions in early 2023, fueled by the Federal Reserve’s aggressive response to historically high inflation. After an unprecedented period of increasing interest rates, the U.S. finally saw inflation rates drop below 4% in May. This ultimately set up the Federal Reserve to claim victory over inflation and begin signaling potential rate cuts in 2024. This change in tune pushed equity markets higher and extinguishing fears of an immediate, inflation-induced recession. Optimism, supported by strong economic fundamentals, drove the S&P 500 to finish up 25% for the year, after a difficult 2022.
• 2023 Medical M&A experienced a strong year by volume, in line with 2020 and 2022, with 569 transactions announced for the year (2021 remaining the post pandemic outlier). Services was the leading segment, comprising 25% of transactions. This was closely followed by Consumables and Disposable and Therapeutic Devices, each making up 19% of volume.
• The fourth quarter represented a strong bounce back for Medical Device public companies after a sluggish Q3. The Orthopedic index remained the top performer, up 12% for the year, though well below the S&P 500 Growth Index which was up 30%. The Diversified Diagnostic index was the only one of the group with negative annual performance, finishing down 3%.

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