Venture Investors is raising a new healthcare venture fund, according to a PE Hub report citing an SEC regulatory filing.

The firm is targeting $100 million for the fund.

Venture Investors, with offices in Madison, Wyo., and Ann Arbor, Mich., seeks to make early-stage investments in healthcare, specifically within the therapeutic, diagnostic and tools, medical device and IT sectors. The firm focuses on the Midwest, with initial investments ranging from $250,000 to $2.5 million.

McGuireWoods has long been an avid supporter of the advancement of professional women. As part of our initiative seeking to expand the leadership of women in private equity, we are profiling women leaders in private equity throughout 2018. We are hopeful that this series will serve to inspire other women to pursue their careers in private equity in a way that best challenges and motivates them, which these impressive women have all done. This month, we are pleased to feature Rena Clark of Laurel Oak Capital Partners. Access her profile by clicking here.

To recommend a woman for a future interview, email Amber Walsh at awalsh@mcguirewoods.com.

Private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) are joining with Humana to acquire CURO Health Services for approximately $1.4 billion, according to a news release.

CURO Health Services, based in Mooresville, N.C., is a national hospice operator providing care to patients at 245 locations in 22 states.

TPG Capital, headquartered in Fort Worth, Texas and San Francisco, targets investments in middle-market companies in healthcare and a number of other industries.

WCAS, based in New York, targets growth-oriented companies within the healthcare and information/business services industries.

The CURO transaction is anticipated to close during the summer of 2018. Announcement of the acquisition comes less than six months after TPG, WCAS and Humana agreed to acquire Kindred Healthcare in a $4.1 billion deal.

The next in our series of posts sharing key takeaways from panels at the Healthcare & Life Sciences Private Equity and Lending Conference focuses on opportunities for investment in dermatology. It is authored by our colleagues Tom Zahn and Chris DeGrande.

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Dermatology Spotlight Panel: 5 Key Points

By Tom Zahn and Chris DeGrande

Dermatology continues to be an area of strong interest for private equity investors, and both platform and add-on investments continued at a robust pace in 2017. This activity as well other trends in the field of dermatology were explored by experts who spoke on a panel at the McGuireWoods 15^th Annual Healthcare and Life Sciences Private Equity & Finance Conference on Wednesday, February 21.

Experts included Dan Conroy, Chief Development Officer of United Dermatology Partners; J. Kyle Brown, Director of Brown, Gibbons, Lang & Company; Samarth Chandra, Partner at Enhanced Equity Funds; and Elizabeth Campbell, Principal at LLR Partners.

Five of the key topics discussed were as follows:

1. Dermatology remains highly fragmented relative to other fields, with roughly only 5% of the industry currently consolidated. During the last 12 months, there has been strong M&A activity for both platform practices and add-ons, and the panelists expect to see continued add-on growth. Many dermatology practices are becoming more sophisticated with regard to investment strategies, and so it is becoming more difficult for investors to differentiate themselves to dermatologists looking for investment partners.

2. The dermatology field is an attractive field due a variety of factors, including the fragmented nature of the industry and the field’s added retail element. In addition, the productivity level for dermatologists tends to be very high, and profitability can be further increased by owning lab/pathology services in addition to a dermatology practice.

3. Effective use of midlevel providers can be a key to increasing the success of a dermatology practice. It is still very important to use board certified dermatologists to drive the practice, but midlevels can be used to provide services so long as these services are appropriate. Practices should be aware that different states may require certain ratios of physicians to midlevels or may have additional supervision requirements.

4. While the panelists did not report a giant leap forward in negotiating favourable contract terms with payors (as a result of growing platforms obtaining more leverage), they did report minor successes in this area. The presence of larger, diversified practices has in many instances at least resulted in the prevention of cuts to reimbursement rates by payors, and in some cases resulted in minor rate increases as well. One key element is the increased ability of the personnel brought in by investors to better negotiate with these large payors, as these personnel are often professional individuals experienced in such negotiations.

5. Marketing is a major focus area for almost all dermatology practices. Online marketing is a key source to drive patient flow, and the use of online feedback surveys is useful to understand the success of the practice. Online marketing and scheduling can help to get a patient in quickly for his or her first visit in order to encourage the patient to come to the practice long term.

The next in our series of posts sharing key takeaways from panels at the Healthcare & Life Sciences Private Equity and Lending Conference focuses on opportunities for investment in dental services organizations. It is authored by our colleagues Bart Walker and Amanda Roenius.

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Investments in Dental Services Organizations: 5 Key Considerations

By Bart Walker and Amanda K. Roenius

Dental services organizations (“DSOs”) continue to experience consistent growth in both market share and revenue in the dental industry, making them a continued area of interest for investment and expansion. Experts at the 15th Annual Healthcare and Life Sciences Private Equity and Finance Conference, hosted by McGuireWoods on February 21, 2018, explored trends in DSO investments as well as insights as to what potential investors should look for to best align themselves for success.

Experts on the panel included David Friedman, Vice President of Silver Oak Services Partners, James R. Davis, Jr., Managing Partner at Blue Sea Capital, Craig Castelli, Founder and Chief Executive Officer of Caber Hill Advisors, Sean Roberts, Partner at Huron Capital, and Ken Doyle, Partner at The Halifax Group.

Here are five key considerations from the panel discussion:

1. The investment market is active and competitive. As DSOs continue to thrive, so too does the competition for investments. The dental services niche remains fragmented. By most estimates, approximately only fifteen percent (15%) of dentists are associated with a DSO. Panelists opined that private equity-backed platforms with a wide array of healthcare experience, including in the dental field, are amongst the biggest competitors for investments. Nevertheless, operators who have little to no dental experience are also entering the market with success. Given the strong pool of competitors, potential investors should consider looking at smaller practices that may allow for successful consolidation and should strategically select a market that will allow for growth and expansion.

2. Consistency and integration are keys for success. When considering an investment in a dental platform, panelists emphasized the need for consistent and integrated policies and strategies across the platform, such as those related to hiring and training, branding efforts, and service offerings. The more integration and consistency that exists, the more value the investment will bring. As such, whether investors are looking at pre-established or de novo investments, these core considerations should be emphasized from the start.

3. Stay aware of changes in reimbursement, specifically with regard to Medicaid. Although the panelists noted that Medicaid reimbursement has remained fairly consistent over the past several years, investors must keep in mind that reimbursement varies from state-to-state (and market-to-market). Services that are reimbursed by Medicaid in one state may be reimbursed at a much lower rate (or not at all) in another. Investors should pay attention to lobbying efforts in their selected markets and continue to focus on building connections with state managed care organizations to best align themselves for success.

4. Consider the market’s regulatory landscape prior to investing or expanding. When considering whether to expand or invest in a particular market, panelists emphasized the need to consider the market’s reimbursement rates, regulatory structures, and competition. For example, North Carolina often poses challenges for DSOs from a structural and Medicaid reimbursement standpoint. Panelists noted that the difficulty of a market may sometimes lead to enhanced value when properly structured, citing Texas as a state that, even with the hurdles, can be very profitable.

5. Align investment incentives and goals with those of the dentists. The quality and motivation of a platform’s dentists are key factors to success. Panelists stressed the need to keep the investors’ and dentists’ interests, incentives, and goals aligned. This can be done through various compensation and staffing models as well as flexibility on the part of the investor. Investors should position themselves to help dentists meet their end goals in an acquisition, which, in turn, will help the investor meet its goals as well.