Noteworthy M&A Transactions - January 2019

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January 2019 M&A activity highlighted continued momentum on several compelling themes:
  1. Health Plan Member Communication & Engagement. A vast majority of health plans are focused on improving engagement and member satisfaction. Plans see engagement as a key driver of retention and enrollment growth while also leading to improved member outcomes. As the value of engagement becomes even more apparent, we continue to see innovation in models of engagement that move the needle for health plans along with increasing M&A interest and activity in this sector.
  2. Software to Support Physician Practices.  Physician practice management platforms continue to proliferate, creating greater efficiencies and easing the challenges of managing physician groups. Specialized software platforms focused on streamlining processes, improving organizational management, and enhancing automation for specialty providers allow these groups to stay focused on providing high-quality, cost-efficient care. We continue to see significant growth and interest in specialty EMRs and other business software for specialty providers and expect this level of activity to continue as quality and efficiency expectations remain imperative.
  3. Technology-Enabled Hospital Outsourced Services. An uneven reimbursement environment amidst a backdrop of rising operational costs has created difficult financial challenges for providers, who are typically already facing margin pressure. These pressures have continued to drive providers to outsource selected services to specialized operators who can deliver quality service at scale and lower cost. Tech-enabled outsourced services, designed to provide solutions for various issues such as clinical engineering, surgical services and medical equipment rental, help to maximize providers’ operational efficiency and continue to garner investor interest, a theme we expect to continue throughout 2019 and beyond.
Several transactions announced in January align with these themes:
  • Clarity Software Solutions, a provider of member communication solutions for health insurance payers, third party administrators, and dental insurance companies, has received an investment from Morgan Stanley Capital Partners. Clarity’s software collects, consolidates, and cleanses its customers’ data from multiple sources to generate compliant and personalized digital member communications across the enrollment, claims and payments, and compliance functions of its customers. TripleTree acted as the financial advisor to Clarity.
  • WEX, a leading financial technology service provider, acquired Discovery Benefits, Inc., a provider of employee benefits administration services to more than 1 million customers across all 50 states. Discovery Benefits plays a key role in the consumer-directed healthcare ecosystem by offering account administration technology and services. Additionally, Discovery Benefits’ user-friendly platforms and an extensive library of resources drive employee engagement. This acquisition will combine one of the industry’s fastest-growing benefits administrators with WEX’s cloud-based technology platform.
  • SRS Health Software, a provider of specialty EMR solutions, has been acquired by Nextech Systems, a provider of electronic medical record and practice management software. The strategic acquisition will expand Nextech’s specialty physician focus into orthopedics and beyond its core ophthalmology, dermatology, and plastic surgery focus. The acquisition will result in Nextech servicing more than 10,000 providers across specialty ambulatory physician markets.
  • Investcorp, a leading global provider and manager of alternative investment products, acquired Health Plus Management, a provider of business management and operations services for independent physician practices in the physical medicine and rehabilitation market. Health Plus provides physician-owned practices with an effective administrative solution for outsourcing non-medical, front and back office operations. Services include site selection and buildout, front and back office management, marketing, human resources support, technology, and reporting.
  • Arsenal Capital Partners, a middle-market healthcare focused private equity firm, has acquired Accumen, a technology-enabled provider of health system performance optimization solutions, from Accretive, LLC. Accumen provides end-to-end strategy and services for providers’ clinical laboratories, outreach services, patient blood management systems, and imaging services.
  • Federal Street Acquisition Corp., a special purpose acquisition company (SPAC) backed by Thomas H. Lee Partners, has acquired Agiliti Health, formerly known as Universal Health Services. Agiliti delivers medical equipment management and service solutions that help clients reduce costs, increase operating efficiencies, and improve caregiver satisfaction. The Company provides a variety of healthcare technology management and service solutions to approximately 7,000 national, regional, and local acute care hospitals and alternate site providers across the country. Implied enterprise value for the company is approximately $1.74 billion, or 11.6x Agiliti Health’s forecasted 2018 Adjusted EBITDA of approximately $150 million.

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!

Related Blogs:

Noteworthy M&A Transactions - December 2018
Noteworthy M&A Transactions - November 2018
Noteworthy M&A Transactions - October 2018

Alex Arnold
Matt Schiefelbein
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