Deal Activity Alerts: Sector & Company Updates

Author: JC Lupis

Friday February 26th, 2021

Sector Alert! Keep an Eye on the Employer-Sponsored Insurance Market.

We recently highlighted an article about growing investor interest in the employer-sponsored insurance market as employers look to rein in rising healthcare costs. Soon after, Stone Point Capital announced its investment into Allied Benefit Systems, noting that “the group health TPA market is poised for consolidation.” Described as “a leading independent third-party administrator of group health benefits to self-insured employers,” Allied provides customized solutions to more than 9,000 self-insured employer groups, and boasts a strong network of relationships that proved attractive to Stone Point.

Stone Capital’s investment follows from TA Associates’ December growth investment in The Benecon Group, a developer and manager of self-funded medical benefit programs. According to TA Associates, “A number of factors continue to drive growth in the self-funded medical benefit market, including a need for better cost management and greater control over plan design.”

You don’t have to look much further back for another PE deal in this market: in November, it was New Mountain Capital partnering with HealthComp, a leading TPA founded in 1994 and serving more than 400,000 members in the self-funded employer industry.

Clearly, it’s worth keeping an eye on this market, because investors certainly are.

Sector Alert! Healthcare Staffing Activity is Ramping Up.

The pandemic has brought to light chronic staffing shortages, and staffing firms are seeing plenty of demand as a result. Not surprisingly, then, this has also been a focus of private equity interest, with several deals recently announced:

  • This week, Cornell Capital and Trilantic North America announced their acquisition of Fastaff and U.S. Nursing, both founded in 1989. The latter – U.S. Nursing – is an interesting one, as it is a top provider of “strike preparedness and job action staffing services for hospitals with unionized workforces.” Several such actions have taken and continue to take place during the pandemic as nurses have protested unsafe working conditions and argued for higher staffing levels.
  • This was the second set of acquisitions reported by Cornell Capital and Trilantic North America in a roughly 2-week period. Earlier this month they announced their acquisitions of trustaff Management – which provides travel nurse and allied healthcare staffing services – and CardioSolutions, which provides cardiologists and support personnel. The announcement also included an agreement to acquire Stella.ai, an AI-backed marketplace for employers and job-seekers.
  • Not to be outdone, Webster Equity’s Epic Staffing Group has also announced a couple of transactions of its own of late. They include the acquisition of TherapyBrands, which focuses on placing therapists, psychologists, social workers and special educators into schools, as well as the acquisition of TalentMine, a consulting and contract staffing group serving the biotech, pharma, and medical device sectors.
  • In two non-PE-backed deals, Health Carousel made its 5th and 6th acquisitions in the locum tenens space. This month, Health Carousel picked up MEDPATH, a workforce management solution provider established in 2012, while last month it announced its acquisition of Vitruvian Medical, which bolsters its offering in surgery and anesthesia locum tenens staffing.

Friday February 5th, 2021

Sector Alert! Ophthalmology deals are still going strong.

Several years into private equity (PE) investment, there are already dozens of PE-backed ophthalmology platforms. These platforms continue to be acquisitive in the early days of 2021, with GHA counting at least 11 PE or PE-backed deals in the ophthalmology and optometry vertical. For example, Partners Group’s EyeCare Partners has announced multiple acquisitions, as have New Harbor Capital’s Quigley Eye Specialists and Revelstoke’s CVP.

Two deals, however, stand out:

Sector Alert! RCM companies are also trading, and ASCs are a focus.

Moving away from physician services, we’ve also noted some activity in the revenue cycle management market of late, with an average of about a deal a week so far this year. In one transaction Simplify ASC – which offers a proprietary EHR and practice management platform to ASCs – bolstered its service offerings by acquiring PhyBus Revenue Services. Meanwhile, three other deals indicate sustained PE interest in RCM companies and reflect the rise of ASCs:

  • Taking advantage of tailwinds in the ASC industry, SSM Partners, a private equity firm based out of Memphis, has made a strategic growth investment in Mnet Health, which provides patient billing solutions for surgical hospitals and ASCs. (Press release, 1/28/21)
  • Clearlake Capital completed its buy and build investment by carving out and acquiring nThrive‘s Technology Division, a healthcare RCM SaaS platform. nThrive Technology works with more than 900 hospitals and health systems, including 37 of the 40 largest providers in the US. PE Hub reporting and sources indicate that the business was valued at more than $1 billion, and that nThrive’s tech business generates roughly $100 million in adjusted EBITDA. (Press release, 1/28/21)
  • Aquiline Capital Partners, a NY-based firm, clearly sees an opportunity in ASC-focused solutions too, announcing a strategic partnership with National Medical Billing Services. Founded in 2003, National Medical is an RCM company that bills itself as “ASC revenue cycle specialists.” Its CEO has recognized the shift in the market, noting that “the ASC market is rapidly evolving and growing because of high acuity procedures migrating to the ASC setting.” (Press release, 2/3/21)

Company alert! Enhanced Healthcare Partners exits a pair of investments.

