More Competition Coming in Behavioral Health Care

More Competition Coming in Behavioral Health Care

It’s been a wild ride in recent years. Merger and acquisition activity in the Behavioral Health Care sector soared to a record 91 transactions in 2018, an increase of 264% over 2014 (25 deals) and up 60% compared with 2017 (57 deals). The majority of the 2018 deals—63%, in fact—were made by private equity firms or their portfolio companies. For the record, PE firms accounted for 46% of all acquisitions and 24% of the spending in the nine healthcare services sectors last year. M&A in this sector hasn’t been as robust in 2019. With 50 deals reported through the first week in September, the sector isn’t likely to see another 40 announced by the end of the year. One reason for the slowing... Read More »
KKR’s PharMerica Makes Its First Deal

KKR’s PharMerica Makes Its First Deal

In late May, specialty pharmacy company PharMerica Corporation announced its first acquisition since being acquired by KKR & Co. (NYSE: KKR), with a minority investment from Walgreens Boots Alliance (NASDAQ: WBA), in August 2017. The company priovides institutional and community-based pharmacy services in the United States. When KKR took it private for $1.3 billion, it had trailing-12 month revenue of approximately $2.4 billion and EBITDA of $138 million. In December 2018, KKR announced a $1.3 billion deal for BrightSpring Health Services, then owned by Onex Corporation (ONEX.TO). BrightSpring, formerly known as ResCare, provides comprehensive home and community-based health services... Read More »
Home Health & Hospice Is Primed for Consolidation

Home Health & Hospice Is Primed for Consolidation

The Home Health & Hospice sector is far less fragmented than it was just five years ago. The sector has seen a lot of activity, thanks to the push by payors to move patients towards lower-cost post-acute care settings. That has attracted a lot of investor interest in recent years, and 2018 proved to be a watershed moment as the large-market private equity firms moved in to acquire or build national platforms. Deals by publicly traded companies have changed the sector in significant ways, too. Some merged, such as LHC Group (NASDAQ: LHCG) and Almost Family, Inc. have morphed to focus more on home health than other services, such as Encompass Health Corp. (NYSE: EHC), formerly known as... Read More »
BHC Sector Booms as Acadia Healthcare Explores a Sale

BHC Sector Booms as Acadia Healthcare Explores a Sale

Mergers and acquisitions in the Behavioral Health Care sector are booming in 2018, with 68 transactions made public through mid-October, 21% higher than the total in 2017. Now comes the report that one of the sector’s largest publicly traded companies, Acadia Healthcare Company (NASDAQ: ACHC), is in talks with a few interested parties to sell itself, and most likely go private. On October 18, Reuters reported the Franklin, Tennessee-based company was fielding interest from the private sector, naming KKR & Co. (NYSE: KKR) and TPG Global as two firms that have approached Acadia. With a market cap of $3.4 billion and debt of $3.14 billion (less $79.5 million cash), Acadia... Read More »
Physician Practices Kept Consolidating in Q2:18

Physician Practices Kept Consolidating in Q2:18

Investor interest in physician medical groups ramped up significantly in 2018, with 55 transactions announced in the first quarter, followed by 53 deals in the second quarter. The second quarter deals represent 29% of the total of 184 announced in the previous 12 months. Deal volume slipped 4% compared with the previous quarter but posted a 61% increase versus the same quarter a year earlier. Physicians in small practices have been under growing pressure from regulations and legislation, changes in reimbursement cycles and episodes of care. Under MACRA, they may be the lead provider when it comes to bundled payments, which makes primary care and hospital-based physicians of interest to... Read More »