EY’s industry report found that average financing rounds reached $36m, reflecting a 122% increase over 2024. Image credit: BEST-BACKGROUNDS via Shutterstock.com.
A new report by EY has revealed that despite tariff uncertainty, the medtech industry has recorded its seventh successive year of top-line growth to reach a valuation of $584bn in the 12 months ended 30 June, with the sector on course to record 6% to 7% revenue growth by the end of 2025.
EY’s Pulse of the MedTech Industry report found that medtech VC investments were up 16% in the first half of the year compared with the same period in 2024, with average financing rounds reaching $36m, reflecting a 122% increase over 2024.
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The report noted that VC funding in the industry has been characterised by concentration in specific financing rounds, with companies targeting high-growth assets.
“Medtech continues to deliver steady growth, and performance is being driven by innovation and market expansion in high-growth areas such as pulsed field ablation (PFA), structural heart, robotics, diabetes and orthopaedics,” explained John Babitt, EY’s global medical technology leader.
Notable investments during EY’s report period include Canadian PFA system company Kardium securing C$340m ($250m) and British robotic surgery company CMR Surgical attracting equity and debt capital of around $200m.
Babitt continued: “The [medtech] sector is proving to be a safe harbour within the relatively underperforming broader healthcare industry, generating stronger results and building confidence for the quarters ahead.”
Companies adopt “judicious” approach to M&A
On the M&A front, EY’s report observed a trend toward “more judicious” dealmaking, noting that while the number of deals has not increased compared with 2024, the average deal value is on the rise.
Overall M&A spending for 2025 to date stood at $38.8bn, with the average deal size of $497m reflecting an 11% and 72% rise from the average across 2024 and over the previous decade, respectively.
The biggest deals of the 12-month period to June 30 included Stryker’s $4.9bn acquisition of Inari Medical, Johnson & Johnson’s $1.7bn move for Israel’s V‑Wave, and Edwards’ combined $1.2bn deal for Endotronix and JenaValve.
The figures indicate that in in the 12 months to 30 June, M&A activity is focused on “fewer but more meaningful opportunities”, EY Americas life sciences leader Arda Ural highlighted during a media webinar on the report’s key findings.
IPOs expected to continue
Regarding initial public offerings (IPO), while in the report’s surveyed period there has only been around five medtech IPOs, including Beta Bionics $204m IPO at the start of the year and Kestra $204m IPO in March, John Babitt shared during the webinar that there appears to be an ongoing appetite for medtechs to go public.
Indeed, beyond the report’s evaluation period, HeartFlow completed a $364m IPO in August, while reports have emerged this month that Medline may be weighing a $5bn IPO in the coming months.
“We would also expect to see a lot of dual process, where companies move through and evaluate going public, but also run a mini process from an M&A price check standpoint,” Babitt added.
“TherOx is an example of a company that ran through this dual process playbook and ended up with an M&A event with Terumo in 2020, and we expect to see more of those activities in 2025, with some of those resulting in IPOs that may be launched in the first part of next year around the JP Morgan conference and into 2026.
The report’s release follows the Trump administration’s initiation of a Section 232 investigation on September 25. The US Department of Commerce launched an investigation into the national security implications of importing medical devices and other healthcare equipment, leading to a dip in medtech stock prices.
It remains to be seen how this may affect the medtech landscape moving forward.
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