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Hello from San Francisco! 

For many of you reading this, you’ve just about survived “JPM week” if you haven’t already wrapped up your whirlwind of speed dating with management teams, PE firms, banks, lenders and so on. Are you sleep-deprived and ready for another vacation? 

As one sponsor noted: “If you make it to 80 percent of your meetings, you’ve had a successful week.” I’m with you. 

For the healthcare private equity community and many other attendees, the JP Morgan Healthcare Conference is much more about all the shenanigans taking place around the Westin St. Francis, where the actual event is held. It may be taboo for bankers to show up at competitors’ conferences. JPM is the exception. Banks, law firms and other advisory groups, large and small, stake out hotels and restaurants in the surrounding area. And there’s not enough time to hit every reception each night, if that’s your thing. 

As I write this hurriedly amidst Day 3 networking and evening receptions, here’s a bit of what I’m hearing about 2019’s outlook for healthcare PE. 

The deal pipeline is status-quo -- especially in healthcare services. There’s lots of noise around the credit markets. But it’s still a great time to sell and valuations remain strong. While pricing in the debt markets could eventually “let the air out of the valuation balloon,” as one GP put it, that has yet to reduce sponsors’ eagerness to transact or price expectations in the healthcare arena. 

There’s also no big healthcare policy overhang issue that’s widespread. The possibility of ACA repeal and the Trump administration were major topics of conversation in recent years, but that’s no longer the case. There’s certainly vertical-specific policy issues folks are talking about. But for now, broadly, Washington is quiet. 

An interesting side note: JPM week is typically a popular time for companies to unveil their blockbuster megadeals. This year in healthcare services: nada. There were plenty of deal announcements but nothing so sizable or transformative that changes the industry landscape in a big way. Coincidence? A result of the cooling off in the public markets? What do you think? Hit me up with thoughts at springle@buyoutsinsider.com

If you build it, they will come

People love to hate JPM. Or maybe it’s more of a “love-hate” relationship. Either way, the crowd keeps coming back to the Bay each January to kick off the year. 

That said, I did hear anecdotes throughout the week suggesting that more PE folks are opting out of JPM, questioning whether the escalating costs of hotel rooms and meeting spaces are worth the value and efficiency the event produces. 

One GP told me his healthcare shop was spending $125K over four days to attend JPM, with rooms requiring a four-night minimum at $1,500 a night. Another GP told me he was paying $2,000/night for a room, which also required a four-night stay. 

On the other hand, others I spoke with contended that the sheer number and diversity of people attending keeps growing. Even more, JPM is increasingly less exclusive to healthcare-focused professionals. For instance, one sponsor noted that a few of his firm’s generalist LPs came out to see what it’s all about. 

Whatever the case, JPM is always evolving. I’m still a relative newbie -- 2019 was only my third year attending -- so I polled a bunch of sponsors this week for their takes on JPM and how it’s changed in recent years. 

The one thing I heard repeatedly: PE firms are no longer launching and running formal auctions at JPM the way they once did. Rather, it’s all about pre-process “fireside chats” with management teams and previews of assets poised to hit the auction block later in the year. 

Here’s what a handful had to say about this evolution and the effectiveness of the event generally speaking, edited and paraphrased for clarity:

Sponsor A

Five years ago JPM was full of efficient kickoff meetings with bankers and lenders. A lot more sponsors were actually launching processes. 

Now it’s all about “fireside chats,” which are so cursory. [Management teams] are not that prepped. People are now saying, “It’s not that productive.” It’s scattered. It’s superficial. Everything I learned could have been learned in 15 minutes from a teaser. You do get the flavor of management, but it’s such a short amount of time and you spend 15 minutes introducing yourself.

Sponsor B

If fireside chats at JPM are done the right way, they’re valuable. If you’re a [management team] trying to get people up to speed on your story or a firm really trying to learn about a business, it is not enough. But it can serve as the start of a continued evolution of a relationship. 

Sponsor C

I think of JPM as a mosaic. Altogether, you get your finger on the pulse of the market. It’s irreplaceable to get so many peoples’ views so quickly. The timing itself helps prioritize your mandates for the year and impacts the healthcare-deal calendar. 

What’s in vogue? Bankers are now saying, “We’re not launching a process yet … but it’s coming next week.” It’s more of a preview. 

Sponsor D:

I used to come to build my network. Now it’s a great place to maintain my network. If you’re contemplating exploring a sector or selling an asset, you can get the smartest guys to opine on it. 

Fireside chats are worthless. Management teams don’t take them seriously.

Sponsor E:

I don’t come here thinking I’m going to make my next deal. The networking aspect is better than the deal generation. 

Sponsor F:

I spend JPM finding retired or semiretired CEOs. My strategy is executive-oriented. We come out of it with 10 qualified board members. 

Sponsor G

JPM is like a velvet rope. If you’re not based in NYC, it’s super valuable. It allows you to prioritize. If you are a savvy company and come to JPM, by excluding people in meetings, you raise your profile. 

