Goldman Sachs Healthcare Investment Banking Team


Smaller Banks On The Move

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Smaller firms, who focus on niche market sectors, have also asserted themselves as key players in healthcare investment banking. One that has for many years been near the top is global investment bank Jefferies.

Two other healthcare players are the investment banks Guggenheim Partners and Greenhill & Co. . Both of these firms have a strong history and a growing presence in healthcare. In fact, Greenhill & Co. has, in the past, broken into the top ten in league rankings and is regularly competing with the large global investment banks for a greater share of the healthcare wallet.

Financial And Strategic Investors

The Financial and Strategic Investors Group provides advisory and investment banking services to a broad range of institutions including private equity firms, pension funds, sovereign wealth funds, family offices and other investors.

We assist our clients during the entire lifecycle of their investments starting with idea generation, acquisition advisory and financing, through to the final sale or public market stock offering.

What Do Investment Bankers Do In Healthcare Investment Banking

Though you solely focus on advising healthcare deals, you gain exposure to various types of transactions including Mergers & Acquisitions and Capital Market Advisory.

Specifically, the investment bankers responsibilities include:

  • Keep your fingers on the pulse of industry M& A, ECM, DCM trends to set valuation expectations for client companies and help them plan their timing and go-public strategies
  • Craft a set of key points that form a compelling investment thesis by deploying in-depth knowledge, then make and assemble Memorandum to convey these points
  • Identify and contact prospective buyers, manage information flow and hold strategic discussions with interested parties
  • Serve as a primary liaison between the buyer and seller
  • Help negotiate the final terms of the deal
  • Identify potential issues in the diligence process and follow up accordingly
  • Analyze the capital structure to determine the correct transaction financing, help the client find financing
  • Set preliminary valuation based on evaluating the potential target and its industry
  • Assess the strategic fit of a potential target with the client, identify and quantify synergy opportunities if possible

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Recruiting: Who Gets Into Healthcare Investment Banking

Unlike groups such as biotech equity research and life science venture capital, you do not need an advanced degree in medicine, biology, or chemistry to get into this group.

Healthcare groups hire many undergrads from unrelated majors medical knowledge can be helpful, but more so in specific verticals.

Knowledge of healthcare business models is much more important because that affects everything you do.

A background with some exposure to healthcare always helps so you can tell your story more effectively, but its not a strict requirement.

The recruitment process is similar to the one in any other group: attend a top undergrad or MBA program, earn high grades, get relevant internships/work experience, and do a good amount of networking and preparation.

Clients Of Healthcare Investment Banking

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Healthcare Investment Bankings clients are categorized into 3 main groups including Healthcare facilities and providers, Medical equipment and devices companies, and Bio-Pharma companies.

1.1.1 Healthcare Facilities and Providers

Several big names in this category are McKesson, UnitedHealth, Tenet Healthcare, and Quest Diagnostics.

These companies provide facilities including hospitals, surgical centers, care clinics, rehab facilities or nursing homes. Compared with other healthcare sectors, healthcare facilities and providers have more stable revenue because demands for hospitals, drugs, and medical supplies remain significantly unaffected regardless of economic conditions. A majority of these companies often employ high leveraged buyouts for their operations to increase returns, making them valued clients of DCM group in Investment Banking firms.

1.1.2 Medical Equipment and Devices Companies

Medical equipment and devices companies operate on a bigger scale than Healthcare facilities and providers. Dickinson & Company, Siemens Healthineers, Baxter International, and Boston Scientific are representative names in this category.

1.1.3 Biotechnology and Pharmaceuticals

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Along with an uptick in questions about restructuring investment banking and distressed private equity, weve also seen more interest in healthcare investment banking lately.

It makes sense: when theres a recession, pandemic, or market crash, everyone wants to run to the safe group.

The only problem is that healthcare has not been so recession-resistant this time around.

Its still a solid industry group, but it may not deliver on everything it promises.

