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The Healthcare Investor

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

Healthcare & Life Sciences Private Equity Deal Tracker: Warburg Pincus to Acquire CityMD

Posted in Healthcare Services Investing

Warburg Pincus has announced it will acquire CityMD.

CityMD, founded in 2010, is an urgent care provider with more than 68 locations in the greater New York metropolitan area and Seattle.

Warburg Pincus, headquartered in New York, is a private equity firm that takes a long-term perspective and invest in businesses at all stages of development. It invests in healthcare and several other sectors.

The investment is intended to help accelerate CityMD’s expansion through new site openings and strategic acquisitions and partnerships.

Terms of the transaction were not disclosed.

Healthcare & Life Sciences Private Equity Deal Tracker: KKR to Acquire Angelica Corp.

Posted in Healthcare Services Investing

Angelica Corp. has announced it has entered into an asset purchase agreement with an affiliate of PE firm KKR.

KKR will acquire Angelica’s assets for approximately $125 million plus certain assumed liabilities. Angelica indicated it expects to continue operating as normal throughout the process.

Angelica, based in Alpharetta, Ga., is a provider of textile rental and linen management services to the U.S. healthcare market, specifically hospitals, long-term care facilities and outpatient medical practices.

KKR (Kohlberg Kravis Roberts) was founded in 1976. Its PE platform considers investments in healthcare and all other industries. Based in New York and publicly traded under the ticker symbol KKR, the firm prefers to invest in a range of debt and public equity investing and may co-invest, seeking a controlling ownership of a company or a strategic minority positions.

Learn more about KKR and other leading private equity firms that invest in healthcare by clicking here.

Shore Capital Partners Closed Second Private Equity Fund at $190 Million

Posted in Healthcare Services Investing

Shore Capital Partners has announced it has closed it second PE fund (Shore Capital Partners Fund II) at the hard cap of $190 million.

With the closing, the firm indicated it now has approximately $350 million in total capital under management.

Shore Capital Partners, based in Chicago, is a PE firm focused exclusively on microcap healthcare investments. Founded in 2009, Shore’s target investments range in size from $1 million to $7 million in EBITDA. Equity commitments range from $10 million to $30 million per platform.

The firm indicated Fund II will continue the first fund’s investment strategy of primarily investing in control buyouts.

Learn more about Shore and other leading PE firms that invest in healthcare by clicking here.

DW Healthcare Partners Closes Fourth Private Equity Fund at $295 Million

Posted in Healthcare Services Investing

DW Healthcare Partners has announced it has closed its fourth PE fund (Fund IV) totaling $295 million.

With the closing, the firm indicated it now has $800 million in total capital under management.

DW Healthcare Partners, with its U.S. office in Park City, Utah, is a PE firm focused exclusively on healthcare. Founded in 2002, DW prefers to make shareholder liquidity, management buyout and growth capital investments in mid-to-late-stage companies.

Fund IV currently has two platform investments: Edge Systems, a manufacturer of non-invasive equipment and consumables used in aesthetic skin health treatments, and PRIME Education, a provider of continuing medical education for the interprofessional healthcare team.

Healthcare & Life Sciences Private Equity Deal Tracker: Webster Capital Completes Sale of Epic Health Services to Bain Capital

Posted in Healthcare Services Investing

Webster Capital announced it has completed the sale of Epic Health Services to Bain Capital.

Plans for the acquisition were announced late last year. Financial terms were not disclosed.

Epic Health Services, headquartered in Dallas, is a provider of pediatric skilled nursing, therapy, developmental services and home medical solutions.

Webster Capital, based in Waltham, Mass., focuses on investing in healthcare services and branded consumer companies.

Bain Capital Private Equity, with North American offices in Boston and New York, invests in several industries, including healthcare.

Healthcare & Life Sciences Private Equity Deal Tracker: Alignment Healthcare Secures $115 Million Investment from Warburg Pincus

Posted in Healthcare Services Investing

Alignment Healthcare has announced it has received a $115 million investment.

Alignment Healthcare, based in Orange, Calif.,  is a developer of population health management technology.

The investment comes from Warburg Pincus. Headquartered in New York, Warburg Pincus is a PE firm that takes a long-term perspective and invest in businesses at all stages of development. It invests healthcare and several other sectors.

