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It’s Thursday, and more than one private equity fund has taken a victory lap this week in healthcare. Wowza.

To start, the largest-ever sponsor transaction in the vision-care space kicked off the week, with Goldman’s PE arm striking a $2.7 billion deal for Altas and CDPQ’s MyEyDr. Read my story for more info.

Other firms making bold moves were Genstar, preempting the process for Advarra through an about $1.3 billion deal for the Linden- and Northlane-backed provider of compliance-type services for clinical research. Linden is poised to generate a handsome return, I am told.  

Finally, Advent -- just weeks after its bet in home care -- put a quick stop to the process for Spectrum Equity’s Definitive Healthcare. The firm invested in the healthcare data provider in a deal valued around $1.7 billion, sources told me. 

In notable exits, Bain Capital and Diamond Capital this morning disclosed an agreement to sell Beacon Health Options to Anthem. What are the metrics on the deal? Shoot me a note at

In the midst of the flurry of activity … I also got the chance to swing by the Jefferies Healthcare Conference at the Grand Hyatt in NYC, where a June 4 panel of PE executives discussed market dynamics.

Why some large-cap sponsors are avoiding retail health

While we may have seen one of 2019’s biggest bets in retail health this week, some large-cap sponsors are opting out of the segment, which is often considered the most recession resilient.

Cinven, for its part, has yet to participate in retail health because of valuation, Senior Principal John Richardson said on a panel moderated by Jefferies Managing Director Michael Dodds.

While middle-market firms are able to buy assets at 7x or 8x and sell them for as high as 20x, when you reach a certain scale, the small consolidation doesn’t really move the needle, Richardson said. “At $100 million in Ebitda, you have to do a lot of M&A.”

In other words, there’s no history of exits at this scale in segments like dental: “How do you justify the clearing price? … What can I sell it for if I pay 20x today? We don’t know. That’s been our biggest issue.”

“You see a lot of dry powder and people are attracted to retail health for its resilience,” Richardson said. “The heavy Medicare businesses are not for the faint of heart. That obviously takes a certain type of investor. Because of that, the healthcare-light assets are seeing much higher multiples.”

Bain Capital Principal Andrew Kaplan, another panelist, said he saw a mispricing in retail health: “It’s more around relative value.”

In Kaplan’s view, retail health companies aren’t any more recession-resilient than many healthcare-heavy assets. 

“The highly predictable outlook for necessary medical treatment or drug spend …  just feels like it’s in a much better place than retail health,” he said.

That said, Kaplan added that for middle-market firms investing in retail health in earlier stages of consolidation, the dynamic is different. Those funds aren’t the ones buying these companies at 17x or 18x.

Take middle-market shop Quad-C Management, which has proven successful in the dental and veterinary-care segments through investments in Dental Care Alliance and Compassion-First Pet Hospitals, respectively.

In case you forgot, JAB Holding unexpectedly outbid financial sponsors in February in a $1.22 billion deal for Compassion-First, setting a high-water mark in the animal-health sector by paying a more than 19x Ebitda multiple, I was told at the time. 

When you look at those markets, said Quad-C’s Rob Reistetter, another panelist, “the overall industries are huge and you’re seeing a consolidation amongst the consolidators.”

T.J. Rose of Abry Partners added that his firm has found the conviction to pay up in segments of retail health like dental because it’s an area in which it has deep roots.  

Rose, hinting that Abry is nearing the end of its hold in North American Dental, said the firm earlier this year found another DSO to invest in, [Dr. Dental], thanks to its prior experience in the sector: “We’ve now had decades of experience in the DSO market. We were confident we should be one of the parties to pay the most for that asset.”

Rose, prior to joining Abry, was on the investment team at Audax, which in 2008 invested in Great Expressions.

The panel of investors also spoke to the dynamics at play in another trend sure to continue: carve-outs.

In fact, in the view of Bain’s Kaplan, oftentimes large public companies would like to carve out and divest many more assets than you see them doing. Problem is these assets are going to be valued less than the overall value of an organization, so many strategics have a disincentive to divest, he said.

“The idea that you’re going to sell something five turns less than your public multiple is sort of a non-starter, even though it would be a much better outcome for that company,” Kaplan said.

That’s it for today. As always, reach me at with any comments, tips or just to say hello.



