Medical Device IPOs Could Revive Health Tech Listings

Will 2025 bring an end to a fallow period for medical device company IPOs?

As the Financial Times (FT) reported Sunday (Jan. 19) a pair of initial public offerings (IPO) by cardiac device makers could be a sign that a dearth in medical tech listings is soon to end.

Sources told the FT that Kestra Medical Technologies and Heartflow, which both make non-invasive cardiac tests for patients with heart conditions, have recently hired advisers to prepare for IPOs. These listings could happen as soon as the first half of the year, one source said.

The report said high interest rates and a lackluster performance by other medical companies that went public during the pandemic has led investors to cool on medical device companies. Now, attitudes appear to have shifted following a nearly three-year stretch in which just four medical device manufacturers went public in the U.S.

According to the report, Heartflow in 2022 called off a special acquisition company (SPAC) listing that would have valued the company at $2.8 billion. The company’s flagship product is a device that can be used to diagnose coronary artery disease.

Kestra — which makes a wearable monitoring and defibrillation device for people with ventricular arrhythmia, raised $196 million in a funding round last July, the FT said, citing data from PitchBook.

The FT piece is the latest in a series of recent reports expressing optimism in a renewed IPO market this year.

For example, Reuters reported earlier this month that investment bankers were getting ready for an uptick in equity capital markets this year, with optimism fueled by a promising stable of IPOs.

Among these companies are another medical supply firm, Medline, as well as liquified natural gas producer Venture Global and cybersecurity firm Sailpoint.

Burgeoning capital markets activity, driven by greater economic confidence, is expected to bolster many of these private equity-backed companies, that report added. The last two years have seen private equity outfits struggle to sell their companies or take them public, with high interest rates and a turbulent stock market hindering dealmaking.

“Many of the companies owned by private equity firms have become sizable,” Arnaud Blanchard, global co-head of equity capital markets for Morgan Stanley, told Reuters.

“Sponsors know it may take a while to complete a full exit, so they are becoming active now, early in the cycle.”