Healthcare help
guys ill be starting in a MM healthcare group soon and i wanted to get some background into the industry.
any suggestions on how to get some background into pharma, biotech, services etc? ill try getting an initiating coverage ER report.
does anyone know how accounting differs (treatment of R&D)? any HC specific multiples? anything would be helpful!
i understand that ill learn everything on the job and that my time is better spent doing x y and z, but i just dont want to hit the desk and have no clue whats going on.
Would be interested in this too
I work in MM HC, William Blair has a great CRO report, look at big 4 consulting and MBB in their HC sections. I'll post more later.
Every desk is going to do things a bit differently, your associates will have a way they want things done and that's the way you are going to do it. If you don't want to be completely clueless, just read up on the players in the space. It doesn't really make sense for you to get into the nitty gritty accounting treatments right now - believe me, they will train you.
If you're really curious about treatment of R&D, I would expect that to depend heavily on what vertical you are talking about. R&D for a pharma company is generally going to be in COGS and treated as a continuing operating expense, but R&D for say, a urinalysis lab is probably going to be treated as a one time expense. Healthcare is a huge and extremely diverse space, and different healthcare companies are going to treat R&D differently. I'm not sure how MMs do it but BB healthcare groups tend to be highly verticalized as a result.
Is the MM William Blair? If so congrats, they're very well respected in the space and Chicago is a great city.
futurectdoc - thanks for the heads up on the William Blair reports, they're money. Looking forward to whatever you have to post later.
NYCbander - thanks for the thoughts on R&D. Looks like it'll depend on a deal by deal basis on which vertical it falls into. good to at least have that sense though. it seems like the best thing at this point is just read up some equity research / industry reports
Health Care IB is a unique space, first it is incredibly varied, secondly it's huge and thirdly in some areas it is still rapidly growing and consolidating. First things first, look at the various types of companies involved. Basically there are the clinical and non-clinical. Clinical would be hospitals (Tennet Healthcare), outpatient clinics (minute clinic), chains (lenscrafters, Aspen Dental). Non-Clinical would be pharma (Pfizer), device manufacturers (St. Jude Medical), biotech, CROs (Charles River) anything with no direct patient contact.
Clinical facilities may have a lot of equipment and other hard assets with some goodwill thrown in whereas non-clinical may be more IP. My disclosure is I have experience in med devices and CROs, I'm only an SA. Valuation ratios vary and I'm more familiar with the middle and lower middle market, but it really depends on segment, growth prospects etc.
Healthcare oftentimes has less financially savvy CEOs, physicians oftentimes are not great bottom line guys and on the smaller side of the middle market you may see more of them. Deal flow has been strong in this area through out the recession, but there is a sea change coming with healthcare reform, it's full effects will be seen in 2014, I think for companies that create efficiencies i.e. CROs, generic pharmaceutical manufacturers and those that offer outsourcing services this may be a great time. However, I feel traditional R and D heavy pharma houses and hospital chains may be hit hardest. An interesting thing to note is pub fin does do a lot of health care as well, the reason for this is that many hospitals are not for profit.
Healthcare attracts people with interesting backgrounds I have noticed, many people have Ph.D.s, MDs, PharmDs, DOs, MSs or bachelors in related areas. If your science background is weak it may be worthwhile to get bio for dummies, anatomy and physiology for dummies and an easy immuno (Kuby) or pharmacology (Board review series) text. It really isn't necessary, but it is nice to understand the underlying products.
Feel free to ask away if I missed anything.
thanks for the thoughts futurectdoc, really helpful.
i understand this will vary per vertical, but how are you seeing partnerships / JVs / etc being treated when it comes to normalizing income or valuing companies?
are you familiar with the treatment of R&D? capitalized?
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