FINANCIAL

Noteworthy M&A Transactions - December 2018

JAN 10
December 2018 M&A activity highlighted continued momentum on several compelling themes:
 
  1. Innovative Approaches to Healthcare Interactions. Companies that provide technologically advanced and innovative solutions to increase productivity, reduce costs, provide personalized healthcare communications, and interact with consumers in low cost settings have been of interest in December, highlighted by 3M’s investment in M*Modal. We expect interest in companies that revolutionize healthcare interactions through the use of Artificial Intelligence (AI), telemedicine, and blockchain will persist through 2019 and beyond.
     
  2. Electronic Health Record (EHR) Investments that Mirror Emerging Healthcare Trends. Capping off a strong year for EHR investments, December saw continued investment in specialty EHR with increased focus in areas that have paralleled the most prevalent healthcare themes recently observed (e.g. behavioral health, post-acute, and physician practice). As investors look to capitalize on emerging healthcare trends through consolidation, additional opportunities are developing for specialty EHR companies that enable those investments to deliver better care and meet the needs of the populations served.
     
  3. Behavioral Health Treatment for Adult and Aging Populations. There has been no shortage of investment activity in behavioral health in 2018, with particular interest in autism, expansion into alternative settings, and market consolidation. Behavioral health will continue to see significant interest in 2019, with increased vigor around services targeted towards adult and aging populations. Nearly 45 million adults experience behavioral health issues each year, and a vast majority of them now have behavioral health coverage due to mental health parity and the Affordable Care Act (ACA).
 
Several transactions announced in December align with these themes:
 
  • 3M, a worldwide diversified technology company with $32B+ revenue, has entered into a definitive agreement to acquire the technology business of M*Modal, a leading healthcare technology provider of cloud-based, Artificial Intelligence-powered systems that allows physicians to effectively capture and improve the patient narrative to provide a higher quality of care.
 
  • Curavi Health, a provider of telemedicine solutions for nursing homes, announced the acquisition of TripleCare, a provider of telemedicine solutions for the post-acute, long-term care industry, including skilled nursing facilities. TripleCare uses its platform to provide access to physicians at times they are typically not readily available and allows residents to be treated from the comfort of their bedside, often avoiding unnecessary visits to the emergency room or hospitalizations. Together, the combined entity will serve nearly 100 facilities across 14 states.
     
 
  • Change Healthcare, a provider of software, analytics, network solutions, and technology-enabled services for the healthcare market, has acquired intellectual property and other key assets from PokitDok, a platform-as-a-service that facilitates healthcare organizations to bring new applications and services to market and allows payers to integrate real-time, member-specific health insurance data at scale. The integration will add new capabilities for digital health, telemedicine, and other new, disruptive care models that support value-based, patient-centric healthcare and will create a more connected, transparent, and efficient healthcare system where patients control their own information.
     
 
  • Consolo Services Group, a provider of EHR software to the post-acute market, has been acquired by Wellsky, a provider of EHR software and solutions and portfolio company of TPG. Consolo sells its solutions to hospice, palliative care, adult day care, and memory care providers.
     
 
  • GI Partners and TA Associates announced they have entered into an agreement to acquire Allscripts’ stake in Netsmart Technologies, a provider of EHR software to the behavioral health market. As a result of the transaction, GI will be the majority owner of Netsmart.
     
 
  • PharMerica, a national provider of pharmacy services and portfolio company of KKR, has announced that it acquired BrightSpring Health Services, one of the largest providers of diversified home and community-based health services to complex populations (primary businesses include: behavioral health, home health, neuro therapies, pharmacy, telecare, and job placement and vocational training). The combined entity will serve over 300,000 clients daily and operate in 44 states and the District of Columbia. In addition to KKR, Walgreens Boots Alliance will own a minority stake in the combined entity.
     
 
  • Consonance Capital has recapitalized Psychiatric Medical Care (PMC), a leading behavioral management company focused on the geriatric population. PMC provides inpatient and outpatient psychiatry services in over 20 states, primarily within rural communities.
     
 
  • EMHware, a cloud-based healthcare solutions provider that serves over 140 agencies and 10,000+ users, has been acquired by Colorado-based EverCommerce, a service commerce platform that connects technologies and solutions for service organizations. EMHware provides a comprehensive agency management software solution focused on the specific needs of adult mental health, children's mental health, addictions, and out-patient social services in Canada.
     
 
  • The Columbus Organization, a nationally recognized provider of support coordination and other services for individuals with Intellectual and Developmental Disabilities (IDD) and portfolio company of HealthEdge Investment Partners, has acquired the support coordination assets of Progressive Comprehensive Services, a provider of support coordination services to adults with intellectual and development disabilities. This acquisition expands the Company’s services to six states and more than 10,000 individuals, families, and guardians.

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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Mike Acosta