FINANCIAL

Noteworthy M&A Transactions - April 2019

MAY 23
April 2019 M&A activity highlighted continued momentum on several compelling themes:
 
  1. Home Health and Hospice. Healthcare has been continually shifting more and more into the home as the number of individuals with high-cost medically complex ailments continues to grow. An aging population and increasing prevalence of chronic conditions creates a need for low-cost, home care alternatives, and investors and national providers alike have taken a proactive view on this shift. Throughout the month of April, the industry saw multiple strategic acquisitions in the home health and hospice space. As the 65+ population increases substantially, we expect this shifting of care and M&A volume to continue.
  2. Healthcare Staffing Solutions. Throughout U.S. health systems, providers and patients alike are facing patient access issues where patients are waiting weeks to obtain appointments driven by a lack of provider availability. Health systems are in dire need of innovative applications that help source and staff qualified providers to meet the growing service demand. April saw multiple strategic transactions as existing workforce solutions providers look to expand their reach and staffing capabilities.
  3. New Funds. Through 2018 and 2019 thus far, financial sponsors have been considerably active, making significant investments across the healthcare industry. Financial sponsors will look to continue these investments through the many new funds that were raised throughout the month of April. Pitchbook estimates that 2019 will reach $220B in total capital raised, topping 2018’s fundraising total. Per Bain & Co.’s 2019 private equity and corporate M&A report, global PE-backed healthcare deals rose almost 50% to $63.1B in 2018, and with an influx of additional dry powder, we expect these investments in healthcare to continue throughout the rest of 2019.
 
Several transactions announced in April align with these themes:
  
  • Memphis, TN-based Comprehensive Pharmacy Services (CPS) has announced its sale to Frazier Healthcare Partners. CPS helps hospitals and health systems address challenges such as hyper-inflated drug costs, specialty pharmacy, ambulatory/retail strategy, operational effectiveness, and staffing efficiency.
 
  • THMED, a New Capital Partners portfolio company, announced that it has acquired CV Staff Solutions, a niche healthcare staffing solutions company. THMED is a leading healthcare staffing firm focused on locum tenens and permanent placement. CV Staff Solutions focuses on providing cardiovascular surgeons, cardiologists, and non-physician providers to inpatient care facilities. This acquisition accelerates THMED’s vision of providing more access to qualified medical professionals for current and new clients and expands CV Staff Solutions services on a national scale.
 
  • Aya Healthcare, the largest privately held travel nurse and workforce solutions provider, delivering solutions for all aspects of healthcare staffing, including locums, allied health, and just-in-time local staff, recently acquired Symmetry Healthcare Solutions, the Managed Services Division of Symmetry Healthcare Strategies.
 
  • Encompass Health, a nationwide provider of post-acute services, has entered a definitive agreement to acquire Alacare Home Health & Hospice, a Birmingham-based operator of home health and hospice locations in Alabama, for $218M. Alacare operates 23 home health and hospice locations in Alabama, through which it generated $117M in revenue in 2018. Post-close, the acquisition will make Encompass a top-10 provider of hospice services in the US, based on Medicare reimbursement.
 
  • HCAP Partners, a California-based private equity firm and recognized impact investor, announced its investment in Mission Healthcare, a leading home health and hospice services provider headquartered in San Diego, CA. Mission Healthcare has cultivated a strong operating team and infrastructure to guide the company’s continuing growth. Mission is committed to providing exceptional home-based care for patients across Southern California.

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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Nick Palmer