Noteworthy M&A Transactions – February 2020

MAR 27

Each month we look back at the notable transactions shaping the healthcare industry, and this month, we also reflect on the industry's dynamic and durable nature — especially in response to the COVID-19 pandemic. While it’s too early to know the human and long-term impacts of the coronavirus, there is no doubt that this time of disruption will both affirm and reorient the priorities of industry players in the months ahead.

Let’s look back at three important themes that shaped M&A activity last month:

  1. Patient Engagement. Unlike legacy models, value-based care is highly complex and requires sophisticated capabilities to aggregate individual or member-centric data, including comprehensive quality and risk drivers along with socio-economic data. As value-based payments replace legacy payments, payers and providers will be looking for partners that can drive positive outcomes and deliver meaningful ROI. Patient engagement is one such strategy within VBC that has garnered recent attention, as private equity groups build platforms and strategic buyers broaden capabilities and service offerings.  Consumerism in healthcare is on the rise, as demographics shift, and younger generations begin to participate more meaningfully in healthcare spend. Growing consumerism has led to an increasing demand for solutions that improve access to care and simplify the healthcare decision making process. Combining this with the rise in high deductible health plans and patient cost burden, means companies will need to build out the proper payments and engagement infrastructure to optimize revenue. As the transition to value-based care gains traction, and consumerism in healthcare continues to increase, companies that can help patients streamline decision making and access the appropriate care setting will receive attention from a wide range of potential acquirers.
  2. Behavioral Health Services. Access to mental health care services has become a significant focal point within the healthcare community. Less than 50% of those in need of treatment receive services, and this is especially acute when looking at vulnerable youth populations and also people with autism. Strategic buyers have been active in the space, as they look to build solutions and cost containment strategies in this rapidly growing segment of healthcare. While most initial M&A activity in behavioral health was focused on inpatient solutions, buyers have realized that the needs of the patient extend into the home and community, focusing attention on other care settings, including residential, outpatient, and home and community-based services. Market consolidation will continue as a reduced stigma for behavioral health treatment and favorable reimbursement tailwinds have led to expanded care options available to serve the large and growing unmet demand for behavioral health services.
  3. RCM Solution Consolidation. RCM remains a pain point for payers and providers alike, as disparate, manual remittance processes and poor payment management remains widespread. Hospitals especially are in need of new and improved solutions. Increasing Medicare and Medicaid populations, rising supply and drug costs, a growing percentage of patient-pay and decreasing inpatient admissions are all combining to compress margins. Hospitals need capabilities that can improve patient pay dynamics and are looking to RCM vendors to help facilitate these payments. Improved revenue cycle, especially on the front-end, can help increase ROI and drive margin improvement. Patient payment software that helps hospitals (and other providers) improve payment capture can also improve patient engagement and drive better outcomes. As healthcare constituents seek to navigate the myriad of complex challenges within the RCM, both strategic and private equity buyers have been adding or merging solutions within broader RCM platforms.
Several transactions announced in February align with these themes:
  • Brightree announced it has agreed to acquire privately held SnapWorx, a market-leading software company providing patient contact management and workflow optimization for the continuous positive airway pressure (CPAP) resupply market. Based in Brentwood, Tennessee, SnapWorx is a SaaS company with intelligent workflow technology empowering HME providers servicing CPAP resupply patients. SnapWorx solutions focus on patient engagement and automation of workflow for collecting the supporting documentation required for dispensing and billing of CPAP supplies.
  • Humana and Welsh, Carson, Anderson & Stowe has entered into a joint venture to expand value-based primary care for Medicare patients. The joint venture will develop and operate senior-focused, payor-agnostic primary care centers which will operate under Humana’s Partners in Primary Care brand. WCAS made an initial commitment of $600M and will own the majority stake in the company, while Humana will enjoy a minority share. Together, they plan to double Partners in Primary Care’s footprint over the next three years and scale core operations to facilitate the expansion of its care model.
  • Sharecare, a digital health company that helps people manage their health and connect with providers has acquired Visualize Health, a company that supports value-based healthcare and enables providers and payers to close gaps in care. By integrating streamlined, insight-based actions in clinicians' workflow to eliminate care gaps in patient journeys, Visualize will help Sharecare position payers and providers to succeed in VBC environments.
  • Cimarron Healthcare Capital announced that it has completed the acquisition of Ascent Behavioral Health together in partnership with the company's management team, Monroe Capital and Veronis Suhler Stevenson. Ascent operates six unique residential programs in Utah that deliver behavioral health treatment to adolescents across a continuum of care, including wilderness therapy, residential treatment centers and a therapeutic boarding school.
  • The IMA Group, a provider of clinical evaluation services for government agencies and health plans, announced the acquisition of PsyBar, a provider of behavioral health services, independent medical exams, and other employment related services. The acquisition expands IMA’s geographic footprint as well as behavioral health and payer services capabilities with a national network of board-certified providers.
  • CentralReach, a provider of EMR practice management and clinical solutions for ABA clinicians and educators has acquired Thread Learning, an offline-capable mobile data collection solution designed for center-based clinics and schools. Thread will be rolled into CentralReach’s current platform to provide an offline-capable suite of clinical solutions to deliver care in homes, clinics and schools.
  • Meduit, a leader in healthcare revenue cycle solutions announced that it has merged with CMRE Financial Services, a leading revenue cycle solutions company, effective February 7th 2020. Together, the two companies will be able to leverage their combined broad and complementary RCM capabilities and footprint to fuel strategic growth. The combined firm will be one of the largest RCM companies in the nation.
  • Flywire, a high-growth vertical payments company, announced that it has acquired Simplee, a leading healthcare technology platform, to optimize the digital payments and patient engagement experience in healthcare and scale its global payments services. The acquisition builds on Flywire’s growing healthcare payments business and accelerates the company’s market share. Flywire is also announcing a $120M Series E investment round led by Goldman Sachs, which will support Flywire’s ongoing investment in its multi-vertical strategy. This latest round brings the company’s total capital investment to $260M.
TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and let us know what you think!
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Samuel Robinson
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