FINANCIAL

Noteworthy M&A Transactions - September 2018

OCT 16
September 2018 M&A activity highlighted continued momentum on several compelling themes:
 
  1. Pursuit of technology and analytics solutions to help patients better navigate the healthcare system. As the line between patient and consumer blurs, healthcare providers and healthcare technology companies are pursuing investments to improve vital but often overlooked components of a patient’s healthcare experience. Recent investments include non-emergency transportation, financial engagement solutions, and health improvement resources.
  2. Expansion of behavioral health services to alternative settings. Providers and investors are pursuing novel approaches to the provision of behavioral health services beyond the traditional residential treatment model. Alternative settings allow for treatment models that serve patients within their existing environment, with settings including correctional institutions and college campuses.
  3. Continued investment in integrated care delivery models. Driven by the ongoing shift to value-based care, investor interest in integrated care delivery remains high. There is particular interest in businesses that address complex, high cost conditions, such as end stage renal disease, heart disease, and cancer.
 
Several transactions announced in September align with these themes:
 
  • Logisticare, the nation’s largest non-emergency medical transportation broker, acquired Circulation, which offers HIPAA-compliant logistics and analytics solutions to administer non-emergency transportation programs. The Company’s intuitive platform allows healthcare professionals to easily schedule rides for patients, while providing patients with text or voice notifications with the details they need to complete their ride. Circulation currently serves approximately 3,000 healthcare facilities across 45 states. Logisticare’s parent company, Providence Service Corporation, made an initial minority investment in Circulation in July of 2017 and will pay $46 million to acquire the remaining equity of the company. Logisticare intends to integrate Circulation’s platform nationwide and is targeting $25 million of run-rate synergies within the first 24 months of ownership.
 
  • Revspring, a provider of patient communication and billing solutions, acquired Apex Revenue Technologies, which creates personalized patient engagement communications with the goal of improving financial outcomes for both patients and providers. The combined companies produce over one billion financial communications and generate over $4 billion in payment volume annually. Private equity firm GTCR, Revspring’s current majority shareholder, will retain a majority position in the combined entity, with the management teams of both companies holding significant minority positions.
 
  • Welltok, a SaaS-based company connecting consumers with personalized health improvement resources, acquired Wellpass, which offers text-based health programs on behalf of managed Medicaid plans, state Medicaid agencies, and departments of health. Wellpass has delivered over 400 million health messages by text since its founding and provides programs in smoking cessation, prenatal care, and diabetes management, among others. Welltok will incorporate Wellpass’s programs into its existing suite of patient engagement solutions.
 
  • Correctional Medical Group Companies, a portfolio company of H.I.G. Capital, acquired Correct Care Solutions, a provider of medical and behavioral health solutions to patients in correctional facilities, state hospitals, and civil commitment centers. The combined company will provide services to nearly 300,000 patients daily across 40 states and generate revenues in excess of $1.5 billion annually.
 
  • Private equity firm Fulcrum Equity Partners acquired Life of Purpose Treatment Centers, which is designed to support young adults who have received primary substance abuse treatment at other facilities and are entering or re-entering college. The Company’s locations in Pennsylvania, New Jersey, and Florida are situated on or near several college campuses. Concurrent with the acquisition, Fulcrum announced the creation of City Line Behavioral Healthcare, which will act as the parent company for Life of Purpose Treatment Centers, Fulcrum’s predecessor investment Liberation Way, and future behavioral healthcare assets.
 
  • Evolent Health acquired New Century Health, a technology-enabled specialty care management company with a focus on cardiology and oncology. In addition to developing specialty networks, the company designs evidence-based clinical pathways to drive higher quality of care at a lower overall cost. The purchase price of $217 million, which consists of 3.1 million shares of Evolent Class B stock and $120 million in cash, represents approximately 1.2x LTM revenues and 10.9x LTM adjusted EBITDA.
 
  • Cricket Health, a provider of integrated kidney care, closed a Series A round of $24 million. The round was led by Oak HC/FT, and included new investors Cigna, LifeForce Capital, iSeed Ventures, Liquid 2 Ventures, Halle Tecco, and Sami Inkinen. Cricket utilizes proprietary data analytics to identify high risk patients and develop customized treatment plans in order to delay the progression of kidney disease. In doing so, the company seeks to create better outcomes for patients while avoiding or reducing costs for payers.

 
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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Michael Herrmann
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Shane Svenpladsen