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The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

NaviMed Capital Closes New $110 Million Healthcare PE Fund

Posted in Healthcare Services Investing

NaviMed Capital has announced (pdf) the closing of its inaugural healthcare private equity fund, NaviMed Partners, LP.

The fund has more than $110 million of total capital commitments.

NaviMed Capital, based in Washington, D.C., is focused exclusively on the healthcare industry. More specifically, it invests in lower middle-market healthcare companies providing healthcare services, healthcare IT, hospital products and distribution businesses.

The new fund made its initial investment in October 2014 in Lucent Health Solutions, a healthcare risk management company.

NaviMed typically invests in profitable private companies with up to $10 million of EBITDA and double digit revenue growth.

Aetna to Acquire Humana for $37 Billion

Posted in Healthcare Services Investing

Aetna will acquire Humana for a combination of cash and stock valued at $37 billion, according to a joint news release from the two insurers.

According to data supplied by the companies (pdf), Aetna is the larger of the companies, with 23.67 million medical members to Humana’s 9.77 million. Aetna also has a larger dental insurance business, with 15.56 million members, compared with Humana’s 3.89 million.

In 2014, Aetna reported total revenue of $58 billion, while Humana reported revenue of $48.5 billion. Aetna reported a net income of $2.04 billion in 2014, compared with Humana’s $1.15 billion.

As Modern Healthcare notes, the deal must still survive antitrust review. The merger is presently expected to close in the second half of 2016.

If the merger is approved, the company would become the second largest managed care company in the United States, trailing only UnitedHealth Group.

Supreme Court Upholds ACA Subsidies

Posted in Healthcare Services Investing

The U.S. Supreme Court has issued its King v. Burwell (pdf) decision regarding the validity of premium assistance issued by federally run insurance marketplaces.

In a 6-3 ruling, the Supreme Court upheld subsidies for the millions of people who have purchased insurance on the federal Obamacare exchange.

According to a report from U.S. News & World Report, the case focused on whether middle- and low-income adults who purchased health insurance through the federal Healthcare.gov marketplace were entitled to subsidies based on the language of the Affordable Care Act that says tax credits are only to be distributed for marketplaces “established by the state.”

Chief Justice John Roberts wrote the court’s majority opinion and was joined by Justices Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan, Anthony Kennedy and Sonia Sotomayor.

As the New York Times reported, the ruling means that “it is all but certain that the Affordable Care Act will survive after Mr. Obama leaves office in 2017.”

Will Increased Consolidation in the Insurance Industry Yield Opportunities or Challenges for Investors?

Posted in Healthcare Services Investing

A recent flurry of activity in the health insurance industry would seem to indicate that investors can expect significant consolidation in the managed care sector.

As The Health Care M&A Information Source reports, it began in May, with Humana announcing it was exploring a sale. The Wall Street Journal reported that Aetna and Cigna had held preliminary discussions with Humana, with Aetna recently making a takeover proposal.

There were also reports that UnitedHealth Group was exploring a possible merger with Aetna, and that Anthem was pursuing a takeover of Cigna. Cigna rejected Anthem’s initial offer.

As it is, in many states there remains just one or two dominant payors, with resulting dramatic impacts on the local market. It will be interesting to see how further consolidation in the managed care sector will impact these states as well as those states that could see their higher number of payors quickly decline.

In future posts and in our Law360 column we intend to examine the impact this consolidation trend may have on investors and their portfolio companies.

50 Things to Know About Healthcare Costs

Posted in Healthcare Services Investing

A new column from Becker’s Hospital Review identifies 50 things to know about healthcare costs.

Topics covered include the rise in spending; cost of hospital services; spending on drugs and services; and growing out-of-pocket costs.

These are interesting facts for investors to understand about the changing healthcare climate and shifting cost picture.

To read the Becker’s Hospital Review column, click here.

Investors May Find Opportunities In Retail Clinic Growth

Posted in Healthcare Services Investing

The role of retail clinics in health care has been steadily and rapidly expanding in recent years, and private equity funds are taking note. The private equity community has actively invested in this arena with some regularity in the past decade, with several funds investing in national and regional businesses and then strategically selling such investments to well-positioned buyers such as grocery chains, large “big box” retailers and urgent care clinics. Opportunities in the retail clinic space remain and our most recent Law360 column, authored with our colleague Lauren Ramos, addresses these opportunities.

View the Law360 column “Investors May Find Opportunities In Retail Clinic Growth.”

Healthcare & Life Sciences Private Equity Deal Tracker: Shockwave Medical Secures $40 Million in Financing

Posted in Healthcare Services Investing

Shockwave Medical has announced it has secured $40 million in funding.

Shockwave Medical, based in Fremont, Calif., develops technology for the treatment of peripheral and coronary vascular disease and aortic stenosis. It is the developer of Lithoplasty balloon catheters.

The funding round was co-led by returning investor Sofinnova Partners and new investor Venrock, with the participation of RA Capital, Deerfield, Sectoral Asset Management, Ally Bridge Group and two undisclosed large-cap investors.

Shockwave Medical indicated the funding would be put toward the development of the Lithoplasty system. The company says the Lithoplasty family of balloon dilatation catheters incorporate lithotripsy electrodes designed to increase the compliance of rigid vascular and valvular lesions prior to low-pressure dilation, which is intended to limit injury to healthy tissue and overcome limitations of current revascularization technologies.

Five Urgent Care Models To Know For 2015

Posted in Healthcare Services Investing

Below is a link to view the latest entry from the monthly Law360 that we publish relating to healthcare private equity investments. This column was written by Geoff C. Cockrell and Amber McGraw Walsh, McGuireWoods LLP, together with Hunter Atkins of Allen Mooney & Barnes Brokerage Services.

In the Law360 column, we identify five operating models in the urgent healthcare industry: the pure-play model, the rural model, the hybrid model, the pediatric model and the onsite model. Private equity investors have renewed interest in urgent care, and this seems to be an upcycle in urgent care interest similar to what we saw in 2012-2013.

View the Law360 column “Five Urgent Care Models To Know For 2015.”

Healthcare & Life Sciences Private Equity Deal Tracker: Precision BioSciences Secures $25.6 Million in Financing

Posted in Life Sciences Investing

Precision BioSciences has announced it has secured $25.6 million in series A financing.

Precision BioSciences is a Durham, N.C.-based genome editing company. Its ARCUS genome editing technology is designed to produce nucleases that can insert, remove and modify DNA in a complex genome.

The funding round involved Fidelity Biosciences, Amgen Ventures, Baxter Ventures, Osage University Partners, the Longevity Fund and two public market investors.

As Precision’s CEO Matthew Kane indicated in a news release, “This financing will allow us to expand beyond our successful efforts to develop the leading next-gen genome editing platform and significantly accelerate the development of our genome-edited product pipeline.”

Healthcare & Life Sciences Private Equity Deal Tracker: Moximed Secures $33 Million in Financing

Posted in Healthcare Services Investing

Moximed has announced it has secured approximately $33 million in funding.

Moximed, based in Hayward, Calif., is focused on developing minimally invasive, joint preserving solutions for patients with knee osteoarthritis.

The funding round included new investor Vertex Venture Holdings and returning investors New Enterprise Associates, Gilde Healthcare Partners, Morgenthaler Ventures and GBS Venture Partners.

Moximed indicated the funding will go toward the company’s efforts to gain FDA approval of the KineSpring System, a joint unloading knee implant for pre-arthroplasty patients, and grow commercial sales in Europe.