Well cover that as well as the following points in this industry overview:

  • The main sectors within healthcare, including drivers and operating and valuation metrics.
  • Sample investor presentations, valuations, and Fairness Opinions.
  • Recruiting and what to expect as an Analyst or Associate.
  • The top banks in the sector and exit opportunities.
  • Pros and cons of the group and why the recession-resistant label is a simplification.

What Do You Do As An Analyst Or Associate In Healthcare Investment Banking

As always, youll work on a combination of pitch books, deals, and random tasks.

Your experience as an Analyst or Associate depends on the specific vertical you focus on within healthcare. There are three points worth noting here:

  • In Healthcare Equipment & Services, youll tend to work with bigger companies that use more debt. Leveraged buyouts are common, and so are standard M& A deals. Youll learn more about finance and less about the market and the science behind different drugs.
  • In Pharmaceuticals, Biotechnology, and Life Sciences, youll work with the huge companies and much smaller companies, so youll gain more market/product knowledge, but youll spend less time working on LBOs and high-yield debt financings.
  • You may get exposure to more unusual deal types, such as joint ventures, royalty arrangements, asset swaps, and spin-offs because managers at the Big Pharma companies often control collections of assets, and they may prefer to partner with other firms rather than outright acquiring them.
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    Pharmaceuticals Biotechnology And Life Sciences

    Representative Large-Cap, Global, Public Companies: Johnson & Johnson, Roche, Novartis, Pfizer, Bayer, Merck, GlaxoSmithKline , Sanofi, AbbVie, Abbott Laboratories, AstraZeneca, Amgen, Gilead, Eli Lilly, and Teva.

    Many of these firms are diversified and operate in other areas, such as devices and equipment some, like Johnson & Johnson, even operate outside the pure healthcare sector.

    There are some differences between pharmaceutical and biotech firms, but their business models are quite similar: spend a lot of time and money discovering and developing drugs, go through expensive clinical trials, pray wait for FDA/EMA approval, and then make as much money as possible until patent expiration.

    So, it may be more helpful to divide this segment into these sub-categories:

    • Branded Biopharma Companies These companies follow the model described above. Its high-risk, high-reward because most drugs fail, and of the ones that succeed, only a small percentage turn a profit. But a blockbuster drug can bring in billions of dollars and might generate sales even after patent expiration.

    It takes an average of ~10 years to develop a new drug and win government approval and another ~10 years to bring it to market and ramp up sales & marketing. Conveniently, drug patents in most developed countries last for around 20 years.

    Branded companies tend to be more valuable than generic companies because they have time-limited monopolies and enjoy much higher margins.

    Is Healthcare Investment Banking Truly Recession

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    And now we arrive at the punchline: Sort of, but maybe not as much as you think and it depends on the type of recession and your vertical within healthcare.

    In a generic recession driven by a credit bubble that bursts , yes, healthcare holds up relatively well.

    Unemployment rises, but people still go to hospitals, take their medicine, and get surgeries nursing homes are still populated.

    But if its a recession caused by a pandemic or another health issue, all bets are off.

    The New York Times Upshot describes this well: in 2020 so far, 1.4 million healthcare jobs have been lost in the U.S.:

    The problem is that hospitals in the U.S. earn most of their money from elective surgeries, and people are now afraid to go to the hospital because of COVID-19.

    That creates a death spiral where hospitals cant afford to keep everyone on staff, which then results in even less capacity for elective surgeries, which then results in even less demand.

    Sectors like branded pharmaceuticals have held up better, and job losses are still not as bad as they are in restaurants, hotels, and retail.

    But healthcare investment banking deals are being pulled from the market , and its clear that the sector is not the safe haven that many people had believed.

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    Investment Banking Division Classic Healthcare


    Our division works on some of the most complex financial challenges and transactions in the market today. Whether advising on a merger, providing financial solutions for an acquisition, or structuring an initial public offering, we handle projects that help clients at major milestones. We work with corporations, pension funds, financial sponsors, and governments and are team of strong analytical thinkers, who have a passion for producing out-of-the-box ideas.

