MedTech Insights and Expertise

2021: Economic Outlook Redux

Kinsella Group

COVID-19, significant reductions in elective surgeries in 2020, uncertainty among OEMs as to product requirements, restricted plant access for vendors…and now proposed significant personal, corporate and capital gains tax increases!

The Kinsella Report on Medical Contract Manufacturing

The Kinsella Report provides key metrics for our industry based on annual survey results. Unfortunately our survey results from survey participants in September of 2020 are likely very different from the results we might expect if the survey were conducted today given the externalities of late 2020.

In September 2020, the majority (over 60%) felt that they would see revenue shortfalls of under 20% for calendar 2020. The remainder felt they would see growth despite the factors affecting the market. In fact, based on our interactions with industry participants, most companies reported a range of reductions in revenues. Fall offs of as much as 35% have not been uncommon particularly among surgical instrument makers; implant producers saw more modest fall offs which  varied among customer types being supplied. Suppliers to large OEMs did not see as significant dips if any in some cases as compared to suppliers to smaller OEMs who did see impactful losses of revenue.

Surprisingly a minority of Survey participants did not identify the impact of COVID-19 as a major detraction of growth for 2020. I suspect many were expecting hospitals and ASCs to resume surgeries much earlier than occurred.

The Survey asked about the prospects of raising capital (debt/equity). A strong majority answered they saw no prospect of raising capital over the next 24 months. (This strikes us as very curious. A business owner who has plans to sell at some point must realize that debt is subtracted from business value on exit on a 1:1 basis while earnings carry multiples generally in excess of 7 to 8 times. One must ask why an investment in highly efficient machinery or robotics which could increase earnings would not be considered with multiples on earnings as strong as they are in our industry.)

Finally the Survey found that just under 50% of participants indicated they were likely to sell their business in the next 24 months. Given the prospect of a doubling of the long term capital gains tax from 20% (plus 3.8% Medicare tax)  to 40% (plus Medicare tax) (plus state tax) one might think that more than 50% of participants, if asked today, might respond with an intention to sell this year of 2021 to beat the anticipated tax increase.

We are anxious to learn participants’ responses to The 2021 Kinsella Report which will be sent to MedTech contract manufacturers this June-July.


Kinsella Group, Inc. is an investment bank focused exclusively on the MedTech and medical contract manufacturing markets.  Kinsella Group has been representing buyers and sellers in this space for over 20 years, working to exceed desired outcomes.  For more information, please contact Bob Kinsella at or by calling (312)229-1357.