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Hello, everybody! 

Word of the week: One prominent i-bank in healthcare is hosting a small VIP group of PE professionals this week at a top ski resort out West. 

I’ve heard about ski trips like these put on by other banks, as well as by major lenders and law firms. … So, now I’m wondering: How much deal talk actually takes place at these things?! Is it all about that fresh pow pow and apres-ski? 

Elsewhere, some are getting ready for HIMSS - the big healthcare IT conference in Orlando next week. I spent some time this week catching up with contacts in the segment, one of whom said certain PE groups appear to be in hold mode. Why? “Everybody wants an investment in healthcare IT,” so if you sell your business, you’ve gotta go out and find something else. That’s not an easy feat in today’s hypercompetitive environment. 

This person also noted that some forward-thinking PE firms are having more dialog about socialized medicine and what that could mean for deals. Anybody payer-focused might be a little concerned, although ultimately it’s probably just a lot of noise, this person added. 

With so many healthcare-IT deals having scaled and cycled through, and thus with scarcity value an issue for investors eager to deploy huge amounts of dry powder, we may see more folks get creative as a means to find sizable investments.

Grooming for HCIT carveouts

How regulation and policy unfold is anyone’s guess. But the healthcare landscape will certainly continue to evolve, creating interesting new opportunities for sponsors as the supply-chain lines blur. 

For instance, 2018 saw complex deal structures unfold, such as Clayton, Dubilier & Rice’s partnership deal for Cardinal Health’s naviHealth.  

But today I’m talking about the hospital end of the market. Besides partnering with or buying up physician specialties, hospitals over the years have redefined their strategies by acquiring revenue-cycle-management businesses to maximize collection of payments from patients.  

This week I learned that Ensemble Health Partners, the RCM division of recently merged Catholic health system Bon Secours Mercy Health, will look to sell a slight majority stake to PE. 

Ensemble’s earnings have grown tremendously since the company joined the Cincinnati health system less than three years ago, proving a valuable driver for its parent, a source said. 

Read my full story for all the deets

Ensemble isn’t alone. Other not-for-profit health systems that have invested in RCM units include Dignity Health, now part of newly created CommonSpirit after its marriage with Catholic Health Initiatives. Ascension Health in 2016 bought R1 RCM (formerly Accretive Health).

Of course, Tenet’s Conifer revenue-cycle business is still up for sale, CEO Ronald Rittenmeyer reiterated during a presentation at the JP Morgan Healthcare Conference in January, media reports said.

Broadly speaking, Dan Shoenholz, managing director and co-head of health care at EY-Parthenon, this week told me he expects the trend of health systems divesting or selling stakes in their healthcare IT units to increase.

“I think a number of health systems are waking up to the fact that they have significantly underrealized assets in terms of capabilities,” Shoenholz said. “You inherently have tension in these models between serving the primary customer and commercializing the business.”

If an RCM business is proven out within its parent system, it creates a track record of providing services to the parent system that can be helpful in signing on new customers. At the right time, an equity sponsor can not only offer capital but can add its expertise, Shoenholz said.

“There’s a skill to working with a not-for-profit system,” Shoenholz said. The institutionalization, focus, governance and discipline that PE can bring can be really helpful in fueling growth, he said.

Elsewhere in RCM, as the private equity community continues to support consolidation of physician practices, more large groups are increasingly thinking about taking in-house what historically has been outsourced, Shoenholz said. At the same time, acceptance of offshore providers of RCM appears to be growing, he added.

What additional RCM activity is brewing out there? I’d love to know. Reach me at springle@buyoutsinsider.com 

In other news… 

GTCR’s Resonetics struck what represents the medical-device contract manufacturer’s third add-on over the past year, adding Caribou Technologies of Blaine, Minnesota.  

L Catterton invested in Sao Paulo’s Femme – Laboratório da Mulher, which offers women diagnostic gynecology, ultrasound, fetal medicine, breast imaging, genetics, pathology lab and blood tests. In Brazil, like the U.S., a large and growing middle class of women care a lot more about their health and, increasingly, their families’ health, a source said. L Catterton is getting behind that theme. 

NMS Capital, which specializes in healthcare services and business services, collected $450 million for its third fund, beating its $350 million target. 

That’s it until next week. As always, reach me at springle@buyoutsinsider.com with any juicy tips, feedback, or just to say hello.

-Sarah 
 

 
 
               



Top Stories

Ensemble, RCM unit of Bon Secours Mercy Health, to pursue PE partnership

Ensemble Health Partners, the revenue-cycle-management division of Catholic health system Bon Secours Mercy Health, will seek a private equity partner, according to people familiar with the matter. The Cincinnati system is interested in selling a slight majority ownership stake in Ensemble, one of the people said, while cautioning that could change as the process develops. […]
Read more...  

Post Capital, ex-Addus chief join in new home-care platform

Getting behind healthcare’s continued shift to home-based care, Post Capital Partners teamed up with industry veteran Mark Heaney to source and invest in a platform in the non-medical, adult daycare and home-care sector. The partnership is part of the New York firm’s “executive-first strategy,” through which it partners with executives before proactively searching for and identifying […]
Read more...  

