Healthcare Financial Insights

Noteworthy M&A Transactions – November 2020

December 21, 2020

Deal markets continued their hot streak into November, as investors accelerated activity in what has been an active second half of 2020. TripleTree has monitored robust levels of market activity for the month of November and noted three important themes from across healthcare M&A and capital markets.

  1. Market Tailwinds Drive Continued Interest in At-Risk Provider Groups: Healthcare investors have shown an uptick in interest for at-risk provider groups. These providers focus on value-based care, assuming larger accountability around the cost of care and resulting health outcomes of their patients. Value-based care organizations are typically compensated on quality of care and patient health instead of a traditional fee-for-service model. These groups have shown strong performance throughout 2020 as their capitated, risk-based reimbursement model has been relatively insulated from depressed in-office visits that have hit fee-for-service providers. Furthermore, these groups have been aided by a growing senior population and the expanding demand for value-based care options within the Medicare Advantage market. The ongoing COVID-19 pandemic has accelerated discussion for many key private equity players looking to gain a foothold or expand their platform in this space, resulting in a flurry of activity in the closing months of the year.
  2. Regional Consolidation Picks Up in the Hospice Market: Across verticals, post-acute care has been one of the highest growth segments in healthcare, with valuations rising considerably over the past few years. Private equity groups with an eye towards cost-containment platforms have shown particular interest within the hospice sub-sector, leaning in on key regional demographic trends to identify growing markets. Strategic players have also participated in the robust deal activity, seeking to expand their offerings to capture patients across the entire continuum of care. While this market is still relatively fragmented and highly localized, investors focused on areas of high hospice utilization alongside growth in the senior population. Consolidation has continued throughout the second half of 2020, with strong activity in November.
  3. Enhancing the Patient Engagement Experience: Consumers continue to adopt and become more comfortable with virtual care delivery, demanding holistic and integrated solutions across the care spectrum including diagnosis, scheduling, monitoring, and post-acute care. On the flip side, payers and providers seeking to drive cost down through remote triage, medication adherence, and ER diversion are looking for the best channels of communication with their patient base to drive higher responsiveness levels. New patient engagement solutions aim to address these gaps in care, by both expanding further into advocacy and clinical support roles, and presenting solutions that can integrate seamlessly across scheduling, billing, and reporting software. As these engagement companies evolve into holistic platform solutions, they will continue to attract interest from stakeholders across the healthcare spectrum.

 Several transactions announced in November align with these themes:

  • Sun Capital Partners announced that its affiliate has signed a definitive agreement to acquire Miami Beach Medical Group (MBGB), a leading provider of primary care, specialty care and ancillary services to Medicare Advantage plan members in South Florida, from Gauge Capital. MBMG is the second largest independent provider of capitated primary care services to Medicare Advantage plan members in South Florida, with a network of 19 medical centers serving more than 1,750 MA patients. TripleTree served as an advisor to Sun Capital Partners.
  • Cano Health LLC merged with Jaws Acquisition Corp, special purchase acquisition company (SPAC), in a $4.4B deal, taking the Miami-based company public. Cano Health treats more than 103,000 patients through a network of primary care doctors in Florida, Texas, Nevada, and Puerto Rico. Alongside the transaction, Cano Health received an infusion of $800M in development capital from a syndicated group of investors.
  • Texas-based Silverstone Hospice acquired Dallas-based Comfort Care Hospice. Silverstone’s expansion has benefited from a highly fragmented market serving a rising hospice demand in Texas. Comfort Care will be renamed under the Silverstone brand and will offer home health, palliative care, and hospice services.
  • Addus HomeCare Corp, the Frisco, Texas-based home care services provider, acquired Queen City Hospice (and its affiliate Miracle Hospice) for a cash purchase price of approximately $192M. Queen City, which had revenues of nearly $56M and an EBITDA of approximately $11M, serves an average census of around 900 daily patients across Ohio.
  • AccuReg, a healthcare technology solutions company offering a full suite of front-end revenue cycle management solutions for health systems and hospitals, acquired Orlando-based Zenig, an innovator in patient engagement technology solutions that enable touchless check-in, virtual waiting rooms, patient flow and bi-directional communication methods. This acquisition aligns with AccuReg’s strategy to build on its patient access suite and seamlessly integrate digital patient engagement with the revenue cycle process.
  • DW Healthcare Partners (“DWHP”), a healthcare-focused private equity firm, announced an investment in CareXM, a provider of virtual care and patient engagement solutions for post-acute and non-acute healthcare providers. CareXM’s patient engagement platform and virtual care offerings, including clinical nurse triage, are used by home health and hospice providers, physician practices, hospitals, and other care providers. All services can be integrated with providers’ existing electronic medical record and scheduling platforms.

TripleTree and TT Capital Partners continuously monitor the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and, as always, let us know what you think!

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