PwC Report: Healthcare Led U.S. IPOs in Volume and 2014 Returns

Recently, PwC released its 2014 U.S. Capital Markets Review, which compared IPO activity across major sectors over the past three years and provided a detailed analysis of 2014. So how did the healthcare sector perform in U.S. IPOs, and what were its distinguishing features? VCBeat takes you through the highlights.

Healthcare Growth Outpaces All Other Industries

Over the past three years, the healthcare sector has led all other industries in the growth of initial public offering (IPO) activity. The number of healthcare IPOs surged from 14 in 2012 to 54 in 2013, and further to 115 in 2014, making it the sector with the highest number of IPOs, with a compound annual growth rate (CAGR) exceeding 180%. In terms of capital raised, the healthcare sector accounted for only $851.9 million in 2012—the smallest among the seven categories, representing just 2% of the total. However, within two years, this figure climbed to $9.685 billion, with a CAGR exceeding 230%, and its share increased to 11%.

IPO-Year Returns Lead Other Industries

Compared with other industries, the healthcare sector demonstrated superior performance following its 2014 IPOs; notably, its year-end return rate exceeded that of all other industries by 30%, while the first-day return rate stood at 13%.

However, returns vary significantly depending on company size. Companies with valuations between $100 million and $1 billion performed the best, followed by those valued at under $100 million. In contrast, companies with valuations exceeding $1 billion showed almost no growth after their IPOs, whether in terms of first-day performance or year-end results. This may be because ultra-high-valued companies had already exhausted their potential at the time of listing, having been overhyped to the point of lacking subsequent momentum. Across all sectors, mega-IPOs have delivered relatively low returns, a trend that is particularly pronounced in the healthcare industry.

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