Healthcare

Envision Healthcare has agreed to be acquired by KKR in an all-cash transaction for approximately $9.9 billion.

Envision Healthcare (NYSE: EVHC) is one of the largest providers of physician staffing services for emergency departments and hospitalists, anesthesiology, radiology and tele-radiology, and children’s services. The company also owns and operates 261 surgery centers and one surgical hospital in 35 states with medical specialties ranging from gastroenterology to ophthalmology and orthopedics.

Envision also provides medical transportation services in 41 states. Customers of Envision include health systems, payors, providers, and patients. The company, led by CEO Christopher Holden, was founded in 1992 and is based in Nashville (www.evhc.net).

Envision began reviewing strategic alternatives, including a sale of the company, on November 1, 2017. During the last seven months, the company examined a number of options to generate shareholder value which included changes to its capital structure, potential acquisitions, and a sale of the whole company. Envision was approached by 25 potential buyers, including financial sponsors and strategic entities. The transaction with KKR represents a multiple of 10.9x trailing 12 months Adjusted EBITDA and 10.1x 2018 anticipated Adjusted EBITDA.

“Envision is a leading provider of physician-led services in a health care system in which physician-patient interactions have a pronounced impact on nearly all health care decisions. Envision has a very strong reputation for delivering high-quality, patient-focused care through its network of 25,000 clinical professionals at thousands of hospitals, surgery centers and alternate sites of care across the country,” said Jim Momtazee, Head of KKR’s Health Care investment team. “We are excited to partner with the outstanding team led by Chris Holden to help build upon the strong foundation in place and accelerate Envision’s growth going forward.”

KKR (NYSE: KKR) makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East.  The firm has $176 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters has offices in 19 cities around the world (www.kkr.com).

The buy of Envision by KKR will be funded through KKR Americas Fund XII LP and is expected to close during the fourth quarter of 2018.

Fully committed debt financing for the transaction will be provided by Citigroup Global Markets, Credit Suisse, Morgan Stanley, Barclays, Goldman Sachs, Jefferies, UBS Investment Bank, RBC Capital Markets, HSBC, Mizuho, and KKR Capital Markets.

J.P. Morgan Securities, Evercore, and Guggenheim Securities are the financial advisors to Envision.

© 2018 Private Equity Professional | June 11, 2018

Aveanna Healthcare has been formed by Bain Capital Private Equity and J.H. Whitney Capital Partners through the merger of Epic Health Services, a Bain portfolio company, and PSA Healthcare, a portfolio company of J.H. Whitney. Bain closed on the acquisition of Epic Health Services, a portfolio company of Webster Capital, just a few days ago.

According to Bain and J.H. Whitney, Aveanna Healthcare is now the largest pediatric home healthcare company in the nation with 180 locations in 23 states and 26,000 caregivers currently serving over 40,000 patients. Aveanna is led by Executive Chairman Rod Windley, CEO Tony Strange, and COO Jeff Shaner. All were formerly executives with PSA and Gentiva Health Services. David Hagey, CFO of Aveanna, was previously with Epic Health Services. Aveanna Healthcare is based in Atlanta (www.aveannahealthcare.com).

Epic Health Services has been a portfolio company of Webster Capital since August 2010. The company is a provider of pediatric home health and therapy services as well as adult home health services.  The company provides care to more than 38,000 patients and its services include nursing, therapy, personal care and behavioral health nursing. Epic was founded in 2001 and is based in Dallas (www.epichealthservices.com).

PSA Healthcare, acquired by J.H. Whitney in March 2015, is a provider of home care services for medically fragile children. PSA provides care to more than 2,500 patients across 16 states through over 78 offices. PSA is based in Atlanta (www.psahealthcare.com).

Bain Capital Private Equity was founded in 1984 and invests in the consumer and retail; financial and business services; healthcare; industrials; and technology, media and telecommunications sectors. The firm has offices in New York and Boston (www.baincapitalprivateequity.com).

J.H. Whitney invests in small and middle market companies that are active in the consumer, healthcare, specialty manufacturing, and business services sectors. The firm was founded in 1946 and is based in New Canaan, CT (www.whitney.com).

Webster Capital invests in branded consumer, business-to-business, and healthcare services companies with EBITDAs from $3 million to $15 million and transaction values from $20 million to $100 million. At present, Webster has $600 million under management and is currently investing its third fund which closed in 2014 with $400 million in capital commitments.  The firm was founded in 2003 and is based in the Boston suburb of Waltham (www.webstercapital.com).

Goldman Sachs (www.goldmansachs.com) was the financial advisor to Epic Health Services on this transaction and Edge Healthcare Partners (www.edgehealthcarepartners.com) advised PSA.

© 2017 Private Equity Professional | March 17, 2017

Perimeter Healthcare, an acquisition vehicle formed by Ridgemont Equity Partners earlier this year to pursue invests in behavioral healthcare, has acquired WoodRidge Behavioral Care.

