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Happy Thursday!

It’s that two-week period where New York feels like LA does 12 months a year. If you spot me daydreaming in Bryant Park early afternoon, come say hello. 

Speaking of dreams, my mind seems to be deep in the trenches of healthcare M&A even more than usual. The other night I dreamed that an ex-co-worker secretly worked for a European buyout shop and confessed they were the lead bidder for Instamed. Should I be concerned? 

I suppose that speaks to all the noise the healthcare payments company has created. Instamed, in reality, is poised to receive final bids at the end of the month. Read our latest update on the process. 

Instamed aside, healthcare tech remains the talk of the town. 

Bain Capital has retained a pair of investment advisers to weigh potential strategic alternatives for WayStar, the revenue-cycle-management behemoth created when Navicure and Zirmed married less than a couple years back. 

Read my story to learn which banks are involved. 

While no formal process for WayStar is underway -- and the timing, if one takes place, is uncertain -- the buzz around the company underscores continued demand for the various tools touching the broader RCM universe. 

First, in a world where providers are eager to maximize reimbursement of care provided, the benefits of RCM technology companies like WayStar offer are obvious. 

Helping doctors, health systems and alternative-site care providers accurately bill and collect payments for patient care and lower administrative costs, while ultimately improving patient care and transparency, is a no-brainer.  

Thus, from a big-picture standpoint, RCM fundamentals are strong if you consider underlying market pressures. 

For example, Health Affairs estimated that $85 billion in uncompensated care was provided in 2013. At the same time, 80 percent of newly insured patients are considered high risk not to pay, the Commonwealth Fund Biennial Health Insurance Survey has said.

Sources have pointed to a confluence of factors contributing to industry growth. These include the increasing prevalence of complex medical claims, fueled by the transition to value-based payment structures, managed-care penetration and Medicaid expansion. 

Hospitals, already facing immense volume pressure, are ill-equipped to manage and collect patient bills. 

At the same time, as patients become more responsible for their care -- bearing a greater financial burden amid the rise in high-deductible health plans -- accounts receivable and patient responsibility services and tech are that much more important. 

From an M&A perspective, the market has produced a flurry of activity over the past several years. Yet there remains significant room for continued consolidation and opportunity to add adjacent technology tools and offerings. 

Notable assets currently in process include Ensemble Health Partners, the RCM division of Catholic health system Bon Secours Mercy Health, currently evaluating the sale of a slight majority stake to private equity. Meanwhile Conifer, the RCM unit of Tenet, has yet to lock down a buyer.  

Elsewhere, Change Healthcare -- jointly owned by McKesson, Blackstone Group and Hellman & Friedman -- filed for an IPO this year. 

Middle-market PE firms are also active in RCM. 

Recent entrants in the space include H.I.G. Capital, which this month completed an investment in Medusind Solutions. In March, Riverside Partners formed Revecore by linking portfolio companies Bottom Line Systems and Medical Reimbursements of America

There are also specialized RCM providers such as anesthesia-focused Abeo. Parthenon Capital explored a sale of the company more than a year ago, I reported.

What else is brewing in RCM? Reach me at springle@buyoutsinsider.com.

In other news… 

Just in this AM: Varsity Healthcare is getting into pediatric home health services, making a growth equity investment in Angels of Care

Golden Gate Medical Supply, backed by Frazier Healthcare, Goldman Sachs and NEA, is in the early stages of a sales process. Read my full story on the largest supplier of generic pharmaceuticals to the VA and DoD. 

Arsenal Capital Partners has closed its fifth fund at $2.36 billion. The firm, which targets middle-market specialty industrials and healthcare companies, collected $1.3 billion for its previous fund.

Guest Columns

We had two guest columns in healthcare this week. 

Bain & Co’s Kara Murphy and Nirad Jain offer their two cents on how healthcare sponsors can expect to make a decent return these days. 

Patrick Krause of MHT Partners writes about how investing in the continuum of care can be a win-win for patients and hospitals. 

Until next week. Reach me at springle@buyoutsinsider.com with any comments, juicy tips, or just to say hello. 

-Sarah 
 
 
 
 
 
               



Top Stories

Varsity Healthcare backs pediatric home-health provider Angels of Care

Los Angeles private equity firm Varsity Healthcare Partners made a growth-equity investment in home-health-services provider Angels of Care. Current management, including CEO Jessica Riggs, will continue to lead the company. Founded in 2000 by Bonnie West, Angels of Care provides long-term home health services to pediatric patients with complex medical conditions. Services include private-duty nursing care, skilled […]
Read more...  

Bain Capital hires banks to advise on strategic options for WayStar

Bain Capital has engaged financial advisers to weigh strategic options for healthcare revenue-cycle-management giant WayStar, according to people familiar with the matter. JP Morgan Securities and Deutsche Bank have been hired for financial advice, the people said. While WayStar, Louisville, Kentucky, has received inbound strategic interest, no formal process is under way, the people said. […]
Read more...  

Golden State Medical Supply, backed by Frazier-led group, kicks off sales process

Golden State Medical Supply, the largest supplier of generic pharmaceuticals to the country’s federal healthcare system, is evaluating a sale, according to four sources familiar with the matter. Cantor Fitzgerald and Guggenheim Securities are providing sell-side financial advice on the process, the sources said. GSMS is owned by Frazier Healthcare Partners, Goldman Sachs and New […]
Read more...  