Top Stories

Genstar preempts Advarra process in ~$1.3 bln deal

Preempting the highly anticipated sales process for PE-backed Advarra, Genstar Capital agreed to buy the provider of compliance-related services for clinical research, according to sources familiar with the matter. The pending acquisition values the Columbia, Maryland, company at about $1.3 billion and represents an 18x multiple of Ebitda, the sources said. In connection with the transaction, […]
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Advent takes victory lap, investing in Spectrum Equity’s Definitive Healthcare

Preempting the process for Spectrum Equity-backed Definitive Healthcare, Advent International is investing in the highly sought after healthcare-data provider, according to three sources. The transaction is valued around $1.7 billion, two sources said, while a third characterized the deal as an equity recapitalization. Spectrum will remain an investor in Definitive Healthcare. Evercore provided financial advice […]
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Goldman PE arm buys MyEyeDr in $2.7B deal, producing 3.5x return for Altas Partners

Altas Partners is poised to generate an about 3.5x return on MyEyeDr through a sale of the optometry giant valued at $2.7 billion, according to a source familiar with the matter. Goldman Sachs through West Street Capital Partners VII, a fund managed by its merchant banking division, agreed to acquire the well-known brand by buying its […]
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Golden Gate takes stake in Ensemble Health in more than $1.5 bln deal

Golden Gate Capital agreed to acquire a slight majority stake in Ensemble Health Partners from Bon Secours Mercy Health, assigning the revenue-cycle-management division an enterprise value between $1.5 billion and $2 billion, according to people familiar with the matter. In connection with the transaction, Bon Secours will receive about $1.2 billion in proceeds, the people said. […]
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Deals Exit Personnel


Jump Capital sells Champion Healthcare to Riverside Co

Jump Capital said June 6 that it sold its portfolio company Champion Healthcare Technologies to Riverside Co. Financial terms weren’t announced. Champion provides implant management solutions to over 500 hospitals and health systems. Riverside has combined Champ with portfolio company HemaTerra Technologies.
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Carbon Health attracts $30 mln Series B

San Francisco-based Carbon Health, an healthcare provider, has secured $30 million in Series B funding. Brookfield Growth Partners led the round. In conjunction with the funding, Josh Raffaelli, a managing director at Brookfield Growth Partners, has joined Carbon Health’s board of directors.
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LLR recaps CareATC

LLR Partners has recapitalized Tulsa-based CareATC, an employee population health management company. No financial terms were disclosed. Canaccord Genuity LLC served as financial adviser to CareATC on the deal with PrayWalker providing legal counsel. And, Morgan Lewis & Bockius LLP served as legal counsel to LLR Partners. CareATC was backed by Omega Capital and the Oklahoma Life Science Fund.
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GPP backs Bionova Scientific

Great Point Partners has provided $22 million in funding to Bionova Scientific. Based in Fremont, California, Bionova is a specialized biologics contract development and manufacturing company.
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Strand Therapeutics snags $6 mln seed

Cambridge, Massachusetts-based Strand Therapeutics Inc., a developer of gene therapies powered by synthetic biology, has raised $6 million in seed funding. Playground Global led the round.
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Greycroft leads Series A round for Medly Pharmacy

Brooklyn, New York-based Medly Pharmacy, a digital pharmacy, has raised an undisclosed amount of Series A funding. Greycroft led the round.
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Capital Senior Living rejects TPG offers: Bloomberg

Capital Senior Living has rebuffed several acquisition attempts from TPG over the past few months, Bloomberg is reporting. Capital Senior, of Dallas, develops and operates senior living communities, the story said.
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WindRose Health recaps Lykan Bioscience

WindRose Health Investors LLC said June 4 that it recapped Lykan Bioscience Holdings LLC. Financial terms weren’t announced. Lykan, of Hopkinton, Massachusetts, is a manufacturing services organization that provides production and logistics solutions for pharmaceutical and biotech companies focused on cell and gene therapies.
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Serent backs The Professional Companies

Serent Capital has made an investment in The Professional Companies, a provider of home healthcare benefits management services. No financial terms were disclosed. Also, TPC has named Brian Sassi as CEO.
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Goldman Sachs arm to buy Capital Vision Services: Reuters

Goldman Sachs Group Inc said on Monday that West Street Capital Partners VII, a fund managed by the company’s merchant banking unit, will acquire Capital Vision Services LP, to bolster their portfolio in the healthcare services sector, Reuters reported.
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Firms & Funds

