FINANCIAL

Noteworthy M&A Transactions - July 2018

AUG 16
July 2018 M&A activity highlighted continued momentum on several compelling themes:
 
  1. Hospice sees surge in M&A activity due to increased private equity Interest. Private equity groups opened their wallets to the hospice industry in July, as they continued to build out portfolio platforms via M&A in order to capture the growing trends in hospice care. As hospice continues to gain traction and stability in the marketplace, platforms are looking to capitalize by expanding their geographic reach and deepening their presence in existing markets.  We anticipate continued activity in this sector as the marketplace continues to focus on care settings, like hospice, that deliver quality and compliant care while reducing costs.
  2. Mental health invests in core competencies. July has seen mental health companies focus on improving the quality of the patient experience by working to create additional interaction points with patients and providers. In this traditionally under-served market, providers are looking to augment depth rather than breadth to ensure they are driving successful outcomes for patients. Mental health has also proven to be an attractive area for private equity investment, as several funds made large investments in the market.  As mental health continues to be destigmatized, many companies are positioning themselves to catch the growing number of new consumer entrants and serve as a long-term partner to their patients’ mental health journeys.
  3. Consumer-facing health applications garner a wide range of buyer interest. Several transactions in July highlighted the desire from both strategic buyers and financial sponsors to create long-lasting consumer relationships via technology. As healthcare companies look to be active participants in the shift towards value-based care, the market has realized that creating and securing touchpoints with patients is extremely desirable, which has led to attractive valuations for acquisition targets that can consistently engage consumers.  Companies will leverage these relationships to promote quality care and reduce spend by driving patient behavior to lower cost settings and preventative care.

Several transactions announced in July align with these themes:
 
  • Bristol Hospice, a portfolio company of Webster Capital, acquired Optimal Health Services, the largest privately-held hospice provider in California. Bristol Hospice is a multi-regional provider of hospice and palliative care services designed to meet the needs of individuals at the end of their lives. Optimal Health Services has 8 hospice and 2 home health locations and serves over 1,100 patients daily. The combined organization’s deep knowledge of the hospice and home health markets will allow it to continue to scale quickly and drive superior operating performance.
 
  • Mediware, a portfolio company of TPG Capital and provider of software solutions to healthcare providers and payers, acquired Fazzi Associates. Fazzi Associates offers medical coding to the home health and hospice market, patient satisfaction surveying, and a distance learning platform with more than 30,000 users focused on employee education. The acquisition creates a unique alignment between two different platforms - one in software, and the other in outsourced services. Fazzi will allow Mediware to offer new services to their existing clients, supporting Mediware’s value proposition to customers transitioning to value-based care. Together, the combined company is positioned to make positive transformations and foster well-trained and highly capable employees working in home health and hospice.
 
  • Aveanna Healthcare, a pediatric home healthcare company that is backed by Bain Capital, completed the acquisition of Premier Healthcare Services, a provider of pediatric services to patients in California, with additional operations in Colorado and Texas. The acquisition of Premier will enable Aveanna to expand their presence into new geographical markets and create additional touchpoints with patients.
 
  • Civitas Solutions (NYSE:CIVI) has completed the acquisition of Creative Connection (CCI), a provider of community-based services for individuals with intellectual and developmental disabilities. Like Civitas’ Family Home Agency program in California, CCI specializes in matching adult individuals in need of support with caregivers in their community. Civitas will adopt CCI’s proprietary method of screening, monitoring, and supporting each caregiver-patient relationship, as well as bring CCI into their umbrella of specialized mental health providers. 
 
  • Delphi Behavioral Health Group has acquired Family Recovery Specialists (FRS). Delphi is a nationwide provider of addiction and detox treatment programs, while Family Recovery Specialists is an outpatient program that provides comprehensive evaluations and treatments for adults and adolescents suffering from substance abuse and mental health disorders. With Delphi’s expertise and resources, FRS will be able to expand its services and offer treatment to more individuals, as well as improving the quality of care they offer. Delphi plans to incorporate several techniques from FRS into its clinics and create a partnership that can offer a more complete continuum of care within Florida.
 
  • Lightyear Capital and Oak HC/FT have acquired Therapy Brands, a software provider for the mental and behavioral health markets. The Company’s software includes solutions across revenue cycle management and payments, data collection and reporting, practice management, and electronic health records. Founded in 2013, the Company’s goal is to allow mental health and behavioral health professionals to spend less time on the administrative burden of practice management and more time treating patients, improving outcomes and growing their businesses. Providence Strategic Growth and Greater Sum Ventures, the current owners of the business, will maintain a minority stake in the Company.
 
  • Clearview Capital and Starboard Capital Partners purchased Apothecare, an institutional pharmacy targeting behavioral health in group homes and community-based settings. The companies will be providing capital to help Apothecare with its organic and acquisition growth initiatives and help improve the quality of care for their existing patients. Pharmacies in this sector manage complex medication needs, and Apothecare’s high-touch model has been successful at driving positive patient outcomes.
 
  • SensorRX Inc., a Charlotte, NC-based provider of patient generated health data, has agreed to acquire St. Louis-based Welltodo. Welltodo is the developer of Migraine Coach, a mobile app focused on migraine management. SensorRX has its own migraine application, MigrnX, which tracks migraines and is integrated with top EHR vendors in order to streamline and improve patient care. With the acquisition, SensorRX plans to integrate Migraine Coach into their MigrnX platform and provide more comprehensive care to those dealing with migraines. 

TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry.  Thanks for reading and as always, let us know what you think!
 
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Samuel Robinson