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Morning, healthcare fanatics!

I’m off for a quick vacay tomorrow. Will be largely out of pocket through next Thursday as I enjoy nature and good eats far from the city. 

But before I sign off, let me highlight some of the week’s deal news … ICYMI: I learned about two that quietly transacted earlier this year: Blue Wolf Capital snapped up Fox Rehab after a formal sales process for the company stalled. Separately, BlueMountain Capital recapitalized QMES, one of a handful of durable-medical-equipment processes I wrote about in 2018. 

Meanwhile, Arsenal -- whose healthcare bets have historically involved outsourcing services that serve the life sciences industry or other providers -- made its first behavioral health deal. Read my story to find out where its deal for Hopebridge valued the autism-treatment company.   

An interesting side note: John DiGiovanni joined Arsenal as a principal earlier this year from Baird Capital, Hopebridge’s existing investor, which will reinvest. 

As for brewing deal activity… 

New(ish) on the block

Metalmark Capital is evaluating the sale of Collagen Matrix, a medical device company focused on regenerative medicine.

Read my full story for deets on which banks are involved, how far along the process is and what kind of pricetag the company could command.  

Now let’s dig in a little bit. Collagen Matrix is one company around which I’ve been hearing chatter since the healthcare industry’s big J.P. Morgan event took place in January. Turns out something was percolating.

From a most-likely outcome perspective, there are likely to be gobs of sponsors that will take a look at Collagen Matrix at this size bracket, sources have said. It’s a unique business model, has good margins and, importantly, a strong management team. 

But as a developer of collagen- and mineral- based medical products that go into OEMs making devices in the dental, spinal and orthopedic markets, among others -- the bigger uncertainty is the level of strategic appetite we’ll see.  

There are plenty of dental, spinal or orthopedic products companies; however, many of these are customers of Collagen Matrix. That makes things a little tricky, one source I spoke with this week explained. The question becomes: does the company want to be owned by one of its customers, such that other customers become competitors? 

Collagen is B2B. Not B2C. For example, a company like Young Innovations -- backed by Jordan Co and Linden -- sells dental equipment directly to dentists. Whereas Collagen Matrix makes products that are sold to OEMs like Young, Dentsply, Smith & Nephew and so on. 

We also aren’t talking about physician specialty roll-up. Meaning we haven’t seen dozens of obvious comparable transactions in recent months.

The most pertinent transaction, sources said: DSM’s 2012 acquisition of Kensey Nash. (DSM, btw, is the one logical strategic acquirer of Collagen that folks have identified).  

But the Kensey Nash deal was seven years ago and valuations have certainly risen. Thus, looking at a broad set of more recent contract manufacturing precedents isn’t a bad way to consider Collagen Matrix, one source said. 

That might include recent trades involving companies like Orchid Orthopedic or Tecomet

Nordic in January prevailed in the sales process for Altor Equity’s Orchid, which provides outsourced contract design and manufacturing services in the orthopedic implants industry. Terms weren’t disclosed, but a 12x to 13x Ebitda multiple was anticipated, I reported prior to the deal. 

Orchid is a direct competitor of Tecomet, which Charlesbank Capital bought back from Genstar Capital in May 2017. 

Of course, Orchid and Tecomet differ in that they are overweight in orthopedic OEMs. Collagen Matrix, while smaller, could be considered sexier given that it’s selling something that is less commoditized and has customers across varying end-markets, one source noted.

That less commoditized something is the other interesting element to consider: Collagen Matrix is in the business of advancing regenerative medicine. The regenerative medicine field refers to the creation of human tissue and cells that support the body’s natural ability to heal itself.  

The uniqueness of Collagen Matrix has other implications. There’s a universe of people that know Collagen Matrix well, and a universe that’s learning its story for the first time, one source said. 

That’s it for me today. If you’re among those getting educated on Collagen Matrix and have some thoughts, reach me at springle@buyoutsinsider.com. Otherwise, tips, words of wisdom or other comments are always welcome. 

