Labor shortages in the healthcare industry aren’t a new topic. Earlier this year, the Association of American Medical Colleges warned that the United States could lose as many as 100,000 doctors by 2025, up to one-third of those being primary care physicians. A shortage of registered nurses has been discussed since 1965, by one account. That makes the market for medical staffing companies of particular interest to investors.
M&A activity in this subsector has grown in recent years, from a single deal in 2013 to eight deals in 2015. Through the end of October 2016, six deals targeting medical staffing companies are on the books. The majority of acquirers have been another staffing company (61%) or a private equity firm (26%).
Prices are rarely disclosed in these deal announcements. Of the 18 transactions announced since 2013, six disclosed financial terms, for a combined total of $294 million. The largest deal by price was announced in January 2015 by Envision Healthcare Holdings (NYSE: EVHC), when it acquired Vista Staffing Solutions from On Assignment Inc. (NYSE: ASGN) for $123 million. Vista’s focus was on providing locum tenens staffing and permanent placement services for physicians, nurse practitioners and physician assistants.
None of the six deals announced in 2016 disclosed prices. The acquirers included three private equity firms and two privately held companies.
Advanced Medical Personnel Services, a portfolio company of Clearview Capital, announced two acquisitions this year. Advanced Medical Personnel specializes in travel therapy jobs, and places physical therapists, physical therapy assistants, occupational therapists and others in medical facilities across the United States. In April it acquired Rise Medical Staffing, a privately held provider of short- and long-term travel nurse staffing services.
In September, it targeted IPI Travel, another short- and long-term nurse staffing company that works with healthcare facilities in all 50 states.
While Clearview Capital is building a medical-travel staffing platform, other private equity firms are getting in on the ground floor. In January, MTS Health Investors, LLC acquired HCCA Health Connections and HCCA International, together forming the largest independent provider of offshore clinical resources and staffing solutions for U.S. healthcare companies. HCCA’s domestic nurse staffing business recruits experienced, qualified nurses for deployment at U.S.-based hospitals.
In February, The Vistria Group took on Supplemental Health Care, which provides comprehensive and customized staffing and workforce solutions to healthcare facilities, schools and correctional facilities.
BelHealth Investment Partners, which previously focused on specialty pharmacy and biotech companies, branched out a bit with its October acquisition of AHS Staffing LLC. AHS Staffing provides healthcare staffing services focused on placing pharmacy professionals and dialysis travel nurses. The deal is central to its strategy to create a national and diversified healthcare staffing platform.
The sixth deal this year was actually between two Canadian firms. Quebec-based Alliance Pharma Inc., a portfolio company of Persistence Capital Partners, announced the acquisition of Pro-J-Pharma, a staffing company specializing in healthcare personnel placement that is headquartered in Saint-Eustache, Quebec. Some financials were even disclosed. For the year ended May 31, 2015, Pro-J-Pharma generated revenue of CAD$1.7 million.