Third Rock fifth flagship closes on $770 mln

Third Rock Ventures LLC said June 6 that its latest flagship closed on $770 million. Third Rock Ventures V LP invests in life sciences companies. Third Rock also said that Steve Kafka, previously a venture partner, was named a partner.
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Vivo Capital amasses over $1.2 bln for ninth fund

Vivo Capital has raised over $1.2 billion for its ninth fund, according to an SEC filing. No target was listed in the document. Vivo invests in healthcare companies in the U.S. and greater China.
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Health Catalyst Capital to raise $275 mln for sophomore fund

Health Catalyst Capital is seeking to raise $275 million for its second fund, according to an SEC filing. The New York-based firm invests in healthcare technology firms.
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Anthem buys Beacon Health Options from Bain, Diamond Castle

Anthem Inc said June 6 that it agreed to buy Beacon Health Options. Financial terms weren’t announced. Bain Capital Private Equity and Diamond Castle Holdings are the sellers. Beacon Health Options, of Boston, is a behavioral health organization that serves more than 36 million individuals across all 50 states.
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NMS-backed USFAS buys Affiliated Podiatrists PC

US Foot & Ankle Specialists LLC, a portfolio company of NMS Capital, has acquired Newport News, Virginia-based Affiliated Podiatrists, P.C., a provider of podiatric care. No financial terms were disclosed.
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Coloplast says reviewing its urology business: Reuters

Danish medical device maker Coloplast on Tuesday said it is conducting an “unconditional strategic review” of its urology division, Reuters reported.
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Tonka Bay exits AppleWhite

Tonka Bay Equity Partners has sold Dubuque, Iowa-based AppleWhite Dental, a dental services organization, to Cordental Group Management. No financial terms were disclosed.
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PE-backed CORA makes several acquisitions

CORA, a portfolio company of Gryphon Investors, has acquired two outpatient physical therapy companies: St. Louis-based Elite Physical Therapy and Florida-based Advanced Physical Therapy. Also, CORA has acquired several additional clinics in South Carolina. No financial terms were disclosed.
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PE-backed RMS acquires i8 Health Solutions

Revenue Management Solutions, which is backed by Thompson Street Capital Partners, has acquired i8 Health Solutions, a provider of a technology platform that enables reconciliation of payments posted to the general ledger within a provider's patient accounting system. No financial terms were disclosed.
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PE-backed Team Services Group buys Circle of Life

Team Services Group, a portfolio company of Alpine Investors, has acquired Circle of Life, a home care agency focused on serving Native American communities. No financial terms were disclosed. Vertess Advisors LLC represented Circle of Life on the sell-side.
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European drug wholesaler Abacus postpones IPO: Reuters

Danish drug merchant Abacus Medicine, which buys medicines in cheaper parts of the European Union to sell them in more expensive markets like Germany, on Wednesday said it is postponing its planned initial public offering due to an “unfavorable market environment."
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PE-backed SightMD taps Lujan as CEO

SightMD, a portfolio company of Chicago Pacific Founders, has appointed Jonathan C. Lujan as CEO. SightMD is a multi-specialty ophthalmology platform.
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PE-backed Gemini expands senior exec team with two new hires

Gemini Bio-Products LLC, which is backed by BelHealth Investment Partners LLC, has named Donald O'Neil as chief commercial officer and Brendan Lucey as vice president of business development. Recently, O'Neil was senior vice president of sales and strategic partnerships at ORFLO Technologies while Lucey's past roles include serving as an executive at ILC Dover, Sartorius Stedim and Lonza.
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Raymond James recruits Gitkin as MD

Raymond James has appointed Andrew Gitkin as managing director and co-head of the firm's healthcare investment banking practice. Previously, he worked at Piper Jaffray where he led the West Coast biotech investment banking practice.
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Waud Capital taps Collins as healthcare services principal

Waud Capital Partners has named Ken Collins as principal, healthcare services. The appointment is effective immediately. Previously, he was a principal at Roark Capital Group.
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Dynamk Capital adds venture partner

Dynamk Capital, a venture firm focused on early-stage life sciences companies, has named Dr. Gustavo Mahler as a venture partner. Mahler is the former CEO of AGC Biologics.
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