Healthcare companies, facing new and unprecedented pressures from regulators, competitors, and consumers, continue to turn to dealmaking – by way of M&A, joint ventures, and other forms of partnership – as a means to survive in the industry’s new world order. Previously, we’ve profiled the drivers and models of deals among payers, providers, and pharmacy companies, though we have yet to touch upon an adjacent segment – medical technology – where dealmaking is unfolding in a distinct but interrelated manner.
Recently, Water Street sat down with Rick Anderson, Managing Director of PTV Healthcare Capital, a late-stage venture and expansion capital firm based in Austin, TX, and Greg Davis, CEO of MedCelerate, a consulting group that supports the growth of medical device companies through manufacturing and commercial ramp-ups, and Adjunct Professor at the Fuqua School of Business at Duke University. We discussed highlights of dealmaking trends among medtech companies today and talked about how companies in this sector are leveraging particular types of deals to propel innovation.
THE VOLUME AND PACE of dealmaking among U.S. healthcare companies remains high, as the industry wrestles with transformative change due to a confluence of disruptive factors. These factors include: passage of the Affordable Care Act (ACA) in 2010 and subsequent repeal and/or replace efforts; an aging American population with increasingly complex and costly medical needs; and evolving market and consumer demands of the healthcare system. Health insurance companies are particularly exposed to the financial and strategic pressures levied by that industry-wide flux, and as a result have been at the forefront of striking new JVs and other deals as a means to survive in a leaner and more competitive post-ACA – and potentially post-BCRA – landscape.
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ALLSCRIPTS, A LEADING electronic health record (EHR) provider, and private equity firm GI Partners have announced that they will jointly acquire and govern Netsmart Technologies, a privately-held healthcare information technology (HIT) firm specializing in behavioral health and human services. Allscripts will contribute its Allscripts Homecare business to the joint venture, in addition to $70 million in cash. GI Partners will contribute an undisclosed amount of capital which, in addition to third-party debt financing, enabled the partners to make the $950 million acquisition (Exhibit 1).
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JASON MANN, FORMER CEO and Vice Chairman of Life & Specialty Ventures (LSV), headquartered in Little Rock, Arkansas. LSV is a joint venture owned by six Blue Cross and Blue Shield plans and provides specialty insurance products through 14 plans. Jason was with the JV since its formation in 2005. This Water Street Insight is based on excerpts from an interview we conducted with Jason in 2015.
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