Alignment indicated it will use the funding to accelerate expansion of its operations.

Optum-SCA Merger Could Signal Renewed Payer Interest in Providers

Posted in Healthcare Services Investing

In January, UnitedHealth Group’s health services arm Optum announced it would acquire Surgical Care Affiliates (SCA), one of the nation’s largest and most well-respected ambulatory surgery center (ASC) and surgical hospital companies, for $2.3 billion.

With the combination, SCA will become part of the OptumCare platform, which serves consumers through 20,000 affiliated physicians and hundreds of care facilities. At the time of the announcement, SCA was operating 205 surgical facilities, including ASCs and surgical hospitals, in partnership with approximately 3,000 physicians in 30 states.

UnitedHealth Group’s acquisition of SCA may indicate a renewed interest in insurance companies investing in providers after a few years of lighter activity.

As Kaiser Health News reported in mid-2011, four of the five largest health insurers had increased physician holdings in the previous year. Highmark, a not-for-profit insurer, went so far as to acquire an entire health system — West Penn Allegheny Health System — in April 2013. But the surge of insurers acquiring physicians was not sustained, as Modern Healthcare reported in 2015.

However, the trend may now be reversing course. As The New York Times noted in its Optum-SCA coverage, “Insurers are aggressively experimenting with new ways to pay doctors and hospitals to reward them for delivering better care at lower prices. Many doctors are scrambling to join health systems and insurers to avoid being left behind.”

A Fitch Ratings report in January highlights the growing interest in ASCs from insurers and hospitals, citing the SCA acquisition and Tenet’s acquisition of United Surgical Partners International in 2015. As the report notes, “ASCs are desirable targets for health systems and insurers partial to vertical integration strategies because they offer a compelling value proposition as volumes continue to shift to an outpatient setting; all else equal, treatment in an outpatient surgery setting is cheaper than in an acute care hospital due to a more flexible operating model and cheaper capital plant.”

The public markets have generally reacted favorably as well to such merger news. SCA’s stock increased by nearly eight points to $56.65 when the acquisition was announced. Similarly, on that same day, shares of Surgery Partners, another publicly traded ASC management company, increased two points, from $16 to $18 per share, and now sits at about $21 per share.

And many believe this is only the beginning of a revived interest in insurer-provider combinations.

KKR Closes $13.9 Billion PE Fund

Posted in Healthcare Services Investing

KKR has announced the closing of KKR Americas XII Fund, a $13.9 billion fund.

The fund will focus on investments in the United States, Canada and Mexico in seven industries, including healthcare.

KKR (Kohlberg Kravis Roberts & Co.) was founded in 1976. Based in New York, the firm prefers to invest in a range of debt and public equity investing and may co-invest, seeking a controlling ownership of a company or a strategic minority positions.

Learn more about KKR and other leading PE firms that invest in healthcare here.

Healthcare & Life Sciences Private Equity Deal Tracker: Doctor.com Secures $5 Million in Funding

Posted in Healthcare Services Investing

Doctor.com has announced the closing of a $5 million series A investment.

Doctor.com is a provider of cloud-based marketing automation solutions built for the healthcare industry.

The funding comes from Spring Mountain Capital.

Spring Mountain Capital is based in New York and founded in 2001. Its PE group makes growth equity investments principally in technology-enabled and healthcare companies in the lower middle market.

Doctor.com indicated the funding would go toward product innovation and client success initiatives.

Healthcare & Life Sciences Private Equity Deal Tracker: Xenex Secures $38 Million in Funding

Posted in Healthcare Services Investing

Xenex Disinfection Services has announced it has received $38 million in funding.

Xenex, based in San Antonio, is the developer of a pulsed xenon full spectrum UV room disinfection system for use in healthcare facilities.

The funding round was led by Essex Woodlands (EW), a healthcare PE firm based in Palo Alto, Calif. EW seeks minority or majority investments in private and public companies with revenues ranging from $20 million to $200 million that are EBITDA-positive or soon to be positive. Typical investment range from $20 million to $80million in equity.

The financing included new participation from Piper Jaffray Merchant Banking and continued investment from Malin Corp. and Tectonic Ventures.

Xenex indicated the funding would be used to support sales force growth, product development, scientific research and international expansion.