October 2019 M&A activity highlighted continued momentum on several compelling themes:
- Physician Practice Management and Services. As we have previously noted, the physician practice industry is seeing a surging wave in consolidation. Factors such as changing reimbursement and regulatory landscape, the appeal of economies of scale for burdensome administrative activities, and greater access to information technology have created a consolidation opportunity for buyers looking to combine smaller sole proprietor practices experiencing margin pressure and process inefficiencies. Larger practices are also able to create stronger payer and patient relationships, offer integrated care, and negotiate better vendor terms, adding to the consolidation motivation for buyers. The fields of dermatology, ophthalmology, dental and physical therapy continue to be areas of high activity, with multiple acquisitions to report.
- Post-Acute Technology and Solutions. An aging population, increasing prevalence of chronic conditions, and a shift towards a value-based environment have forced constituents across the healthcare landscape to focus on moving treatment and care into the home in an effort to increase patient satisfaction, lower costs, and provide higher-quality services. As a result, buyers are increasingly focused on capabilities that support in-home care delivery. In the month of October, there were a handful of significant transactions in the post-acute technology and solutions space. Given the strong end-market tailwinds in this space, we continue to believe that scaled providers of technology and solutions to the post-acute industry will garner significant investor interest.
- Digital Health and Consumer Engagement. Patient engagement has become a key strategy for healthcare payers and providers to promote informed decision-making and behaviors that facilitate improved health outcomes and reduce healthcare costs. Some of the latest digital health technologies focused on patient engagement involve managing patient health data, managing communication with physicians, self-care at home, education, and financial management. From wearable tech and medical devices to patient portals and personal health records, all of these innovations are aimed at improving the overall patient experience. Both strategic and private equity buyers are cognizant of this rapidly evolving space and are actively pursuing opportunities through acquisitions of innovative technologies.
Several transactions announced in October align with these themes:
- Gryphon Investors portfolio company CORA Physical Therapy, a national operator of outpatient physical therapy services, has acquired Blacksburg Physical Therapy Associates, a physical therapy network with locations across Virginia. Blacksburg PT offers a wide variety of services, including general physical therapy and specialties in Parkinson’s treatment, functional movement, women’s health, running analysis, back and neck pain, and sports injuries. This new acquisition broadens CORA’s coverage in Virginia and strengthens CORA’s position as one of the largest physical therapy providers in the country. The financial terms of the deal were not disclosed.
- Mid-Atlantic Dental Partners, a dental support organization, has acquired DentalOne Partners. DentalOne is one of the first and largest DSOs nationally with approximately 150 affiliated offices across 13 states and 27 markets. The acquisition will increase Mid-Atlantic Dental Partners’ affiliated offices to more than 240 operating in 18 states. Under the terms of the agreement, Mid-Atlantic Dental Partners acquired the equity of DentalOne’s operating subsidiaries in an all-cash deal. Financial terms of this deal were not disclosed.
- SkyKnight Capital, a San Francisco based private equity firm, announced that it has made an investment into AeroCare, a leading provider of home healthcare solutions focused on patients with chronic respiratory conditions. AeroCare management and existing shareholders, including Peloton Equity, SV Health Investors, and Morgan Stanley Investment Management’s AIP Private Markets, will remain invested as part of the transaction. TripleTree was the sole financial advisor to Aerocare in this transaction. Financial terms of the deal were not disclosed.
- WellSky, a health and community care technology company backed by TPG Capital, has entered into an agreement to acquire ClearCare, a personal care technology platform. The deal further solidifies WellSky’s dominance in the home-based care arena. As part of the agreement, WellSky will invest in ClearCare’s software platform. The deal will also enable WellSky to offer its clients additional software and services. Financial terms of the deal were not disclosed.
- Amazon acquired Health Navigator, a provider of technology and services to digital health companies. Health Navigator enhances the eHealth experience by providing evidence-based digital health information content that improves patient care. Health Navigator will become part of Amazon Care, a new virtual health service benefit for employees and their families in the Seattle region. This is Amazon’s first health-related acquisition since buying PillPack. Financial terms of the deal were not disclosed.
- UnitedHealth Group’s Optum division has acquired patient-monitoring start-up Vivify Health, according to CNBC. Vivify sits in the remote patient monitoring space, providing connected devices and other technologies to track at-risk patients at home. In theory, such interventions will help reduce the number of patients rushing to the emergency room, which is highly expensive for a health plan. Financial terms of the deal were not disclosed.
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and Happy Thanksgiving!
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