Instamed final bids due end of April

By Luisa Beltran and Sarah Pringle Private equity is still in the running for Instamed, the healthcare payments company that’s up for sale, sources said. Final bids for the Philadelphia company are due at the end of the month, one of the sources said. Instamed is expected to sell for $500 million to $600 million, […]
Read more...  
                                    



Roundup
 
Deals Exit Personnel

Deals

Home dialysis creator Simergent collects $2.835 mln seed

Simergent, a creator of affordable home dialysis, has secured $2.835 million in seed funding. i2E Inc led the round.
Read more...  

Vital picks up $5.2 mln seed in First Round and Threshold-led round

Vital, an AI-powered software for hospital emergency rooms, has secured $5.2 million in seed funding. First Round Capital and Threshold Ventures (formerly DFJ) led the round.
Read more...  

Onera Health nabs over $9.3 mln Series A

Palo Alto, California and Netherlands-based Onera Health Inc, a provider of sleep diagnostic solutions and services, has raised over $9.3 million in Series A funding. The investors included Jazz Pharmaceuticals and imec.xpand.
Read more...  

HCAP Partners invests in Mission Healthcare

HCAP Partners said April 23 that it invested in Mission Healthcare. Financial terms weren’t announced. Mission Healthcare, of San Diego, is a home health and hospice services provider.
Read more...  

Biotech startup RWDC Industries snaps up $22 mln

Singapore-based biotech startup RWDC Industries has raised $22 million in funding. Vickers Venture Partners and Eversource Retirement Plan Master Trust, the pension fund of Eversource Energy, led the round.
Read more...  

Engineering biology firm Sherlock Biosciences amasses over $31 mln Series A

Sherlock Biosciences, an engineering biology company, has raised over $31 million in Series A funding. The investors included Northpond Ventures, Baidu Ventures and the Open Philanthropy Project.
Read more...  

HCAP invests in Mission Healthcare

HCAP Partners has made an investment in San Diego-based Mission Healthcare, a home health and hospice services provider. No financial terms were disclosed.
Read more...  

Bow River recaps AbsenceSoft

Bow River has recapitalized AbsenceSoft, a provider of software solutions for employers to manage FMLA, disability, ADA and other forms of absence leave. No financial terms were disclosed. Cascadia Capital was financial adviser to AbsenceSoft on the transaction.
Read more...  

Zageno inks $20 mln Series B

Cambridge, Massachusetts-based Zageno, an enterprise marketplace for lab supplies, has raised $20 million in Series B funding. General Catalyst led the round with follow-on investment from Grazia Equity and Capnamic Ventures.
Read more...  

Censinet pulls in $7.8 mln Series A

Boston-based Censinet, the third-party risk management company for healthcare providers, has raised $7.8 million in Series A funding. HLM Venture Partners and Cedars-Sinai Health System led the round with participation from seed investors Schooner Capital, LRVHealth and Excelerate Health Ventures.
Read more...  

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Firms & Funds

Thurston collects $19.5 mln for debut fund

Thurston Group has raised $19.5 million for its inaugural fund, according to an SEC filing. No target was listed in the document. The Chicago-based private equity firm invests in healthcare companies.
Read more...  

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Exits

CortiCare acquires Physicians Ancillary Services

Carlsbad, California-based CortiCare, a telehealth services and EEG brain monitoring solutions,  has acquired Rocky Hill, Connecticut-based Physicians Ancillary Services, a provider of ambulatory EEG services. Also, HCAP Partners has made an investment in CortiCare. No financial terms were disclosed.
Read more...  

PE-backed ECP merges with Ascension Emergency Physicians

Emergency Care Partners, which is backed by Varsity Healthcare Partners and Regal Healthcare Capital Partners, has merged with Louisiana-based Ascension Emergency Physicians, a provider of outsourced emergency department management services. No financial terms were disclosed. Sheppard, Mullin, Richter & Hampton LLP acted as legal adviser to ECP and VHP on the deal while Offering Solutions PLLC did likewise for AEP.
Read more...  

NCP-backed THMED acquires CV Staff Solutions

THMED, a portfolio company of New Capital Partners, has acquired Colorado-based CV Staff Solutions, a niche healthcare staffing solutions company. No financial terms were disclosed.
Read more...  

KCI files for IPO

San Antonio, Texas-based KCI Holdings, a maker of wound care and specialty surgical products, has filed to go public. JPMorgan, Goldman Sachs and BofA Merrill Lynch will serve as the underwriters. KCI is an affiliate of medical technology company Acelity, whose backers include Apax Partners, PSP Investments and the Canada Pension Plan Board.
Read more...  

Hookipa Pharma debuts IPO

New York and Austria-based Hookipa Pharma, a developer of immunotherapeutics, has raised $84 million for its IPO after pricing its 6 million shares at $14 per share. The stock began trading April 18, 2019 on the NASDAQ under the ticker symbol “HOOK." BofA Merrill Lynch, SVB Leerink and RBC Capital Markets are the lead underwriters. Hookipa's pre-IPO backers included HBM Partners, Hillhouse Capital, Sirona Capital, Gilead, Sofinnova Partners, Forbion Capital Partners, Boehringer Ingelheim Venture Fund, Takeda Ventures and BioMedPartners.
Read more...  

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Personnel

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