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Two Bain-backed cardiac medical device makers are gearing up to go public this year, in a sign that the drought in listings of medical technology companies could be set to end, according to people familiar with the matter.
Kestra Medical Technologies and Heartflow, which both manufacture non-invasive cardiac tests for patients with heart conditions, have recently hired advisers to prepare for initial public offerings, which could come as soon as the first half of this year, three people said. The timeline on the IPOs could slip, they added.
Kestra, which is based in Washington state, has tapped Bank of America to lead on a public listing, while Heartflow, based in Mountain View, California, is working with JPMorgan, the people said. Heartflow, Bain Capital, BofA and JPMorgan all declined to comment.
High interest rates and the poor performance of several medical technology groups that listed during the frothy pandemic IPO market led public investors to sour on medical device makers, but sentiment seems to have shifted.
Two medical technology groups going public should be a boon for a sector that has suffered from a dearth of public listings in recent years. Only four medical device makers have listed in the US since the start of 2022, according to data tracker Dealogic.
Heartflow’s public listing would be an especially bullish sign for the sector because of its size. In 2022, Heartflow narrowly called off a reverse listing using a special acquisition vehicle, which would have valued it at $2.8bn. Heartflow’s lead product is the first non-invasive device that can be used to diagnose coronary artery disease, which affects about 16mn Americans, according to official estimates.
Kestra — which manufactures a wearable monitoring and defibrillation device aimed at patients with ventricular arrhythmia, a condition that causes the lower chamber of the heart to beat abnormally — raised $196mn in a funding round last July, according to PitchBook. The funding target and listing price of both possible IPOs could not be established.
Last October, seizure monitoring device maker Ceribell, which was also advised by BofA, went public, raising just over $180mn in an upsized IPO, in an early signal that investors were warming to the prospect of listings by medical technology companies. Ceribell’s share price stood at $21 as of market close on Friday, giving it a market value of $753mn, about 24 per cent above its listing price.
The last boom in medical technology IPOs came during the pandemic. Between the start of 2020 and the end of 2021, 16 companies went public in the US, compared with just four companies over the following three years, according to Dealogic.
The IPOs planned for this year would be a victory for the companies’ venture backers. Along with Bain, Kestra is backed by T Rowe Price and Omega Funds, while Heartflow’s investors also include Baillie Gifford and Wellington Management.
Bain, which has a total of $185bn in assets under management, is one of the biggest private equity investors in fast-growing healthcare technologies, a marketplace often dominated by West Coast venture capital funds. It has invested nearly $7bn in 70 such companies since 2016, including Cerevel, which was sold last year to pharmaceutical company AbbVie for nearly $9bn.
Additional reporting by Antoine Gara in New York
