GE Capital: Healthcare Companies Poised to Invest in 2014
Seventy-seven percent of healthcare executives expect business performance to be stronger in 2014, according to a survey released by GE Capital’s Healthcare Financial Services business, and nearly the same percentage (75%) plan to invest aggressively in their business over the next 12 months, employing various strategies. M&A was cited as the primary strategy (38%), followed by revitalizing existing offerings (36%) and launching new segments or lines of business (26%).
GE Capital conducted the survey in advance of the JP Morgan Healthcare Conference, held in San Francisco January 13-15. Respondents included 418 senior executives from pharmaceutical and medical technology companies, hospitals, healthcare service providers and health systems, as well as other industry stakeholders, who discussed their industry and company outlook for 2014.
“While there is uncertainty for many of these companies about exactly how the Affordable Care Act will affect them, a large majority are confident that 2014 will present attractive investment opportunities to drive growth,” said Al Aria, senior managing director of GE Capital, Healthcare Financial Services’ corporate finance team.
Additional findings from the survey include:
Industry Outlook: Fifty-four percent of respondents anticipate the healthcare industry will perform more strongly in 2014 versus 2013. Thirty-five% forecast it will perform the same with just 11% expecting it will perform weaker.
Challenges: Over half (57%) of respondents believe the Affordable Care Act changes/implementation will be the greatest challenge for the healthcare industry in 2014, followed by regulatory scrutiny (20%) and the U.S. economy (13%). Far fewer executives cited challenges in access to financing (8%) and rising interest rates (2%) as their predominant concern.
Financing: Fifty-five percent of respondents noted that acquisition financing will be most important form of financing for their business over the next 12 months. Respondents also cited recapitalization driven by company-specific considerations (16%) and refinancing to extend or improve terms on current credit facilities (14%) as top-of-mind in 2014.