Noteworthy M&A Transactions - January 2018

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Healthcare M&A activity in January 2018 highlights three themes we’ve been monitoring:
  1. Autism platforms are attracting significant private equity investment. KKR, Altamont Capital, Pharos Capital, and Five Arrows Capital are among groups that have made investments in the autism treatment space this past month; the general investment thesis being that it’s an underserved market that can be effectively addressed with a scaled platform.
  2. The benefits market is rapidly adopting consumerism. What has historically been a complex, confusing and intricate market is accelerating up the curve of consumerism; approaching the level of industries such as retail. This change is driven by the modern healthcare consumer demanding price transparency, transactional simplicity and access to information.
  3. Data is becoming more actionable and reaching the point of care. EHR systems are becoming more sophisticated, specialized and applicable than ever, leading to increased knowledge and improved decision support at the point of care. This is a win across the board for healthcare, improving the efficiency and effectiveness of care while simultaneously reducing costs. 

Several transactions announced in January align with these themes:
  • AXA (ENXTPA: CS), a company engaged in the provision of insurance and asset management services, entered into an agreement to acquire Maestro Health, a developer of an online employee health and benefits platform designed to simplify and personalize how people shop, enroll and live with their benefits. Total consideration for the acquisition is $155M. Maestro's platform maestroEDGE is an all-in-one, tech-meets-service platform that offers four key components of employee health and benefits, including HR management, benefits marketplace, benefit accounts and self-funded insurance. It optimizes the benefits experience for all employees, enabling employers to streamline integration of care management to drive down costs and improve engagement for constituents across the entire continuum of care. With AXA, Maestro customers will see enhancements in their experience and access to leading product offerings. This transaction reflects AXA’s continued focus on its health business and supports its payer-to-partner strategy, in line with “Ambition 2020,” a corporate initiative to meet customers’ rapidly evolving needs and grow in a challenging economic environment. Starting with a platform in the U.S., the most advanced and innovative market in this respect, it represents an important step towards building a comprehensive and long-term population health management solution to provide better care at lower cost.
  • Wolters Kluwer Health (ENXTAM: WKL), which provides information and business intelligence for healthcare professionals, entered into an agreement to divest ProVation Medical, its procedure documentation and order set management software business, to Clearlake Capital Group for $180M. The divestment reflects the Health division's increasing focus on supporting healthcare providers in delivering improved patient outcomes by offering a broad and cohesive suite of products, from healthcare learning and research, to advanced clinical decision support, terminology management and patient engagement. This broad-based, multispecialty and integrated range of solutions can most effectively help healthcare providers in improving outcomes and reducing variability in care.
  • Alliance HealthCare Services, a national provider of outsourced healthcare services, and owner Tahoe Investment Group executed a definitive agreement to acquire e+CancerCare, a provider of cancer care services, from Kohlberg & Company. With 24 locations in 10 states, e+CancerCare will join Alliance Oncology, a division of Alliance HealthCare Services, upon completion of the transaction. Together, the organizations will operate 60 cancer care centers across the U.S. focused on diagnosing, staging and treating cancer. Services the organizations deliver include radiation oncology and related therapies, medical oncology and chemotherapy services, and PET/CT imaging in partnership with leading academic medical centers, health systems and physicians. The vision of Alliance HealthCare Services is to be a driving force in transforming healthcare in a consolidating U.S. healthcare environment. Bringing Alliance Oncology and e+CancerCare together will ultimately benefit patients and their families with more effective, efficient and compassionate care.
  • VSS, a private investment firm focused on the information, healthcare services, tech-enabled business services and education industries, closed its private placement in Caravan Health. The transaction represents its ninth investment in the healthcare industry. Caravan is a provider of value-based care (VBC) enablement services to hospitals and physician practices, enabling providers to qualify, participate and succeed under value-based payment models, with a focus on Medicare Accountable Care Organizations. The shift to VBC requires providers to have a fundamentally different set of capabilities in order to succeed in these complex programs, driving a significant need for Caravan’s capabilities and expertise. Caravan’s platform drives industry leading savings, care improvement metrics, and strong customer ROI.
  • KKR, the global investment firm, created Blue Sprig Pediatrics, a platform of clinics providing Applied Behavior Analysis (ABA) for children diagnosed with Autism Spectrum Disorder (ASD). The Company intends to open new clinics and partner with existing providers to fulfill the unmet need for compassionate and high-quality interventions for ASD patients nationwide. With 1 in every 68 children diagnosed with ASD, there is a large and growing population that, unfortunately, is currently under-served. The mission of Blue Sprig as a scaled platform providing ABA services is to advocate for the resources that patients need, invest in additional research to advance understanding and treatment of these children, and ultimately make a difference in their quality of life and ability to contribute to society as a whole.
  • Allscripts (NASDAQ:MDRX), a provider of software, services, information and connectivity applications for physician practices, entered into an agreement to acquire Practice Fusion for $100M in cash, subject to adjustment for working capital and net debt. Practice Fusion partners with top-tier life sciences organizations to drive innovation. It offers an affordable, certified cloud-based EHR for traditionally hard-to-reach, small, independent physician practices. The Company supports 30,000 ambulatory practices and 5 million patient visits a month. This strategic acquisition is expected to further advance Allscripts’ strategy to offer the most comprehensive, high-performing health information technology and solutions. Practice Fusion’s EHR will complement and round out Allscripts’ existing ambulatory clinical portfolio, providing a value offering and “last mile” reach to the under-served clinicians in small and individual practices.
  • Connecture (OTCQX: CNXR), a provider of web-based information systems used to create health insurance marketplaces, entered into a definitive agreement to be acquired by entities affiliated with the global private equity firm, Francisco Partners. Under the terms of the agreement, entities affiliated with Francisco Partners have agreed to pay $0.35 per share for each share of Connecture common stock not held by Connecture’s existing preferred investors, Francisco Partners and Chrysalis Ventures, and their affiliates. Connecture provides software and related service solutions to health insurance and ancillary carriers, brokers and other related retail distribution entities, health care providers and government agencies. The Company helps organizations grow and retain their membership, while improving efficiency and reducing technology costs. Connecture is playing a crucial role in the continued evolution of health insurance distribution. The Company is on the forefront of providing technology solutions that enable consumers to find and purchase the best health insurance and ancillary benefits policies for them and their dependents.
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 if you have any feedback!

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Connel McGough
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