Noteworthy M&A Transactions – August 2017

In this second edition of TripleTree’s Noteworthy M&A Transactions blog, we look back at M&A activity from August. Several interesting themes surfaced after reviewing recent transactions:

1. The shift to value is taking hold. The shift to value is a theme that has been a frequent topic of healthcare conferences, presentations, and research pieces since the passage of the ACA. While there is still plenty to be done across the market to make value-based care ubiquitous, significant investments are being made by key constituents across the industry as this shift continues to accelerate.
2. Data and analytics are top of mind. As referenced in our recent blog on key Population Health Management capabilities, the importance of meaningful, timely, and actionable data and analytics cannot be overstated as being critical foundational capabilities for payers and providers to be successful in a value-based environment.
3. Digital health & wellness platforms continue to scale. This sector of healthcare continues to attract investor interest as companies expand and transition from direct-to-consumer offerings into the business-to-business (B2B) market. In some ways this momentum is to be expected, as employers think about new ways to attract and engage millennials who are comfortable with technology and demonstrate a more proactive stance on their mental and emotional well-being.

The following transactions caught our eye in the month of August:

• eSolutions, a SaaS RCM software and analytics platform, acquired RemitDATA, a SaaS analytics company that leverages comparative data to bring transparency to key healthcare constituents – providers, payers, billing companies, and HCIT partners. The acquisition provides eSolutions with highly complementary data, reporting, and analytics capabilities, denial management capabilities strengthening eSolutions product suite, and a greater footprint in the FQHC, Ambulatory, ASC, and Hospital-owned Physician markets. This transaction represents eSolutions’ second acquisition in last 18 months as they acquired ClaimRemedi in March of 2016.

• The Advisory Board Company (NASDAQ: ABCO) entered into an agreement to sell its healthcare business, Advisory Board, to Optum, a subsidiary of UnitedHealth Group (UHG) (NYSE: UNH), for $1.3B. Advisory Board enables healthcare organizations to improve performance through research, technology and consulting. Optum also serves healthcare organizations, offering information and technology-enabled health services. Advisory Board’s array of strategic services fills a gap in Optum’s technology-heavy portfolio. Optum now has direct access to Advisory Board’s clients, representing the C-suite of 4,000+ healthcare systems nationwide. It is a landscape in which Advisory Board’s Crimson analytics products are in wide use. This presents a significant opportunity for Optum’s analytics suite, OptumInsight, to create synergies, enhance the product offering, and win new accounts. The challenge for Optum will be to convince Advisory Board clients, many of which are in the provider landscape, that it has their best interests in mind despite being owned by a holding company that also owns a payer (UnitedHealthcare). 

• KKR (NYSE:KKR) and Walgreens Boots Alliance (NASDAQ: WBA) (minority investor) entered into an agreement to acquire PharMerica Corporation (NYSE: PMC), a provider of pharmacy, specialty infusion, and hospital pharmacy management services, for $1.4B. KKR views PharmMerica as a platform opportunity in the growing post-acute pharmacy management segment. The minority investment allows Walgreens an opportunity to participate in post-acute care drug spend without a full ownership position like its primary competitor, CVS Health, did with its acquisition of Omnicare. Following CVS’s acquisition of Omnicare, many speculated that Walgreens would pursue a full acquisition of PharMerica. The minority position de-risks ownership for Walgreens given its recent pivot on the blocked Rite Aid acquisition.

• NxStage Medical (NASDAQ: NXTM), a home dialysis equipment maker, entered into an agreement to be acquired by Fresenius Medical Care (FMC) (DB: FME), a Germany-based provider of dialysis services, for $2B. This acquisition positions FMC to be a leader in the growing home dialysis market. It will enable the company to leverage one of the main drivers of healthcare innovation, the shift to value-based care, by offering care in lower cost settings. Additionally, NxStage’s presence in critical care (i.e. hospitals) in North America presents an attractive opportunity for FMC to offer its products in that market.

• Happify Health, the pioneer in combining evidence-based emotional health interventions with engagement and gaming technology, received a $9M investment led by TT Capital Partners (TT Capital Partners is part of the TripleTree platform). With this investment, Happify Health will continue the expansion of its digital platform that provides clinically tested, highly personalized behavior change interventions for use across the emotional health continuum including solutions for individuals, health plans, employers and care delivery systems.

TripleTree and TT Capital Partners continuously monitor the market to identify the trends impacting the healthcare industry and deliver uncommon clarity to our clients and investors. Let us know what you think – thanks for reading!

Related Blogs
 

• Noteworthy M&A Transactions – October 2017
• Noteworthy M&A Transactions – September 2017
• Noteworthy M&A Transactions – July 2017