I’m not attending thinking I’m going to find a team I’m going to back. I’m not going to find my next platform, but maybe an add-on, or maybe I’ll find something else. Human resources, person connections. That’s worth it.

Sponsor H:

Fireside chats? Yes, they’re effective. It’s a good way to network and begin a multiyear relationship that could lead to something. Sometimes it take four years of meeting folks in various ways for something to happen. 

Sponsor I:

Sale processes are designed to maximize an outcome. More exposure at JPM is always a good thing. As a sponsor, the exchange of info you get is minimal. But it’s more facetime with a given team. 

That’s it for now. Stay tuned for brewing deal activity in the weeks ahead. ICYMI, one on the horizon I learned about this week was PE-backed Hospice Compassus. Check out my story for more detail.

Which interesting emerging themes or hot auctions at JPM have you heard about? I’d love to know. Reach me at springle@buyoutsinsider.com with any tips, comments, or just to say hello.

-Sarah 
 

 
 
               



Top Stories

PE-backed Hospice Compassus taps adviser for upcoming sales process

Private equity-backed Hospice Compassus, one of the nation’s largest providers of hospice-care services, is prepping for a sales process, according to three people familiar with the matter. Jefferies has been engaged to provide financial advice to the Bay City, Michigan, company, which is jointly owned by Formation Capital and Audax Private Equity, two of the […]
Read more...  

Bain Double Impact Fund doubles down on healthcare, adding HealthDrive

Echoing major themes supported by its large-cap fund, Bain Capital Double Impact is proving a devoted investor in healthcare providers serving some of the nation’s most vulnerable populations. Bain’s impact-investing arm said Jan. 3 that it acquired specialty physician services company HealthDrive from Riverside Partners. This follows the firm’s October formation of Arosa+LivHOME, a non-medical homecare company […]
Read more...  
                                    



Roundup
 
Deals Exit Personnel

Deals

Verato raises $10 mln

Blue Heron Capital said Jan. 9 that it participated in Verato’s $10 million Series C round. Existing investors, Bessemer Venture Partners and Columbia Capital, also took part. Verato, of McLean, Virginia, provides cloud-based patient matching and master patient index (MPI) solutions.
Read more...  

ShoreView invests in California Retina Associates alongside management

ShoreView Industries invested in a newly formed administrative services organization that will provide administrative and non-clinical support services to California Retina Associates, an ophthalmology practice based in southern California. ShoreView invested alongside the founders of California Retina Associates.
Read more...  

Cynerio raises $7 mln

Cynerio said Jan. 9 that it raised $7 million in funding. Investors including Accelmed, RDC and MTIP. Cynerio provides medical device and Internet of Medical Things (IoMT) security solutions.
Read more...  

BBH Capital invests in Ethos Veterinary Health

BBH Capital Partners said Jan. 9 that it has invested in Ethos Veterinary Health LLC via a recap. Financial terms weren’t announced. Ethos, of Woburn, Massachusetts, provides specialty veterinary health services, including 24/7 emergency care, surgical procedures, radiology services and internal medicine.
Read more...  

Optum Ventures backs AbleTo

AbleTo, a provider of virtual behavioral health care, has secured an undisclosed amount of funding. The investor was Optum Ventures.
Read more...  

Keros Therapeutics nets $23 mln Series B

Lexington, Massachusetts-based Keros Therapeutics, which is focused on developing treatments for neuromuscular diseases, has raised $23 million in Series B financing. The investors included Pontifax, Arkin Bio Ventures, Partners Innovation Fund, Medison Pharma and Global Health Sciences Fund.
Read more...  

Stelexis Therapeutics procures $43 mln Series A

New York-based Stelexis Therapeutics, a cancer therapeutics firm, has secured $43 million in Series A financing. Stelexis is backed by Deerfield.
Read more...  

Apollomics racks up $100 mln Series B

Apollomics Inc, a biopharmaceutical company focused on oncology combination therapies, has raised $100 million in Series B financing. CMB International led the round with participation from other investors that included OrbiMed Asia.
Read more...  

Spring Lake leads Series A round for Forefront Telecare

Novato, California-based Forefront Telecare Inc, a provider of behavioral telehealth services to seniors in rural facilities in the U.S., has raised an undisclosed amount of Series A funding. Spring Lake Equity Partners led the round.
Read more...  

GreenLight Biosciences grabs $50 mln

Boston-based GreenLight Biosciences Inc, a developer of RNA-based solutions for agriculture and pharmaceutical applications, has secured $50 million in funding. S2G Ventures, Baird Capital and Blue I/O led the round.
Read more...  

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Firms & Funds

Madryn collects $289.65 mln for new healthcare fund

Madryn Asset Management has raised $289.65 million for its new healthcare fund, according to an SEC filing. The target is $500 million. Based in New York, Madryn Asset Management invests in healthcare companies.
Read more...  