-Sarah 
 
 
 
               



Top Stories

Metalmark seeks buyer for device maker focused on tissue repair, Collagen Matrix

Metalmark Capital is evaluating the sale of Collagen Matrix, a medical-device company focused on tissue repair and regenerative medicine, according to four people familiar with the matter. Piper Jaffray and Robert W. Baird are conducting the sales process, some of the people said. The initial bid deadline was last week, two people said. The deal […]
Read more...  

Arsenal’s deal for Hopebridge valued at ~$255 mln

Arsenal Capital Partners’ all-cash purchase of a majority stake in Hopebridge assigns the Indianapolis autism treatment-services company an enterprise value of some $255 million, Buyouts has learned. Representing the latest in a flurry of deals in behavioral health, New York’s Arsenal said May 6 that it acquired Hopebridge. Terms weren’t disclosed. The deal comes less than 18 […]
Read more...  

Blue Wolf acquires Fox Rehabilitation after bank-run process stalled

Blue Wolf Capital Partners earlier this year acquired clinician-owned Fox Rehabilitation, a provider of in-home geriatric therapy services under Medicare Part B, according to people familiar with the matter. While a transaction was never formally announced, the deal closed in February, one of the people said. In connection with the transaction, Founder Tim Fox has […]
Read more...  

BlueMountain recaps durable-medical-equipment company AdaptHealth, formerly QMES

BlueMountain Capital Management has led an about $250 million recapitalization of AdaptHealth, which distributes oxygen-therapy products and other durable medical equipment, according to people familiar with the matter. In connection with the recap, BlueMountain injected some $100 million into the Oaks, Pennsylvania, company, formerly QMES, the people said. CIT Group led a $425 million senior credit […]
Read more...  

Apax to make more than 3x on Acelity

Apax Partners is poised to generate a more than 3x multiple of invested capital through the $6.7 billion sale of Acelity to 3M, according to a source familiar with the matter. The selling consortium also includes Canada Pension Plan Investment Board and Public Sector Pension Investment Board. The group acquired Acelity’s predecessor Kinetic Concepts Inc […]
Read more...  
                                    



Roundup
 
Deals Exit Personnel

Deals

Great Point Partners invests in Axiom Real-Time Metrics

Axiom Real-Time Metrics, a Toronto-based provider of e-clinical solutions, has raised a “significant” undisclosed investment from Great Point Partners, a U.S. healthcare private equity firm. Founded in 2001 by CEO Andrew Schachter, Axiom provides data management, data analytics, biostatistics, pharmacovigilance and other services that support the clinical study data and operational needs of small and mid-sized life sciences companies. The investment by GPP is Axiom’s first from an external capital source. The proceeds will be used for enhancements to Axiom’s Fusion eClinical platform and growth of professional services and business development initiatives.
Read more...  

LunaPBC attracts $4.6 mln

La Jolla, California-based LunaPBC, a provider of a genomic and health data platform, has raised $4.6 million in funding. The investors included ARCH Venture Partners, Bain Capital Ventures, F-Prime Capital, Illumina Ventures and Osage University Partners.
Read more...  

Health IQ scores $55 mln Series D

Silicon Valley-based Health IQ, a life insurance company, has secured $55 million in Series D funding. The investors included Greenspring Associates, Aquiline Technology Growth, Hanwha Asset Management and Andreesen Horowitz.
Read more...  

MedCrypt nabs $5.3 mln Series A

San Diego-based MedCrypt, a medical device cybersecurity software provider, has raised $5.3 million in Series A funding round. Section 32 led the round with participation from Eniac Ventures and Y Combinator.
Read more...  

Confo Therapeutics locks in $33.4 mln Series A

Confo Therapeutics, an emerging drug discovery company, has raised $33.4 million in Series A financing. The investors included BioGeneration Ventures, Wellington Partners, Fund+, Perceptive Advisors, Capricorn Health-Tech Fund, Qbic, Participatie Maatschappij Vlaanderen NV and V-Bio Ventures.
Read more...  

