Divide Growing Between Strong, Weak Medical Device IPO Companies

Article preview from Start-Up - September 2008

Find out why a growing number of medical device companies that managed to go public over the past few years are finding their market capitalizations slipping away.

Article preview from Start-Up - September 2008

The arrival of September marks the beginning of the season. We begin to analyze and debate the gap between The Rich and The Poor; the Haves and The Have Nots. But in this particular instance we're not thinking about the election of a new president, but rather the possibility of medical device companies going public.

Let's be frank. Things don't look good for device firms or their investors. Investment bankers aren't holding out a great deal of hope that the window for these companies will open up anytime this year. (See "Thriving When the Device IPO Window Closes," IN VIVO, July 2008.) Sam Navarro, managing director at Cowen & Co., says medical device companies with more than $50 million in revenue will be reviewed on a case-by-case basis. But all others likely will need to wait until the macro-economic uncertainties begin to clear up. Similarly, Michael J. Neuberger, managing director at Jefferies & Co. Inc., outlined a list of 10 things that must happen for the IPO window to reopen. The list starts with falling oil prices and a stronger dollar and works through the credit crisis, stronger corporate earnings, improved market sentiment, and so on. (See "Venture Round: An IPO To Do List," The IN VIVO Blog, July 25, 2008.)

Of course, the value of comparables come into play as well. And this is where the news for those device players with an eye toward the public market remains discouraging.

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Companies mentioned in this article:
Acclarent Inc.
Baxter International Inc.
Boston Scientific Corp.
Medtronic Inc.
Restore Medical Inc.
Smith & Nephew PLC
Stryker Corp.
VNUS Medical Technologies Inc.
Zimmer Holdings Inc.

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