WindRose Health fifth fund raises $705 mln

WindRose Health Investors LLC said Jan. 7 that it closed its fifth fund on $705 million in commitments. WindRose, of New York, is a healthcare-focused private equity fund.
Read more...  

Triventures ARC targets $45 mln for healthcare seed fund

Triventures ARC, a venture capital arm of the ARC Innovation Center at Sheba Medical Center, an Israeli hospital, is seeking to raise $45 million for a fund focused on seed investments in healthcare innovations. Triventures, which is based in Herzliya, Israel and Menlo Park, California, will manage Triventures ARC.
Read more...  

North Castle rakes in $278.5 mln for seventh fund

North Castle Partners has raised $278.5 million for its seventh fund, according to an SEC filing. No target was listed in the document. The Greenwich, Connecticut-based private equity firm invests in the health, wellness and active living sector.
Read more...  

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Exits

Revelstoke-backed CEI Vision buys Retina Vitreous Associates

CEI Vision Partners, a portfolio company of Revelstoke Capital Partners, has acquired Retina Vitreous Associates. Financial terms weren’t announced. Retina Vitreous Associates, of Toledo, Ohio, is a vitreoretinal surgical practice with nine ophthalmologists who specialize in medical and surgical retinal disorders, including diabetic retinopathy, age-related macular degeneration, retinal vascular disease, diabetic macular edema, and other retinal conditions.
Read more...  

Gryphon-backed Smile Brands invests in DecisionOne Dental Partners

Smile Brands Inc, a portfolio company of Gryphon Investors, has invested in DecisionOne Dental Partners. Financial terms weren’t announced. DecisionOne, of Schaumburg, Illinois, is a dental group.
Read more...  

Riverside-backed HSI buys EMS Safety Services

Health & Safety Institute, which is backed by Riverside Company, has acquired EMS Safety Services Inc, a provider of First Aid and CPR training. No financial terms were disclosed.
Read more...  

Vestar-backed Healthgrades buys Influence Health

Healthgrades, a Vestar Capital Partners portfolio company, said Jan. 8 that it acquired Influence Health. Financial terms weren’t announced. Influence Health, of Birmingham, Alabama, provides patient engagement software and health marketing analytics, according to PitchBook. Influence Health investors include Silver Lake Sumeru and Essex Woodlands.
Read more...  

Shore-backed IZI Medical buys assets from Cook Medical

IZI Medical Products LLC, a portfolio company of Shore Capital Partners LLC, has acquired select soft tissue biopsy and breast localization needle assets from Cook Medical. The deal includes Quick-Core® Biopsy Needle, MReye® Breast Localization Coil, as well as the Kopans and X-Reidy Lesion Localization Needles. Financial terms weren’t announced.
Read more...  

FSAC and Agiliti Health complete merger

Federal Street Acquisition Corp, a blank check company backed by Thomas H. Lee Partners LP, and Agiliti Health, a portfolio company of Irving Place Capital Management LP, have closed their merger. The implied value for the combined company is about $1.74 billion. Agiliti Health is a provider of healthcare technology management and service solutions. Citigroup Global Markets Inc and BofA Merrill Lynch served as financial advisers to FSAC with Kirkland & Ellis LLP providing legal advice. And, Weil, Gotshal & Manges LLP served as legal adviser to Agiliti Health.
Read more...  

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Personnel

Sensor named CEO of Kolmac Outpatient Recovery Centers

Kolmac Outpatient Recovery Centers, a portfolio company of WindRose Health Investors, said Jan. 9 that Wayne Sensor was named CEO. Mark Santangelo, Kolmac’s former CEO, has retired. Sensor is the former president of Direct Patient Logistics.
Read more...  

Amulet promotes one to partner and another to principal

Greenwich, Connecticut-based Amulet Capital Partners LP, a healthcare-focused middle-market private equity firm, has promoted Nick Amigone to partner and Gabriel Luft to principal. Both Amigone and Luft joined the firm in 2015.
Read more...  

Apple Tree Partners announces promotions

New York-based Apple Tree Partners, a life sciences venture firm, has made a number of promotions. Dr. Sam Hall and Aaron Kantoff are now partners; Dr. Christine Borowski has become a principal; and Dr. Jernej Godec and Dr. Chris Cain have become senior associates.
Read more...  

Spectrum Equity promotes four

Spectrum Equity promoted Jeff Haywood to managing director, Parag Khandelwal to principal, Adam Gassin to vice president and Maureen Sullivan to manager of investor relations. Haywood joined Spectrum in 2007 and focuses on healthcare IT, software and information services. He was closely involved in Spectrum's investments in Passport Health, Net Health, MedHOK and RainKing. Khandelwal joined in 2012 and focuses on software, information services and internet. Gassin joined in 2017 while Sullivan joined the same year from Harvard Management Co.
Read more...  

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