Mergers & Acquisitions

CVS’s acquisition of the insurer, Aetna is officially announced

The transaction size is $69B with a breakup fee of $2.1B. We have covered the subject extensively in our editorial section. Putting together a deal of this size is no small feat. CVS had seven financial advisors on the transaction while Aetna had three. Between $120-140 million of fees are to be parceled out to various advisors if the deal goes through. 

The companies claim that they will generate $750 million in near-term synergies.

St. Louis, MO-based Ascension Health and Providence St. Joseph Health based in Renton, WA – both nonprofit institutions- in talks to merge

This will create the nation’s largest provider with 191 hospitals in 27 states and annual revenue of $44.8B. HCA, which is currently the largest provider, has 177 hospitals and $42B in revenue. 

We think this is a start of a titanic change in our industry where providers are trying to upend insurers to gain more bargaining power as well as achieving massive cost synergies. Catholic Health Initiative and Dignity Health are merging as well as Advocate Health Care and Aurora Health Care. The fever has started to spread!

UnitedHealth’s Optum division, snaps up DaVita Medical for $4.9B

Davita Inc is one of the largest dialysis service providers with 1.7 million annual patients and 300 medical clinics. The assets purchased by United are urgent care centers, surgery and medical clinics in a handful of states. Optum already has more than 200 MedExpress urgent care and 30,000 clinicians. This is another sign of vertical integration that is sweeping across our industry. 

McKesson is to buy Louisville, KY-based RXCrossroads from CVS for $735 million

Since shedding its HIT operations, McKesson has been busy repositioning its business model. RxCrossroads provides specialty pharmacy services to biopharma firms and patients. This includes dispensing, logistics services, brand and field support. Although the price is not significant, it gives CVS some cash to navigate through its massive acquisition of Aetna.

Diplomat Pharmacy makes two back to back acquisitions in the PBM space, purchasing National Pharmaceutical Services, based in Omaha, NE for $47 million and Leehar Distributors, based in Creve Coeur, MO, for $595 million

With the push towards vertical integration, the whole PBM market is in disarray. Diplomat, an independent specialty pharmacy has been on an acquisition tear this year. With only $1.4B in enterprise value, these deals are quite substantial. NPS is expected to generate $32 million in sales and $5 million in EBITDA while Leehar is expected to generate $388 million in sales and $41 million in EBITDA in 2017. This is a daring move but it could be a transformational deal for Diplomat.

Vista Equity-backed Aptean buys Connect segment of Influence Health

Connect offers physician and clinicians secure access to patient data from a variety of systems including EHRs, labs and pharmacies. Aptean, which is involved in industry specific enterprise software, has purchased 14 companies since 2015. That is the beauty of being backed by a first-rate firm like Vista.

Revint Solutions acquires Health Check based in Port St. Joe, FL

Revint is a provider of revenue integrity and recovery services for healthcare providers. Health Check, which sells its product under Zero Balance Revenue Recovery, has over 100 healthcare providers as clients. Prior to the acquisition, Revint had 400 healthcare clients. A good acquisition for expanding its footprint.

Change Healthcare buys Docufill of Mayfield Heights, OH, for credentialing documents

With this acquisition, Change is now able to offer customers a hosted service that combines multiple dental provider credentialing documents into a single instance. Nice tuck-in acquisition for Change.

It has been six years since Blackstone took the company private. The business has been transformed through various acquisitions. The time to exit may not be too far in the future. 

McLaren HealthCare acquires MDwise, a Medicaid health plan based in Indianapolis, IN

This is a great example of vertical integration. McLaren is a 12-hospital provider in Michigan. MDwise serves more than 360,000 Hoosiers on Medicaid. The company generates $1.6B of revenue annually. The combined companies will now have $6B in revenue serving 620,000 people.

DHI Group announces the sale of its Health eCareers to Everyday Health for $15 million

DHI, a website focused career search, has been facing a rapidly declining stock price and has announced that it will be selling  its non-tech businesses. This is Everyday’s third acquisition in 2017. The company engages in digital marketing and communication platforms for healthcare marketers. 

Advarra, a leading IRB and OBC, is created by combining Linden-backed Chesapeake and Northlane-backed Schulman

To get two private equity firms agree on a merger in similar business is not an easy task. In light of recent regulatory mandates for single IRB review, this deal is match made in heaven.

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