Velano Vascular grabs $10 mln

San Francisco-based Velano Vascular, which is focused on lowering the pain, risk, and inefficiencies of vascular access and blood collection practices, has raised $10 million in funding. The investors included Intermountain Healthcare.
Read more...  

Echo Health Ventures leads $33 mln round for DispatchHealth

DispatchHealth, a provider of on-demand health care, has raised $33 million in financing. Echo Health Ventures led the round with participation from other investors that included Alta Partners and Questa Capital.
Read more...  

Ampersand Capital backs GenDx

Ampersand Capital Partners has made a minority investment in GenDx, a Dutch provider of molecular diagnostic kits and analysis software for transplantation and companion diagnostics. No financial terms were disclosed.
Read more...  

Audax acquires Chartis from RLH

Audax Private Equity has acquired Chartis, an advisory firm for academic medical centers, integrated healthcare delivery networks, and hospitals. The seller was Riordan, Lewis & Haden | Equity Partners. No financial terms were disclosed. Lincoln International served as financial adviser to Chartis with Winston & Strawn LLP providing legal advice.
Read more...  

LeQuest procures funding

LeQuest, a Dutch provider of medical technology education, has secured 7 million euros in funding. The investors included MedFinance, InnovationQuarter, NextGen Ventures, Noaber Ventures and Philips Health Technology Ventures.
Read more...  

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Firms & Funds

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Exits

Boston Scientific to buy VC-backed Vertiflex

Boston Scientific said May 9 that it agreed to buy Vertiflex Inc. The deal calls for $465 million in upfront cash with additional payments contingent on commercial milestones for the next three years. Vertiflex has developed a device to improve improve physical function and reduce pain in patients with lumbar spinal stenosis. Vertiflex has raised about $160 million in funding from investors including Endeavour Vision, H.I.G Capital and H.I.G. BioVentures, according to PitchBook.
Read more...  

PE-backed Care Advantage buys Capital City Nurses

Care Advantage, a portfolio company of BelHealth Investment Partners, has acquired Chevy Chase, Maryland-based Capital City Nurses, a provider of personal care services. No financial terms were disclosed.
Read more...  

PE-backed SemiTorr buys Tru-Flow

SemiTorr, which is backed by Transom Capital Group, has acquired Denver-based Tru-Flow, which serves biotech and pharmaceutical industries. No financial terms were disclosed.
Read more...  

NMS-backed ADM acquires Laser Skin & Vein Center of Virginia

Anne Arundel Dermatology Management, a portfolio company of NMS Capital, has acquired Laser Skin & Vein Center of Virginia, a provider of cosmetic dermatology patient care. No financial terms were disclosed.
Read more...  

NMS-backed Cordental acquires two St. Louis area dental practices

Cordental, a portfolio company of NMS Capital, has acquired two St. Louis area-based dental practices: John Monaco DDS and Elizabeth Johnson Burns DDS. No financial terms were disclosed.
Read more...  

VC-backed TransMedics debuts IPO

Andover, Massachusetts-based TransMedics, a medical technology company, has raised over $91 million for its IPO after pricing its nearly 5.7 million shares at $16 per share. The stock began trading May 2, 2019 on the NASDAQ under the ticker symbol "TMDX." Morgan Stanley and J.P. Morgan are the lead underwriters. The company's pre-IPO backers include Flagship Pioneering and Kleiner Perkins.
Read more...  

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Personnel

Welltower appoints two investments SVPs

Toledo, Ohio-based Welltower, which invests in seniors housing operators, post-acute providers and health systems, has hired Ayesha Menon and Edward Cheung as senior vice presidents of investments. Previously, Menon was director of real estate investments at Sidewalk Labs while Cheung was a managing partner at BFIN.
Read more...  

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