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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: Wellspring Capital Management Acquires AdvoServ

Posted in Healthcare Services Investing

Wellspring Capital Management has announced it has acquired AdvoServ.

Wellspring, headquartered in New York, is a middle-market PE firm that manages more than $3 billion of private equity capital.

AdvoServ, headquartered in Bear, Del., is an operator of residential group homes and related education programs for the treatment of individuals with intellectual and developmental disabilities and behavioral challenges.

Financial terms of the transaction were not disclosed.

Healthcare & Life Sciences Private Equity Deal Tracker: Warburg Pincus to Invest up to $300 Million in Vertice Pharma

Posted in Healthcare Services Investing

PE firm Warburg Pincus has announced it will invest up to $300 million in new pharmaceutical company Vertice Pharma.

Vertice Pharma, which has its U.S. headquarters in New Jersey, will focus on acquiring specialty pharmaceutical companies and products. It was launched by pharmaceutical industry veterans Don DeGolyer and Andrew Saik in partnership with Warburg Pincus.

Vertice Parma’s first acquisition is VistaPharm, a Birmingham, Ala.-based specialized generics manufacturer of liquid and unit dosage pain medications for the hospital market, retail pharmacy and outpatient clinics.

Warburg Pincus, headquartered in New York, was founded in 1966. The firm focuses primarily on investing in healthcare and consumer products; technology, media and telecommunications; financial services; energy; and industrial and business services. It has invested more than $50 billion in more than 720 companies located in more than 35 countries.

Healthcare & Life Sciences Private Equity Deal Tracker: Atreca Secures $56 Million in Funding

Posted in Healthcare Services Investing

Atreca has announced it has secured $56 million in series A funding.

Atreca, based in Redwood City, California, is a privately held biotechnology company developing therapeutics drawn from human immune responses, including anti-cancer immune responses.

The funding round was led by an unidentified “large, U.S.-based, healthcare-focused fund.” Additional investors included the Bill & Melinda Gates Foundation, Mission Bay Capital and GlaxoSmithKline.

Atreca indicated it will use the financing to further development and advancement of the company’s product pipeline.

Budget Act Significantly Impacts Provider-Based Facility Reimbursement

Posted in Healthcare Services Investing

On November 2, President Obama signed into the law the Bipartisan Budget Act of 2015 (the “Act”), which contains language that will significantly change how hospital-based outpatient care is reimbursed.

Currently, off-campus hospital outpatient departments (“HOPDs”) that comply with Medicare’s provider-based standards are eligible for reimbursement under Medicare’s outpatient hospital prospective payment system (“OPPS”). Section 603 of the Act will exclude provider-based HOPDs from the OPPS begging in January 1, 2017, with the exception of grandfathered HOPDs who were billing under the OPPS as of November 2, 2015.

New provider-based HOPDs who begin billing Medicare after November 2, 2015, will be eligible for reimbursement under either the ambulatory surgery center prospective payment system or the physician fee schedule, which generally contain lower reimbursement rates than the OPPS.

This represents a major shift in HOPD reimbursement and may curtail hospital investment in off-campus facilities in order to convert those facilities to provider-based departments. It will also likely have various ripple effects on transaction structures and delivery of care models.

Healthcare & Life Sciences Private Equity Deal Tracker: Pamplona Capital Management Acquires MedAssets for $2.7B

Posted in Healthcare Services Investing

Pamplona Capital Management has announced it will acquire MedAssets for $2.7 billion.

Pamplona, based in London and New York, is a PE firm established in 2005. Pamplona manages over $10 billion in assets across a number of funds for a variety of clients. Pamplona is currently managing its fourth private equity fund, Pamplona Capital Partners IV LP, which was raised in 2014. The firm invests long-term capital across the capital structure of its portfolio companies in both public and private market situations.

MedAssets, based in Alpharetta, Ga., is a healthcare performance improvement company that serves four out of every five hospitals in the United States.

