October 2018 M&A activity highlighted continued momentum on several compelling themes:
- Continued investor interest in autism therapy service providers. Autism Spectrum Disorder (ASD) affects an estimated one in 59 children, up approximately 119% from 2000. Forty-six states have laws mandating the coverage of autism services for commercial payers and hundreds of small service providers specializing in ASD are emerging to satisfy the increased market demand for care. With favorable reimbursement tailwinds underpinning a highly fragmented and emerging market, investors are actively pursuing scalable opportunities to drive cost-reduction through consolidation of these platforms.
- Revenue cycle and practice management platforms remain a strong focus area for providers seeking improved patient engagement, care delivery, and reimbursement. As the healthcare industry continues to shift towards value-based care and providers assume increased risk profiles related to quality of care, solutions offering a more cohesive patient experience and more efficient billing/claims processing continue to receive significant interest from both strategic and financial parties.
- Demographic shifts and regulatory dynamics drive continued interest in home health and hospice care providers. As home health and hospice continue 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/home health, that deliver quality and compliant care while reducing costs.
Several transactions announced in October align with these themes:
- Blue Sprig Pediatrics, a leading provider of ABA therapy services, acquired The Shape of Behavior, a Houston-based autism therapy provider with 22 clinics in four states. This transaction will make Blue Sprig Pediatrics the largest provider of ABA therapy services in Texas. The acquisition will also further Blue Sprig’s goal to invest in de novo and acquisition opportunities that will fuel growth in underserved regions.
- MBF Healthcare Partners formed ABA platform Acorn Health via multiple acquisitions across Michigan, Florida, and Virginia. Acorn will provide home and facility-based ABA services to children and adolescents with Autism Spectrum Disorder.
- Lighthouse Autism Center, a provider of center-based Applied Behavioral Analysis therapy, received a strategic investment from Abry Partners. Indiana-based Lighthouse was founded in 2012 and operates five centers across Indiana and Michigan, serving children ages 2 to 18.
- LEARN Behavioral, a portfolio company of LLR Partners, acquired Elmhurst, Illinois-based Total Spectrum, a provider of applied behavior analysis services for families and children with Autism Spectrum Disorder. Total Spectrum has experienced an average of more than 80% average annual revenue growth over the last three years and is currently providing nearly 150,000 hours of service to more than 400 individual clients a year. The partnership with LEARN Behavioral will enable Total Spectrum to accelerate its growth plan to further penetrate existing markets and expand into new ones, bringing individualized treatment plans and outcome-driven services to more clients and families.
- Silversmith Capital Partners acquired MediQuant, a provider of enterprise active archiving and interoperability solutions for hospitals and health systems. This investment will allow MediQuant to continue delivering its solutions, while focusing on long-term customer success and satisfaction. Silversmith will also serve as a partner to assist MediQuant in scaling the organization and driving new product innovation.
- Optima Healthcare Solutions, a provider of cloud-based solutions for post-acute care providers, acquired Vantage Clinical Solutions, a provider of revenue cycle management and digital marketing services for physical therapy practices. This transaction will enable Optima to meet demand for outsourced business services used to operate outpatient therapy clinics.
- Waystar, a provider of revenue cycle technologies (formed by Navicure and ZirMed), acquired Ovation Revenue Cycle Services, part of healthcare provider and insurer UPMC. Waystar plans to integrate the Company’s technology, which uses algorithms to monitor claims, into its existing platform to increase claims visibility across its nearly 500,000 healthcare provider customers.
- Amedysis, a national provider of home health, hospice, and personal care, through its subsidiary Associated Home Care, acquired Bring Care Home, a provider of personal care, companionship, and skilled nursing services in northeastern Massachusetts. This acquisition will allow Amedisys to expand its footprint in the state of Massachusetts, while sharing best practices and clinical expertise.
- MBF Healthcare Partners acquired a majority interest in Affinity Hospice, an Alabama-based provider of hospice care services. Affinity, which operates in Georgia and Alabama, also provides palliative care services.
- Bain Capital acquired and merged two regional home health providers: Arosa and LivHOME. Arosa provides skilled and non-skilled in-home care in North Carolina, while LivHOME offers care management, in-home care, and in-home monitoring solutions to residents of California, Illinois, and Texas. Bain funded the transaction via its social impact fund, Bain Capital Double Impact.
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!