Finally, a mention for Enhanced Healthcare Partners, which has exited two investments recently.

The first was SCA Pharma, sold to The Vistria Group and Excellere Capital Management in one of our top deals for the week of 1/19-1/22/21. EHP had invested in SCA in October 2017. SCA, founded in 2010, is an FDA-registered 503B outsourcing facility that provides compounded drugs to more than 1,200 hospitals and health systems in the US. (Press release, 1/21/21)

More recently, Japanese company HORIBA announced its acquisition of MedTest Holdings, consisting of MedTest Dx, Pointe Scientific, Clinitox Diagnostix, and Medical Laboratory Solutions. MedTest Dx describes itself as “a world leader in chemistry reagents manufacturing and diagnostic solutions for decentralized clinical testing.” While EHP hasn’t formally announced this exit on its website, it does list MedTest as an active portfolio company, and it appears its investment can be traced back to May 2011. (Press release, 2/2/21)

Friday January 15th, 2021

Sector Alert! A new PE darling? ENT activity on the rise.

ENT (or otolaryngology) remains in the early stages of consolidation, but we’re seeing indications of increased dealmaking in this vertical. PE firms may be attracted by the broad swathe of the population needing treatment, the diverse service lines offered, and the strong demand profile.

Here are the deals announced in the past week or so, headlined by a new PE-backed platform.

See also: GHA Q&A with Rapidly-Expanding ENT & Allergy Platform SENTA Partners

Sector Alert! A pair of PE-backed urology deals.

Urology has also been developing into an appealing vertical for PE investment, driven in part by its multiple revenue streams and whitespace opportunity. There are now 5 PE-backed platforms (6 if you include last week’s Integrated Oncology Network’s partnership with Southwest Urology), and add-on activity appears to be accelerating. This week brings the following news, headlined by the formation of the largest urology group in the country.

See also: 25 Statistics About the Urology Market

Company alert! Audax is on a roll.

Finally, Audax Private Equity deserves a mention for its activity this week, with platform deals and some add-ons, to boot. Not only did Audax invest in the ENT sector (as mentioned above), but it may have heralded the beginning of another vertical to keep an eye out for with its strategic investment in Global Nephrology Solutions. This week Audax also teamed up with Linden to acquire StatLab Medical Products, while PE Hub reported add-on activity for its portfolio company Active Day, which were in addition to the add-ons noted above for United Urology Group. (Separately, PE Hub also reported last Friday that Audax-backed Axia Women’s Health had made an add-on acquisition, this news being followed on Monday by a new report that Axia Women’s Health is preparing for a possible sale.)

Friday January 8th, 2021

Sector Alert! Gastroenterology has had a hot start to the year.

PE-backed gastro platforms have wasted no time in announcing new deals this year. This week in the Daily Note we’ve already covered the following transactions:

Sector Alert! CDMOs are also seeing a lot of early activity.

GI Alliance may have powered a fast start to the year for gastro M&A, but contract development & manufacturing organizations (CDMOs) are also seeing their fair share of deals, including from PE sponsors:

  • Vivo Capital has made a majority investment in Serán Bioscience, a CDMO with more than 50 employees at its facilities in Bend, Oregon. Its “specialized expertise in enhanced solubility and engineered particle formulations” were cited by Vivo Capital as having particular appeal. (Press release, 1/6/21)
  • MilliporeSigma (the life science business of Merck, operating as MilliporeSigma in the US and Canada) acquired AmpTec, a German CDMO specializing in mRNA therapeutics and PCR technology. Awareness of mRNA has of course risen in the public consciousness given the success of mRNA-based vaccines developed by Pfizer/BioNTech and Moderna. (Press release, 1/7/21)
  • SK Capital agreed to acquire Catalent‘s Blow-Fill-Seal sterile CDMO business operating out of a facility in Woodstock, Illinois, forming a new independent business in the process. (Press release, 1/6/21)
  • Genezen Laboratories, a cell and gene therapy CDMO, announced a majority investment from Ampersand Capital Partners. Unlike the above-mentioned acquired Catalent business, which concentrates on clinical to commercial stage manufacturing, Genezen is focused on early-stage process development among other services. The investment will be used to complete construction of a cGMP-compliant production facility. Keep your eye out for more activity in the cell and gene therapy space this year. (Press release, 1/5/21)
  • Finally, contract manufacturers aren’t only for pharma. In another transaction, Avalign Technologies, a portfolio company of Linden Capital Partners, announced its acquisition of the assets of Slice Manufacturing Studios of Akron, Ohio. Slice is a contract manufacturer of medical devices, and was attractive to Avalign as a result of its “additive manufacturing, high tolerance subtractive manufacturing, and sterile packaging capabilities.” (Press release, 1/4/21)

Interested in the CDMO space? GHA has recent experience, having advised Japan’s Seikagaku Corporation in its 2020 acquisition of Canada’s Dalton Pharma Services. Reach out to us with any questions or if you’re interested in discussing CDMOs.