What can midsized MedTech organizations expect in 2022?
We asked Robert Kinsella a few questions on this year’s Kinsella Report, its findings, and the outlook for MedTech in 2022.
The past twenty months through the COVID pandemic have created unprecedented challenges for business, especially healthcare.
The Kinsella Report originated in 2020 as a tool to survey c-suite individuals in mid-sized MedTech organizations to assess the current year’s sales, operational performance, and outlook for the year ahead. The purpose continues to serve as an industry benchmarking tool while COVID continues to challenge manufacturing and healthcare environments.
Q: Could you share some of the reasons you began the Kinsella Report in 2020?
We initiated the Kinsella Report in order to create a benchmarking standard for medtech contract manufacturers to allow them to assess their performance against their peers. The 2020 timing coincided with Covid and its impact on elective surgery.
Q: Did you have any expectations as to survey results this year?
I expected revenues and margins to have recovered significantly as compared to pre-Covid levels. This of course did not happen as issues related to Covid extended through the full year.
Q: Could you please share 2021 Kinsella Report highlights?
- 33% of our respondents anticipate growth of 20% in 2022
- 60% of our respondents are likely or highly likely to sell their business in the next twenty-four months
- 83.3% of sales is from existing customers
Q: You mentioned 60% of surveyed organizations anticipate a sale within the next twenty-four months. Can you shed color on factors impacting organizations’ appetite to sell?
An indication of an intention to consider sale is not a commitment to sell. But it does indicate that owners are clearly interested in valuations and the identity of buyers. I expect this interest is based on the active market place where a number of transactions have occurred. Additionally, reported multiples have expanded resulting in increased valuations. Companies understand that the expansion in multiples is due in part to the low interest rate environment which has prevailed over the last few years. It should be noted that as the Federal Reserve moves to increase interest rates in 2022 this may impact negatively multiples and valuations.
Q: Also, 33% anticipate hyper-growth – what is your understanding of the underlying factors driving this anticipated growth?
There are factors which could be expected to support this expectation. Pent up demand from 2021 due to delayed elective surgeries are expected to impact demand for 2022. Additionally, OEM product introductions delayed due to Covid are expected to be introduced in 2022. And 2021 found some smaller OEM’s reducing or cancelling previous placed orders leaving significantly diminished inventories now requiring replenishment to meet market demand.
Q: Anything to add?
Kinsella Group is always happy to meet with contract manufacturers and OEM’s to discuss methods to enhance company valuations it relates to a sale of the enterprise.
