FINANCIAL

Noteworthy M&A Transactions – June 2020

JUL 20
Despite the challenges of COVID-19 and the realities of state-by-state reopening strategies, broader M&A activity returned at a healthy pace in June. As we monitored the market last month, we noted three important themes that emerged across healthcare M&A activity:
 
  1. Business Performance Optimization Solutions: Primary care providers and health systems continue to face a tremendous amount of stress as the pandemic has driven down patient volumes over the past few months. A survey released in April by the Medical Group Management Association found that on average, practices reported a 55-60% decrease in patient volume since the start of the pandemic. While recovery from those lows has already begun to take place, and 80% of non-frontline treating specialist physicians have started performing elective procedures as of mid-June, the pandemic will likely continue to usher in an era of transformation in the areas of provider administration and operations, focused on reducing margin pressures. We expect to see healthcare IT, especially digital and SaaS-based businesses, lead the way, as providers of all sizes seek to optimize in multiple areas, including workforce, patient and revenue cycle management as well as governance, risk, and compliance.
  2. Pharmacy Technology Solutions: Today’s patients expect their pharmacists to provide the same consumer conveniences they receive from their favorite retailers, eCommerce providers, credit card companies, and other everyday services. This expectation comes at a time when, according to a recent study by Prophet and GE Healthcare Camden Group, 81% of consumers indicate they are unsatisfied with their healthcare experience. To provide those conveniences, pharmacy operators have been investing in technology solution businesses that promise to deliver increased customer satisfaction and improved operational performance. We expect to see businesses providing pharmacy technology solutions to attract a lot of attention as companies try to create a patient-first culture that results in greater loyalty, more revenue and improved health outcomes.
  3. Virtual-based Patient Engagement & Population Health Management:  Patients are rapidly transforming from passive recipients of healthcare services to active participants in their own health. Providers' current engagement solution deficiencies around scheduling, appointment wait times, and billing are impacting patient satisfaction. The superior customer service expectations of millennials, declines in hospital profitability, and threats from startup providers and retail pharmacies intensify the need for providers to revamp the patient experience. We expect to see virtual-based patient engagement and population health management businesses thrive as providers and health systems try to catch up to increasing expectations from their customer base. 
 
Several transactions in June aligned with these themes:
 
  • Kyruus, the leader in provider search and scheduling solutions for health systems, announced that it has obtained $30 million in new funding from Francisco Partners, a leading global technology-focused private equity firm with extensive experience in healthcare IT. At a time when the Kyruus platform has been critical to the ability for healthcare organizations to facilitate patient access during the COVID-19 pandemic, the additional funding will propel the company’s plans to expand its platform, broaden its footprint with health systems, and expand to new market segments. TripleTree served as the Company’s growth capital and strategic advisory firm during its recent investment activities.
 
  • NewSpring Healthcare has invested in MacroHealth Solutions in partnership with TT Capital Partners. MacroHealth is a health information technology company that provides healthcare network optimization and claims settlement services to insurers, third-party administrators (TPAs), provider-sponsored health plans, and other payers. 
 
  • QGenda, the leading provider of SaaS-based workforce management software to the healthcare industry, announced a significant new equity investment from ICONIQ Capital, a privately-held investment firm. QGenda is a leading innovator of provider scheduling, clinical capacity management, and labor analytics.
 
  • Walmart acquired CareZone’s medication management technology and IP. CareZone developed an app that lets users create medication lists, provides refill reminders and helps facilitate medication delivery. Users can also scan their health insurance card or prescriptions labels to make the process easier.
 
  • Change Healthcare (Nasdaq: CHNG) acquired PDX, a leader in providing patient centric and innovative technologies for pharmacies and health systems. PDX’s fully integrated retail, specialty, and outpatient pharmacy solutions aim to drive superior operational results for pharmacies while improving outcomes for patients.
 
  • Cedar, a patient engagement and financial technology leader, announced it has closed more than $102M in Series C funding, led by venture capital firm Andreessen Horowitz. The deal includes $77M in venture capital and $25M from JP Morgan in venture debt. The company also announced it has partnered with Novant Health, a leading North Carolina-based healthcare system, to deliver an innovative, personalized financial experience for Novant Health patients.
 
  • Bravo Wellness, one of the nation’s top employee wellness solution providers, has bolstered its position as an industry leader with its acquisition of Chicago-based PUSH Wellness. PUSH leverages technology and behavioral economics to motivate people to improve their health, producing real benefits for health plans, employers, and their valued members.
 
  • Sharecare, the digital health company that helps people manage all their health in one place, acquired MindSciences, the leader in evidence-based behavior change apps. MindSciences provides best-in-class digital therapeutics that help people reverse unhealthy habits involving food, tobacco, stress and anxiety – which contribute to the most costly and widespread health issues in the United States.
 
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and let us know what you think!

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