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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: 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.

Healthcare & Life Sciences Private Equity Deal Tracker: Riverside Partners Acquires Medical Reimbursement of America

Posted in Healthcare Services Investing

Riverside Partners has announced its acquisition of Medical Reimbursement of America (MRA).

Riverside Partners, based in Boston and founded in 1988, seeks investments in growing middle-market healthcare- and technology-oriented companies. The firm typically invest in companies with revenues between $10 million and $100 million.

MRA, based in Franklin, Tenn., is a provider of reimbursement solutions for hospitals and health systems. Through its payment integrity division based in Ft. Lauderdale, Fla., MRA also provides underpayment identification and recovery services.

Terms of the acquisition were not announced.

Note: Learn more about Riverside Partners and other leading PE firms that invest in healthcare here.

One Equity Partners Closes Sixth Private Equity Fund at $1.65 billion

Posted in Healthcare Services Investing

One Equity Partners has announced it completed fundraising for its sixth PE fund, One Equity Partners VI.

The fund has total capital commitments of $1.65 billion, which the firm says surpassed its target.

One Equity Partners, with U.S. offices in New York and Chicago, is a middle-market PE firm focused on making investments in the industrial, healthcare and technology sectors in North America and Europe. It was founded in 2001 as the in-house PE arm of Bank One, and from 2005 in the same capacity for JPMorgan. In January 2015, a spin-out was completed, establishing One Equity Partners as an independent management company.

One Equity Partners indicated that One Equity Partners VI has already made eight platform investments to date, with approximately $600 million invested or committed.

Healthcare & Life Sciences Private Equity Deal Tracker: BelHealth Acquires American HealthCare Services Association

Posted in Healthcare Services Investing

BelHealth Investment Partners has announced the acquisition of American HealthCare Services Association (AHSA).

BelHealth, based in New York, is a healthcare private equity firm focused on lower middle market companies. The firm typically invests $20-50 million per platform company across three core healthcare segments: services, products and distribution.

AHSA, headquartered in Traverse City, Mich., is a staffing services provider for hospitals and other healthcare facilities. AHSA supports customers with all areas of staffing, including nurses, physicians, mid-level healthcare professionals, allied healthcare professionals, medical office staff, IT and other staffing specialties.

Financial terms were not disclosed.

Signet Closes Fourth Life Science Fund at $137 Million

Posted in Life Sciences Investing

Signet Healthcare Partners has announced it has closed its fourth life science fund, Signet Healthcare Partners IV L.P., with $137.2 million of capital commitments.

Signet, based in New York and founded in 1998, is a private equity fund that focuses on investments in commercial-stage healthcare companies, specifically pharmaceutical sector and medical technology companies.

Through Signet Healthcare Partners IV, the firm indicated it intends to invest in 10-12 companies and will typically invest $10-15 million per company.