Health Tech Activism Surges in Era of Cash-Burn Scrutiny (The Deal)

Last month, OraSure Technologies Inc. (OSUR) settled with Altai Capital Management LLC to add one of the activist’s director candidates onto the medical diagnostics kit maker’s board. OraSure, Altai argued, was burning cash by pursuing “speculative diagnostics” acquisitions to the detriment of shareholders. The campaign is just the latest in a long string of insurgencies targeting health technology companies as the sector has shifted away from a zero-rate “science first” environment to one more focused on rigid capital discipline and milestone-driven valuations. “When capital was effectively free, investors were more willing to fund early-stage science on a long horizon,” said Goodwin’s Leonard Wood. “Companies could raise equity more easily. There was less immediate pressure to demonstrate near-term progress. Today, with a higher cost of capital, that dynamic has changed. Investors are much more focused on cash runway, cash burn, and whether capital is deployed toward clearly defined milestones that are coming up in the near future,” said Wood.

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