Q1 ’15 Healthcare M&A Roundup

APR 28

In Q1 ‘15, TripleTree tracked 410 healthcare mergers and acquisitions that either closed or were announced but have yet to close. The 410 deals had total and median enterprise values of $204.4 billion and $35.0 million, respectively. In the following charts, we have broken out transaction value detail across the healthcare services, facilities and technology (199 closed transactions); life sciences technology and services (57 closed transactions); and healthcare equipment and distribution (51 closed transactions) sectors.



By our count, closed deal volume was distributed across the following sectors:

Healthcare Services:  88 transactions

Healthcare Facilities:  68 transactions

Healthcare Technology:  40 transactions

Healthcare Equipment:  32 transactions

Pharmaceuticals:  30 transactions

Biotechnology:  16 transactions

Life Sciences Tools and Services:  11 transactions

Healthcare Distributors:  11 transactions

Healthcare Supplies:  8 transactions

Managed Healthcare:  3 transactions


Overall, the first 100 days of 2015 have been punctuated by a range of interesting consolidation activity, setting the tone for a ‘bigger is better’ mentality across the payer, provider, and services landscapes. Consistent with prior quarters, high-profile pharmaceutical transactions drove the aggregate deal value total, with closed pharmaceutical transactions totaling over $80 billion in Q1. Additionally, there were a number of multi-billion dollar pharmaceutical transactions announced in the quarter, including AbbVie’s (NYSE: ABBV) agreement to acquire Pharmacyclics (NasdaqGS: PCYC) for nearly $21 billion and Pfizer’s (NYSE: PFE) agreement to acquire Hospira (NYSE: HSP) for $17 billion.

Outside of drug manufacturing, another notable trend this quarter is the activity in the pharmacy benefit management (PBM) space, highlighted by UnitedHealth Group’s (NYSE: UNH) $12.8 billion acquisition of Catamaran (NasdaqGS: CTRX), the fourth largest pharmacy benefits manager in the U.S., as well as Rite Aid’s (NYSE: RAD) acquisition of PBM EnvisionRx.

UnitedHealth Group to acquire Catamaran:

OptumRx, the PBM subsidiary of UnitedHealth Group (NYSE: UNH) announced it had agreed to acquire Catamaran (NasdaqGS: CTRX), the fourth largest PBM in the country in terms of revenue, for $61.50 per share in cash. The per-share price represents a transaction value of $12.8 billion and a 27% premium over its previous closing price. The acquisition will bolster OptumRx’s marketshare to the high teens, bringing the Company closer to the likes of Express Scripts (NasdaqGS: ESRX) and CVS Health (NYSE: CVS), who own an estimated 30% and 25% of the market, respectively. In addition to the increase in scale, the acquisition helps OptumRx continue to diversify its client base as the two assets integrate. The combined entity is projected to fill close to 1 billion scripts in 2015, and will operate as OptumRx upon closing, with current Catamaran CEO Mark Thierer serving as CEO of OptumRx, and current OptumRx CEO Timothy Wicks becoming president.

Rite Aid to acquire Envision Pharmaceutical Services (EnvisionRx):

Retail pharmacy chain Rite Aid announced in February an agreement to acquire PBM EnvisionRx, a portfolio company of TPG, in a transaction valued at approximately $2 billion, which includes the value of an expected future tax benefit of $275 million. Rite Aid will pay approximately $1.8 billion in cash and $200 million in stock for the full-service PBM company, which has projected 2015 CY revenues of ~$5 billion and projected 2015 CY EBITDA in a range of $150 – $160 million, implying transaction forward revenue and EBITDA multiples of 0.4x and 12.5 – 13.3x, respectively. The addition of EnvisionRx will help Rite Aid create a compelling pharmacy offering across retail, specialty, and mail-order channels, enabling it to deliver cost-effective solutions to employers and health plans. The acquisition will position Rite Aid to better compete with CVS Health, which acquired PBM Caremark Rx in 2006.

Public Markets

The first quarter of 2015 saw a slowdown in overall market IPO activity with 38 transactions compared to 77 in Q1 of 2014. The healthcare industry, despite being down year-over-year from 31 transactions in Q1 of 2014, led the overall market activity with 15 transactions and raised a total of over $1.5 billion dollars in proceeds. While the bulk of deal volume came from biotechnology and medical device companies, Healthcare IT saw the largest deal of the quarter with analytics and data-driven intervention platform Inovalon (NasdaqGS: INOV) raising $600 million.

This Q4 Roundup was pulled from our Quarterly MarketInsight, which includes in-depth analysis about related healthcare news and activity during the quarter – it can be downloaded later this week at

Nate Chivers
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