Alpine taps adviser to evaluate Optima Healthcare sale

Alpine Investors is considering the sale of Optima Healthcare Solutions, which offers therapy-management software to skilled nursing and assisted-living facilities and other post-acute-care providers, three sources said. Houlihan Lokey has been retained for financial advice, the sources said. Pre-process fireside chats were held at the JP Morgan Global Healthcare Conference in January, one of the […]
Read more...  

Zenyth raises $150M-plus for healthcare-focused permanent-capital vehicle

Zenyth Partners has raised more than $150 million for a new permanent-capital vehicle that will focus on building healthcare providers through a retail and consumer lens, Managing Partner Rob Feuer told Buyouts. The Great Neck, New York, investment firm initially gathered $55 million for an inaugural fund in April 2018, an SEC filing showed. The firm […]
Read more...  
                                    



Roundup
 
Deals Exit Personnel

Deals

Health Catalyst racks up $100 mln in OrbiMed-led round

Health Catalyst, a provider of next-generation data, analytics and improvement for the healthcare industry, has raised $100 million in funding. OrbiMed led the round with participation from other investors that included Sequoia Capital, Norwest Venture Partners, Sands Capital Ventures, UPMC Enterprises and Kaiser Permanente Ventures.
Read more...  

H.I.G. buys Taconic Biosciences

H.I.G. Capital has acquired Rensselaer, New York-based Taconic Biosciences Inc, a provider of genetically engineered models and service solutions used in life sciences research. No financial terms were disclosed.
Read more...  

eCare Vault lands funding

Boston-based eCare Vault, a provider of document management, care team collaboration and service tracking platform for special education and healthcare, has raised an undisclosed amount of funding. The investor was EduLab Capital Partners.
Read more...  

Embleema snags $3.7 mln Series A

New Jersey and France-based Embleema, a healthcare blockchain network for secure sharing of personal health records, has secured $3.7 million in Series A funding. Pharmagest and Techstars led the round.
Read more...  

Abry recaps physicians’ social platform Sermo

Abry Partners has recapitalized Sermo, a social platform for physicians and healthcare professional survey company. No financial terms were disclosed. Marlin & Associates was financial adviser to Sermo on the deal while Ernst & Young and Chestnut Hill Partners did likewise for Abry.
Read more...  

Consonance Capital recaps Orsini

Consonance Capital Partners has recapitalized Elk Grove Village, Illinois-based Orsini Pharmaceutical Services LLC, a national specialty pharmacy focused on patients with rare and complicated diseases. No financial terms were disclosed. Latham & Watkins LLP and Bass, Berry & Sims PLC advised Consonance Capital on the transaction while Barone Law Group P.C., Levenfeld Pearlstein LLC, and Brown & Fortunato, P.C. advised Orsini Pharmaceutical Services.
Read more...  

BlueCross BlueShield Venture Partners backs Ideal Option

Kennewick, Washington-based Ideal Option, a provider of medication-assisted treatment and behavioral counseling services for individuals suffering from opioid use disorder, has secured an undisclosed amount of funding. The investor was BlueCross BlueShield Venture Partners.
Read more...  

YPrime secures funding from Flexpoint

Flexpoint Ford has made an investment in Malvern, Pennsylvania-based YPrime, a provider of cloud-based eClinical solutions. No financial terms were disclosed.  YPrime's previous backer Ballast Point Ventures will retain a minority stake in the company and invest alongside Flexpoint in the transaction. Hill Ward Henderson provided legal advice to YPrime while Kirkland & Ellis and Duane Morris did likewise for Flexpoint.
Read more...  

Bolt Biotherapeutics pulls in $54 mln Series B

San Francisco Bay Area-based Bolt Biotherapeutics, a biotechnology company focused on the immune system, has secured $54 million in Series B financing. Pivotal bioVenture Partners led the round with participation from Nan Fung Life Sciences, Novo Holdings and Vivo Capital.
Read more...  

Sun Capital buys Simply Beautiful Smiles

Sun Capital Partners Inc has acquired Langhorne, Pennsylvania-based Simply Beautiful Smiles, a regional dental service organization. No financial terms were disclosed.
Read more...  

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Firms & Funds

Arboretum Ventures targets $250 mln for fifth healthcare fund

Arboretum Ventures is seeking to raise $250 million for its fifth fund, according to an SEC filing. Based in Ann Arbor, Michigan, the venture firm invests in the healthcare sector.
Read more...  

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Exits

VC-backed Avedro sets IPO pricing terms

Avedro Inc, an ophthalmic pharmaceutical and medical device company, has priced its IPO of 5 million shares at between $14 and $16 per share. The company plans on trading the stock on the NASDAQ under the ticker symbol "AVDR." BofA Merrill Lynch and J.P. Morgan are the lead underwriters. Avedro is backed by Lilly Asia Ventures, OrbiMed Advisors, InterWest Partners and HealthQuest Capital.
Read more...  

Resonetic buys Caribou Technologies

Resonetic, which is owned by Regatta Medical, said Feb. 5 that it acquired Caribou Technologies. Financial terms weren’t announced. Caribou, of Blaine, Minnesota, supplies centerless grinding, forming, coiling, machining and laser processing for the medical device industry. Regatta is a GTCR portfolio company.
Read more...  

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Personnel

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