Robust Dealmaking Continues Across the Healthcare Industry

Will healthcare dealmakers take summer vacations? They may need to after a particularly active healthcare M&A season in Q2’18. Macro M&A trends combined with sector-specific healthcare deal drivers were a catalyst for significant growth in transaction volume this quarter. Abundant sources of cheap capital, a stable and growing economy, and heightened valuations created a compelling backdrop for healthcare dealmaking across several subsectors.

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Private equity (PE) continues to lead the charge in acquiring physician practice specialties such as ophthalmology, dermatology, and even emerging niche areas such as pain management, gastroenterology and allergy. In Q2, we tracked several new platforms created by top-tier investors in physician services as well as a flurry of add-ons where existing operators continue to bulk up. Provider groups that can demonstrate success in managing population health appear to be generating the most interest across all sectors.

There has also been a frenzied level of activity in the diagnostics space, fueled by innovation and market dynamics emphasizing the benefits of scale and consolidation. Other areas experiencing robust deal volume were telemedicine (as technological innovation and cost pressures drive market adoption), population health (fueled by the paradigm shift towards value-based care), and revenue cycle management (where consolidation and efficiency gains are king).

Our team closed two unique healthcare transactions this quarter. First, we assisted our international partner Oaklins (Oaklins Germany) in the sale of Acutronic Medical Systems to Vyaire Medical, a portfolio company of Apax Partners. Acutronic is a global leader in developing and manufacturing neonatal ventilation equipment and is based in Switzerland and Germany. This is our second transaction in the space, as a follow-up to our successful sale of Newport Medical Instruments, a leading developer of ventilators for a broad range of applications, to Covidien. Second, we advised American Logistics Company (ALC) on its dividend recapitalization with Comerica and Fifth Third Bank. ALC is a rapidly growing and dominant market leader in the non-emergent medical transportation industry with a particular focus on managing the logistics for transporting special needs patients and students.