Noteworthy M&A Transactions – February 2019

February 2019 M&A activity highlighted continued momentum on several compelling themes:

1. Private Equity Firms Partnering with Seasoned Industry Executives to Pursue Assets. Given the complexity inherent to the healthcare space as well as the high degree of competition for platform assets, private equity firms are increasingly looking to partner with industry veterans who can utilize their prior experience to source, diligence, and subsequently lead companies in select healthcare niches.
2. Post-Acute Consolidators Looking both Nationally and Locally. While strategic acquirers in the post-acute space continue to pursue large transformative mergers, as evidenced by Aveanna’s announced acquisition of Maxim’s home healthcare division, they are also taking advantage of opportunities to acquire providers who can supplement their existing service offerings in key strategic markets.
3. PE-Backed Dental Practice Rollups Continue to Gain Steam.  Seeking to capitalize on beneficial economies of scale, PE-backed practice management groups are expanding their footprint through acquisitions of smaller practices to create larger, more efficient dental care organizations.

Several transactions announced in February align with these themes:

• New York-based private equity firm Post Capital Partners is partnering with former Addus HomeCare Corporation CEO Mark Heaney to acquire platform assets in the home and community-based care space. Platform targets may include adult day centers, home care companies, and community-based services companies. The partnership exemplifies Post’s “executive-first strategy,” where the firm seeks to partner with proven executives in a target industry before pursuing acquisitions in that space. In the press release announcing the partnership, Mitch Davidson, co-founder and managing director of Post Capital Partners said, “We see a growing need for home and group care in the community, as the number of older persons grows and life expectancy increases.”

• TPG Capital announced that it has entered into a partnership with behavioral health executive Lani Fritts to form Kadiant, which will provide Applied Behavior Analysis (ABA) therapy and related services to individuals diagnosed with autism spectrum disorder. Fritts is a well-respected behavioral health industry veteran, having co-founded ABA therapy provider Trumpet Behavioral Health in 2009. Kadiant will initially look to partner with existing providers to grow the platform but will subsequently look to expand via de novos. TPG has committed $300 million of equity to support the Company’s launch and growth strategy. Vida Ventures also invested in the platform alongside TPG.

• Aveanna Healthcare, a leading provider of adult home health and pediatric skilled nursing and therapy services, announced the acquisition of the home healthcare division of Maxim Healthcare Services. The home healthcare business’s service offerings include home health, personal care services, and behavioral health. Maxim’s staffing services and population health and wellness divisions are not part of the agreement. The transaction is complementary to Aveanna’s current services and expands further expands the Company’s national footprint.

• Amedisys, a leading provider of home health, hospice, and personal care services, signed a definitive agreement to acquire RoseRock Healthcare, a northeastern Oklahoma hospice provider with an average daily census (ADC) of approximately 200. Amedisys currently operates six home health care centers in Oklahoma and the RoseRock acquisition positions the Company to better serve patients in the state who transition from home health to hospice care. The RoseRock acquisition follows the early February closing of Amedisys’s $340 million acquisition of Compassionate Care Hospice, a deal which was originally announced in October of 2018.

• Talisker Partners, a Washington D.C.-based private equity firm, announced the acquisition of Texas-based Dental Management Strategies (DMS), a multi-faceted practice management group that serves the needs of dental practices across Texas, with the singular purpose of helping dentists achieve their personal and professional goals.

• New England Management Services (NEMS), a New England-focused dental services organization, announced its expansion into the Boston area with its acquisition of five dental practices owned by local practicing dentists. NEMS was founded in 2015 after partnering with The Beekman Group, a NY-based private equity firm dedicated to investing in lower middle-market companies. With the completion of this acquisition, NEMS now manages a network of ten dental offices.

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!

Related Blogs:

Noteworthy M&A Transactions – January 2019
Noteworthy M&A Transactions – December 2018
Noteworthy M&A Transactions – November 2018