Health care, ophthalmology markets recovering despite pandemic
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Health care markets, and specifically ophthalmology biotech and medtech markets, have largely erased early 2020 losses that were due to the COVID-19 pandemic, according to a speaker at Octane’s virtual Ophthalmology Technology Summit.
“The markets bounced about 40% to 50% off their lows to erase most of the losses. They’re really back from this year. It’s important to note health care stocks have been a shining light throughout the pandemic. Biotech in particular has been really rewarded during this environment,” Mike Giaquinto, senior managing director of SVB Leerink, said during the meeting.
Ophthalmology practices began reopening by June with new sets of procedures, working extra hours and days to recoup losses after state-mandated shutdowns in late March. COVID-19 took health care stocks down nearly 30%, but markets have picked up again, he said.
Ophthalmology companies on average have been flat year to date, but in any segment across health care with a business that could be considered “somewhat or totally elective,” those stocks tended to underperform the rest of the market.
Health care IPO issuance had its best first half in 2020 compared with any of the past 5 years. The dollar volume in 2020 actually doubled over the 2019 volume, he said.
“There was a 2- to 3-week hiatus in March, but the markets picked right back up, and investors had capital to invest in health care,” Giaquinto said.
By comparison, non-health care IPO issuance has decreased by about 15% relative to 2019 and is approximately half the volume of 2018, he said.
Mergers and acquisition have lagged, though, as new deals have stalled and buyers are focused on managing their own business. Valuation gaps are evident, Giaquinto said, as potential buyers want discounts and sellers value their business at pre-COVID levels.
Overactive equity markets will likely continue into the fall as issuers attempt to finance before possible worries of a COVID-19 resurgence and the 2020 election, Giaquinto said.
“These markets are white hot, and from a capital raising perspective, they’re going to remain white hot at least until we move into the fall. Then, hopefully, there won’t be a COVID resurgence and there won’t be volatility over the election,” he said.
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Giaquinto M. State of the ophthalmic industry. Presented at: Octane’s Ophthalmology Technology Summit; Aug. 6-8, 2020 (virtual meeting).
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