Other Services Diversify, but CRO and Outpatient Care still lead

In 2017, our annual Health Care Services Acquisition Report, the Other Services sector featured six particularly active subsectors. Last year we had 13. Other Services includes areas such as specialty pharmacy, urgent care and ambulatory surgery centers and medical staffing companies. All are experiencing significant changes. In 2017 we reported 153 deals in Other Services, compared with 179 in 2018.

A new notable field includes deals involving medical transportation services. There were a total of 10 deals in this category. Perhaps the most significant transaction was Beekman Investment Partners III, LP’s purchase of REVA, Inc., the largest global fixed-wing air medical platform in the U.S. It has completed over 25,000 missions to over 65 countries since inception. There were three other deals involving air medical transportation, while six focused on emergency ambulance services.

Although we saw an increased number of sub-sectors, the deals are still heavily concentrated on a few categories. Specialty pharmacies, staffing companies, distributors, contract research organizations (CRO) and contract manufacturing organizations (CMO), and outpatient care centers took up 84% of the deal total, totaling 151 deals.

The only drop in deal count we found was in the CRO/CMO category. While it still had the largest amount of deals at 43, it didn’t hit 2017’s total of 58 transactions. In 2017, the largest CRO transaction among announced prices was Pamplona Capital Management LLP’s purchase of PAREXEL International Corporation for $5 billion. Last year, the highest disclosed deal was Charles River Laboratories International, Inc.’s $800 million purchase of MPI Research.

However, we found a big increase in dollar volume. With only 35 disclosed prices in 2018, compared to 2017’s 45, there was a roughly 53% increase in dollar volume. We should note that this increase has much to do with Cigna Corporation’s (NYSE: CI) acquisition of Express Scripts Holding Company (NYSE: ESRX) for $67 billion.







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