Following completion of the acquisition, which is expected to close in the first quarter of 2016, pending customary approvals, Pamplona intends to divest MedAssets’ spend and clinical resource management segment to VHA-UHC Alliance NewCo, as per a separate agreement. Pamplona and VHA-UHC have agreed to work together in select service offerings.

Pamplona also indicated it will combine MedAssets’ revenue cycle management segment with Pamplona-owned Precyse.

Healthcare & Life Sciences Private Equity Deal Tracker: Quad-C Management Invests in VMG Health

Posted in Healthcare Services Investing

Quad-C Management has announced it has closed an investment in VMG Health.

Quad-C, headquartered in Charlottesville, Va., is a middle market PE firm focused on investing in business services, consumer, general industrial, healthcare, specialty distribution and transportation/logistics companies. It was founded in 1989.

VMG Health, with offices in Dallas and Nashville, is a provider of financial valuation and advisory services for the U.S. healthcare transaction market.

While terms of the deal were not disclosed, it was made known that VMG management maintained significant ownership in the business.

PE-Backed Lab Company Millennium Health to Pay $256 Million Settlement with Government

Posted in Healthcare Services Investing

We’ve discussed in the past certain risks of which investors should be aware with laboratory investments. Last week, TA Associates portfolio company Millennium Health agreed to pay $256 million to resolve claims that it billed federal healthcare programs, including Medicare and Medicaid, for medically unnecessary urine drug and genetic testing, and for providing free items to physicians who agreed to refer laboratory testing business to Millennium, according to a U.S. Department of Justice news release.

TA Associates invested in Millennium Health in 2010.

The settlement was the result of a whistleblower (qui tam) action. This allows private parties to bring a lawsuit on behalf of the government and to share in any recovery.

The whistleblowers will receive nearly $33 million as their portion of the settlement.

Amber McGraw Walsh Featured in Column on Behavioral Health Investing

Posted in Healthcare Services Investing

Amber McGraw Walsh, chair of the McGuireWoods Healthcare Department, is featured in a new article published by The Ambulatory M&A Advisor.

The column is titled “Evolution in the Behavioral Health Market.” It examines the behavioral health merger and acquisition market — where it has been, where it is predicted to go, and why investors are eager to participate in deals.

Among the topics Walsh discusses includes factors driving interest in behavioral health investments and the risk associated with such investments.

To read the article, click here.

The Ambulatory M&A Advisor is a publication that covers business, legal and transactional updates and insights around ambulatory care center and physician group practice deal making.

Healthcare & Life Sciences Private Equity Deal Tracker: MTS Health Sells DNA Diagnostics Center to GHO Capital for $110 Million

Posted in Healthcare Services Investing

MTS Health Investors has announced it has sold portfolio company DNA Diagnostics Center (DDC) to GHO Capital Partners for $110 million.

DDC, based in Fairfield, Ohio, provides DNA testing services in three main areas: paternity and other family relationships, forensics and genetics.

MTS is a New York-based PE firm that invests in operating companies within services sectors of the healthcare industry. Investment targets are primarily U.S. companies with valuations of $25 million to $300 million.

GHO Capital Partners, or Global Healthcare Opportunities, is a London-based specialist healthcare investor.

Healthcare & Life Sciences Private Equity Deal Tracker: Galera Therapeutics Secures $37 Million in Financing

Posted in Healthcare Services Investing

Galera Therapeutics has announced it has raised $37 million in series B financing.

Galera, headquartered in Malvern, Pa., is a clinical-stage biotechnology company focused on the development of drugs targeting oxygen metabolic pathways.

The financing round was led by Novo Ventures, with participation from existing investors New Enterprise Associates, Novartis Venture Fund , Correlation Ventures and Galera Angels.

Galera indicated the financing proceeds will be used to advance the development of the company’s selective dismutase mimetics. This will include progressing its lead candidate (GC4419) into a phase 2b double-blind, randomized clinical trial for the prevention of oral mucositis in head and neck cancer patients receiving chemoradiation therapy.