The 30 Largest Healthcare Deals of 2018: Who Got the Highest Valuations?

January 8, 2019

 

We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The highest reported price to EBITDA multiples (15x or higher, sorted alphabetically) were as follows:

 

Ability Network: Ability Network, which was acquired by publicly-traded HIT roll-up Inovalon, provides a variety of cloud-based software and data analytics services through a SaaS model that simplifies administrative and clinical tasks for more than 44,000 acute, post-acute, and ambulatory care providers. Ability’s large and diverse customer base was a major attraction, as reports suggest that Inovalon viewed the acquisition as a way to expand the reach of its existing products.

 

Athenahealth: This deal is the result of a much publicized, two-year battle between an activist investment group and management. Upon completion of the acquisition, which is expected to close in the first quarter of 2019, Veritas and Evergreen plan to combine Athenahealth with Virence Health, the former value-based care group of GE Healthcare that was also acquired by Veritas earlier this year. Athenahealth provides a suite of cloud-based software and services to healthcare providers to manage medical records, revenue cycle, patient engagement, care coordination, and population health.

 

Center for Autism and Related Disorders: CARD, which was acquired by Blackstone, offers center, school, and home-based behavioral therapy nationwide to children and adults diagnosed with autism. The company provides services through a workforce of behavior analysts and behavior technicians, proprietary software, and an evidence-based, individualized approach. According to an article published by Autism research organization Spectrum, changes to U.S. federal and state laws now compel insurance companies to reimburse autism treatments, which has made the field much more attractive to investors in recent years.

 

Cotiviti Holdings: Cotiviti, a publicly-traded provider of payment accuracy and analytics-driven solutions focused primarily on the healthcare industry, was acquired by Verscend Technologies, a portfolio company of Veritas Capital. Veritas had an extremely busy year as the buyer in three of the 30 largest reported healthcare deals (Cotiviti, Athenahealth, and Virence).

 

Halo Pharma: Halo is a pharmaceutical finished dosage form contract development and manufacturing organization that was majority owned by funds managed by the private investment firm SK Capital Partners prior to being acquired by Cambrex. The acquisition expands Cambrex’s CDMO capabilities into finished dosage, while also increasing its customer base, as Halo is currently engaged in more than 100 product development projects for over 70 customers.

 

MatrixCare Holdings: Publicly-traded ResMed acquired privately-held MatrixCare, a SaaS-based provider of long-term post-acute care software, serving more than 15,000 providers across skilled nursing, life plan communities, senior living and private duty. These care settings are complementary to ResMed’s current offerings in home medical equipment, home health and hospice (Brightree and HEALTHCAREfirst).

 

MedRisk: The Carlyle Group acquired a majority stake in MedRisk while former investor TA Associates exited as part of the transaction. MedRisk manages workers compensation claims for physical therapy, occupational therapy and chiropractic services, focusing on providing patients quicker access to higher quality, lower cost care through a national network of accredited providers. According to a report published by Moody’s, MedRisk presents a strong value proposition to its payor clients and network providers, which has led to robust organic growth, and enjoys a national presence with no significant geographic concentrations. MedRisk currently works with 17 of the top 20 workers’ compensation insurance carriers and 8 of the top 10 workers’ compensation third party administrators.

 

Sound Inpatient Physicians: German dialysis specialist Fresenius Medical Care sold its majority interest in hospital-based physician group Sound Inpatient Physicians to a consortium led by Summit Partners and Optum. FMC said the investment enabled it to gain important insight into value-based care programs in the U.S. According to a report published by Moody’s, Sound’s success is strongly linked to its performance in the BPCI initiative and is better aligned with hospitals and payers than many other physician staffing companies - not least of which is its relationship with United.

 

Vetcor Holdings: VetCor is one of the largest operators of veterinary hospitals in the U.S., managing 272 locations across 28 states and employing approximately 900 veterinarians. Oak Hill Capital Partners led the transaction alongside significant new investment from existing shareholders Harvest Partners, Cressey & Company, and the VetCor management team. According to a report published by Moody’s, VetCor has significant recurring revenue, a proven ability to successfully integrate acquisitions, and benefits from favorable long-term trends in the pet care sector which lead to same-store sales growth in the low- to mid-single digit percent range. The pet care industry also benefits from the lack of reimbursement and regulatory risk when compared to healthcare providers.

 

See who got the lowest valuations here.

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