FINANCIAL

Noteworthy M&A Transactions - May 2018

JUN 21
May 2018 M&A activity highlighted momentum on several compelling themes:
 
  1. Continued investment activity in the employer healthcare benefits market. The depth and highly fragmented nature of the employer healthcare benefits market continues to drive interest from a broad array of participants. Tech-enabled acquisitions to improve market access or for product differentiation, and the ability to drive consumer engagement through digital mediums to improve health and wellness are themes that continue to resonate in a meaningful way.
  2. Specialized capabilities and automation garner interest in revenue cycle management. Market activity within the revenue cycle management space continues to evolve at a consistent pace. As the complexity of reimbursement constructs continues to heighten and place further pressure on the financial health of providers, platforms that address specific RCM segment pain points through a particular specialization are gaining interest. RCM acquisitions in the month of May saw buyers seeking specific capabilities in the areas of Medicare and workers compensation reimbursement and out-of-network billing. Additionally, we are witnessing interest heighten for companies that can deliver revenue cycle workflow automation. Companies like PriorAuthNow and Recondo Technology are gaining market recognition as the increasing level of claims and prior authorization complexity, combined with the lack of billing clarity on the part of the patient, is accelerating a shift to a much more automated revenue cycle.
  3. Robust activity for technology-enabled patient engagement solutions. Following on a consistent theme, investors continue to seek solutions that support an ability to achieve patient engagement before, during, and after a treatment encounter. The benefits are obvious as this multifaceted approach to patient engagement not only helps promote preventive healthcare, but also keeps patients up-to-date on rehab, medication adherence, and other post-acute practices. Of particular interest as of late are multi-modal engagement solutions that connect patient and provider to enhance the communication between two critical parties in managing both efficiency and effectiveness of care and outcomes.

Several transactions announced in May align with these themes:
 
  • Sun Life Financial (NYSE: SLF) acquired Maxwell Health, an employee health management platform that simplifies benefits and HR administration for small and mid-sized businesses. Maxwell Health's benefits administration platform supports an employer's benefits strategy while streamlining the process by integrating with carriers, payroll systems and other third-party administrators. The deal will allow Sun Life to broaden their benefit service offerings and integrate voluntary benefits and wellness offerings with traditional insurance solutions through a digital marketplace.
 
  • Marlin Equity Partners acquired Virgin Pulse and RedBrick Health, creating a combination of benefits navigation, wellness coaching, and digital engagement solutions. The combination of the two entities seeks to further penetrate the large employer market through a broad, integrated and customizable suite of wellness and engagement solutions.
 
  • Allscripts acquired HealthGrid, a mobile, enterprise patient engagement solution that seeks to help independent providers, hospitals and health systems improve patient interactions and satisfaction. HealthGrid’s technology, which includes features such as appointment confirmations and post-discharge surveys, will be integrated into Allscripts’ patient engagement platform, FollowMyHealth. The acquisition will extend FollowMyHealth’s patient reach to cover a full spectrum of pre-, during-, and post-encounter patient engagement opportunities.
 
  • TransUnion (NYSE: TRU) acquired Healthcare Payment Specialists (HPS), a platform for helping healthcare providers optimize Medicare reimbursement. HPS’ platform focuses on the Medicare Bad Debt (MBD) and Medicare Disproportionate Share (DSH) areas of Medicare reimbursement, as well as Shadow Billing Compliance and Diagnosis-Related Groups (DRGs). The addition of Healthcare Payment Specialists enhances Transunion’s capabilities in post-discharge revenue recovery.
 
  • New Capital Partners acquired Collect Rx, a revenue-cycle-management provider focused on out-of-network billing. Collect RX helps insurers and healthcare providers improve reimbursement rates and lower costs associated with out-of-network bills.
 
  • Aspirion Health was acquired by private equity firm Aquiline Capital Partners. Aspirion specializes in worker’s compensation claims and other less common sources of health coverage. This is Aquiline’s first investment in the healthcare space, leveraging their extensive experienced in the insurance, billing, and payment industries
 
  • PriorAuthNow raised a series A round of $10.5M on May 18th led by BIP Capital. PriorAuthNow’s platform supports workflow automation by reducing cost and inefficiencies by decreasing the time required for hospitals to connect with patients' insurance providers to obtain approvals for procedures.

In addition to the above announced or completed transactions, there are several high profile transactions actively in the market seeking a suitor. In early May, Elliot Management, athenahealth’s largest institutional shareholder, released a letter outlining a proposal to acquire the company for $160 per share. Earlier this month, amid management turmoil, athenahealth’s board of directors announced it was entertaining a broader sales process. With Jeff Immelt recently installed as executive chairman of the company and several potential strategic and financial sponsor suitors likely to express interest, it will be a process that will be watched with a tremendous amount of intrigue. Additionally, it was announced in December that Tenet Healthcare Corp. is marketing its RCM business for sale, Conifer Health Solutions. This came on the heels of Tenet announcing a restructuring plan in October, which included the elimination of approximately 1,300 jobs. Conifer generated $1.6B in net operating revenue for Tenet last year. With two meaningful transactions across the RCM space likely to come to finalization over the coming months and a diversity of themes driving additional interest broadly across the sector, we are encouraged by the momentum of the sector and expect it to continue to attract investment interest for some time to come.

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