    Investment Banking Division

    The Healthcare investment banking group provides corporate clients across both the consumer and retail spectrum with advice, access to financing and execution expertise across a wide range of investment banking products.


    Role Responsibilities

    Our Analysts and Associates play an important role in developing and strengthening our client relationships, participating on our advisory teams and in structuring and executing a full range of financial transactions. Their responsibilities include creating and analyzing financial models, organizing and preparing client presentations, helping manage transaction processes, and assisting in structuring transactions. They will gain exposure to the firmâs businesses and expand their knowledge of the investment banking industry, as they develop key analytical, communications and marketing skills.


    Basic Qualifications

    Interning At Goldman Sachs: A Real Apprenticeship Culture

    James Argo 22 is working as a summer intern in the healthcare sector within the Investment Banking Division at Goldman Sachs. When starting at Hamilton a few years ago, however, economics was not even on his radar.

    I fell into the trap of thinking whatever you were good at in high school should be your career, Argo recalled. For him, that was biology, but after a few semesters taking courses at Hamilton, among them Intro. to Economics, he was drawn to the excitement of the fields time-sensitive transactions.

    High School: Paramus Catholic High School

    At Goldman Sachs, Argo is part of the healthcare team, which handles investment banking services for a broad array of clients, from biotech to medtech to really anything that would fall under the healthcare category, he said. As an intern, Argo works on live-deal teams, working alongside analysts and more senior bankers.

    Argo emphasized the active role that interns at Goldman Sachs are encouraged to play in the office. They try to throw you right in, to whatever extent possible, and show you what it would be like to be a fulltime employee, he said. If a client has a question, they might ask you to take a first pass at researching something they try to get you as involved as possible.

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    The New Team Is Seen As Integral To Growth For Citigroup’s Investment Bank


    Citigroup has hired a senior Goldman Sachs dealmaker to lead a new ‘super group’ of 150 investment bankers focused on the healthcare and ‘wellness’ industries.

    Chuck Adams has joined Citigroup as vice chairman and global head of a newly-formed unit called, global healthcare, consumer & wellness, according to an internal memo seen by Financial News.

    The US…

    Healthcare Valuation And Financial Modeling

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    Unlike other sectors, such as commercial banks, insurance firms, and oil & gas companies, there are no huge accounting, valuation, or financial modeling differences in healthcare.

    You still use standard methodologies such as the DCF, comparable company analysis, precedent transactions, accretion/dilution, and LBO models.

    Thats why we cover healthcare in our Financial Modeling Mastery course and Interview Guide: a separate course is unnecessary.

    The main differences include the following:

    • Different Deal Types As mentioned above, joint ventures, earn-outs, royalties, asset swaps, and spin-offs are all more common in this sector. Modeling something like a royalty arrangement often requires complex formulas and Excel work, even though its not a traditional 3-statement model.
    • Biopharma DCFs When valuing branded drug companies, you often build a probability-weighted DCF that multiplies future cash flows from products by their success probabilities.

    The probability varies based on the stage the product is at if it has not even passed Phase I clinical trials yet, the success probability will be low because most products fail.

    But if it has already passed Phase II, the chances of making it through Phase III will be much higher.

    Heres an example from our Jazz Pharmaceuticals case study in the Financial Modeling Mastery course :

    As another example, we cover Attendo AB, a Swedish healthcare services company, in one of the case studies in the IB Interview Guide.

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    Healthcare Services & Facilities

    Representative Large-Cap, Public Companies: UnitedHealth, McKesson, AmerisourceBergen, Cigna, Cardinal Health, Anthem, Centene, Fresenius SE & Co., HCA Healthcare, Tenet Healthcare, Alfresa Holdings, Shanghai Pharmaceuticals, MediPal Holdings, Quest Diagnostics, and Labcorp.

