Q4’16 Healthcare M&A Roundup

JAN 31

In Q4’16, TripleTree tracked 384 healthcare mergers and acquisitions that were announced (and have not closed) or closed. The number of transactions in Q4 was in line with the 373 deals reported in our Q3’16 M&A Roundup.

The total publicly announced transaction value for Q4 was just over $68 billion. The average total enterprise value for the 384 transactions was $503 million, with a median value of $34 million. This large variance was driven by 14 transactions with an enterprise value greater than $1 billion dollars, summing to a total of over $50 billion.

Transaction value detail is broken out in the chart below.


Blackstone Group Takes TeamHealth Holdings Private for $6.1 Billion

Target Description

TeamHealth offers outsourced physician staffing services through its more than 19,000 affiliated physicians and advanced practice clinicians, serving approximately 3,400 acute and post-acute facilities and physician groups nationwide.

TripleTree Perspective

The transaction will allow TeamHealth to navigate a few pressing challenges away from public market scrutiny, including the integration of its IPC Healthcare acquisition, pricing pressures, and a continued swell of consolidation in the physician services sector in reaction to rising administrative costs.

Among these recent deals in the sector is the merger between Envision Healthcare Holdings and AmSurg (which we profiled in our Q2’16 M&A Roundup), the latter of which failed to acquire TeamHealth last year for roughly $8 billion. As consolidation in the physician services sector persists and as reimbursement models transition to value-based payments, this will be an area that TripleTree will continue to monitor carefully.


WellCare to Acquire Universal Americal Corp. (NYSE: UAM) for $800M

Target Description

Universal American provides health benefits to roughly 114,000 Medicare Advantage members in Texas, New York, and Maine and, through a subsidiary, manages 24 Medicare Shared Savings Program ACOs that cover more than 280,000 Medicare beneficiaries.

TripleTree Perspective

By acquiring Universal American, WellCare will expand and strengthen its Medicare Advantage business, as nearly 70% of Universal American’s members are in Medicare Advantage plans with at least four stars. Within their existing book of business, WellCare’s highest quality plan has only three stars. Ultimately, having more members in higher quality plans will result in higher reimbursement from CMS.

The acquisition is the second of three acquisitions announced by WellCare in Q4 to help bolster the company’s Medicare Advantage and Medicaid books of business. The Company acquired Care1st Health Plan of Arizona for $~157.7 million in early October, and the Medicaid assets of Phoenix Health Plans, Inc. in late December for an undisclosed amount. All three acquisition targets are consistent with WellCare’s Medicare focus.

As the predominantly Republican Congress attempts to shift Medicare benefit administration to private companies, consolidation among insurers in that space has begun to escalate, including the AetnaHumana mega-merger that for the most part aimed to capitalize on the same trend but was recently blocked by the Department of Justice due to anti-trust laws. A similar merger between insurance giants Cigna and Anthem awaits its decision, the result of which will have a large impact on other deal activity in the space.

As we continue monitoring these sectors and others within the healthcare industry, we are interested to see how various trends and developments will affect the M&A markets.

Let us know what you think.

Ian Goodwin
Spencer Evenson
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