    Youll notice that I removed the global part here because many of these companies are limited to their home markets.

    Also, since many of the companies in this list are private health insurance firms, they are far less prevalent outside the U.S.

    This category includes everything from distribution companies, like McKesson and Cardinal Health, to healthcare services firms, which include pharmacy benefit managers , lab testing services, and others, to managed health care, AKA private health insurance.

    Youll notice that there are no facilities providers, i.e., dedicated companies that operate hospitals or nursing homes, in the list above.

    Thats because most of these companies are smaller, and many are private even if they earn billions of dollars in revenue.

    One example of a public hospital operator in the U.S. is Community Health Systems HCA and Tenet also operate hospitals, among other services.

    Key drivers in this sector include patient enrollments, population growth, and government reimbursements, as well as pricing power for distributors and PBMs.

    Insurance is a whole separate topic that were not going to delve into here please see the FIG article for more.

    Big Banks Dominate Healthcare

    Morgan Stanley , JPMorgan Chase & Co. , Goldman Sachs Group Inc. , and Citibank and are the four banks that have generally won the highest share of fees and deals when it comes to mergers and acquisitions, according to GlobalData. The fifth-place spot tends to oscillate, but often goes to Barclays .

    You may notice that many banks can be involved in the same deals. Even though a deal is high profile, it may not result in the highest revenues for the banks. Competition is often fierce between the large banks jockeying for healthcare deals, which can hyperinflate prices due to a bidding-war effect.

    One of the main reasons the big banks are able to maintain such a market share of the healthcare investment industry is because they are able to handle the often turbulent price-swings some healthcare companies tend to incur, especially during a period of drug-pricing or FDA/USDA approvals. Smaller banks aren’t able to commit the capital oftentimes required as a safety net when signing large healthcare companies.

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    Goldman Sachs Asset Management And Charlesbank Capital Partners Complete Acquisition Of Mdvip Primary Care Network

    BOCA RATON, Fla., Oct. 14, 2021 /PRNewswire/ — MDVIP, the national leader in personalized membership-based healthcare, today announced that the Private Equity business within Goldman Sachs Asset Management and funds affiliated with Charlesbank Capital Partners have completed the acquisition of MDVIP from Leonard Green& Partners and Summit Partners. The transaction gives Goldman Sachs and Charlesbank majority ownership of the company. Financial terms were not disclosed.

    With this investment from Goldman Sachs and Charlesbank, MDVIP is ideally positioned to advance its growth initiatives.

    MDVIP leads the market in membership-based medicine with a national network of approximately 1,100 primary care physicians serving 362,000 patients. In the MDVIP model, doctors maintain smaller practices, which enables them to spend more time with patients and provide more attentive, individualized care compared to traditional, high-volume practices. Patients receive the MDVIP Wellness Program, a comprehensive yearly health assessment that includes advanced diagnostic tests and screenings to give a more complete picture of their overall health. Using the results, physicians provide education and coaching to help patients make healthier lifestyle choices, prevent disease and achieve their wellness goals.

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    Common Pathways To Get Into Investment Banking

    Goldman Sachs First-Quarter Trading, Revenue Top Estimates

    Classification: Investment Banking Division as Tier 1, Sales & Trading , Equity Research as Tier 2

    The step-by-step guide created with 6 steps gives you the best shot possible at landing one of the most lucrative careers in finance. However, in this article, the pathway to get into Investment Banking is summarized with 4 main steps as follows:

  • Resume / Cover letter
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    How To Get Into Healthcare Investment Bank

    Getting into Healthcare Investment Banking is similar to getting into any groups in an Investment Bank. The application process is the same. The difference is you will choose your preferences by ticking boxes in the application form. In general, if you receive offers after Superday, you can be placed in any industry groups or product groups based on your own experience and your skills. However, if you are interested in the healthcare industry, you should let recruiters know. The HR department and group leaders are quite flexible, they will consider your preference.


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