The buy of WoodRidge includes five psychiatric residential treatment facilities and three acute hospital programs serving adolescent and geriatric patients from locations in Tennessee, Arkansas and Missouri. WoodRidge is based northeast of Nashville in Madison, TN (www.woodridgecare.com).

Perimeter Healthcare is led by President and CEO Rod Laughlin, who has 35 years of experience in building and operating facility-based healthcare companies such as Restora Healthcare, Regency Hospital Company, Charter Medical Corporation, and Acadia Healthcare. “WoodRidge Behavioral Care is our first platform investment and an important part of the integrated behavioral healthcare company we are building in partnership with Ridgemont,” said Mr. Laughlin.

“The demand for high quality behavioral health services continues to grow due to mental health legislation as well as increasing awareness of the downstream effects of untreated mental illness,” said Scott Poole, a Partner at Ridgemont. “In the face of this growing need, there is currently a severe shortage of mental health providers, particularly in certain markets in the US. The acquisition of WoodRidge is the first step in building a foundation for expanding mental health programs and improving care in local communities.”

Ridgemont Equity Partners focuses on middle market buyout and growth equity investments of $25 million to $100 million. The firm invests in the following sectors: basic industries and services; energy; healthcare; and telecommunications, media and technology. The firm is headquartered in Charlotte with an additional office in Dallas (www.ridgemontep.com).

Nashville-based investment bank Harpeth Capital (www.harpethcapital.com) was the financial advisor to WoodRidge. Financing for this transaction was provided by BMO Sponsor Finance (www.bmoharris.com) and Pinnacle Bank (www.pinnbank.com).

© 2016 Private Equity Professional • 9-20-16

Pine Tree Equity has acquired InHealth MD Alliance and Medical Home Alliance (together “InHealth”). This acquisition marks Pine Tree Equity’s 2nd investment in the physician services industry. Pine Tree Equity has partnered in this transaction with the founders of InHealth, Dr. Nelson Pichardo and Mrs. Patricia Pichardo.

InHealth is a provider of primary care physician services primarily to Medicare eligible patients in Central Florida.  The company operates 13 medical centers located throughout Central Florida.  InHealth was founded in 2011 and is headquartered south of Orlando in Davenport, FL (www.inhealthmd.com).

According to a report by healthcare advisory and consulting firm Marwood Advisory Group (www.marwoodgroup.com), the number of Medicare Advantage eligible patients will continue to increase by 6% to 8% per year over the next 10 years as baby boomers age into Medicare.  According to Pine Tree, nearly 10% of the US Medicare population resides in Florida.

Pine Tree Equity invests in companies that have revenues of $10 million to $50 million and EBITDAs of $2 million to $7 million. Sectors of interest include business, consumer and financial services; consumer products; franchisors and franchisees; and niche manufacturing. Miami-based Pine Tree is investing out of its third fund. The buy of InHealth is the firm’s 31st investment since its founding in 2007 (www.pinetreeequity.com).

© 2016 PEPD • Private Equity’s Leading News Magazine • 2-1-16

RxBenefits, a provider of pharmacy benefits administration services to small and mid-sized, self-insured employers, has been acquired by Great Hill Partners in partnership with the company’s management team.

“RxBenefits has experienced rapid growth in recent years and has emerged as a leader in the pharmacy benefits administration space,” said Bryan Statham, CEO of RxBenefits. “We are pleased to build on this momentum by collaborating with Great Hill, a financial partner that has extensive healthcare experience and resources.”

RxBenefits’ services include management and administration, including pharmacy benefit assessment, plan contracting, plan implementation, member services, claims auditing and reconciliation, and ongoing management of pharmacy benefit plans. The company markets its services through partnerships with employee benefits consultants. RxBenefits was founded in 1995 and is headquartered in Birmingham, AL (www.rxbenefits.com).

According to Great Hill, prescription drug spending last year reached a record-breaking $374 billion, up 13 percent from 2013 representing the largest percentage increase in over a decade. New therapies and specialty drugs were the main driver of the increase. While specialty medications represent only about 1 percent of all US prescriptions, in 2014 they accounted for more than 30 percent of the total drug spend.

“There has never been a more important time for employers to look at their general and specialty pharmacy strategy to see if they have optimal pricing terms and identify strategic savings opportunities,” said Mark Taber, a Managing Partner with Great Hill Partners. “With a seasoned management team, a large addressable market, a growing demand – and most importantly, a strong solution – RxBenefits is poised to continue its rapid growth trajectory.”

RxBenefits joins Great Hill’s current portfolio, which includes recent healthcare investments Qualifacts (SaaS based behavioral health EHR) and PlanSource (SaaS based employee benefits administration technology).

Great Hill invests from $25 million to $150 million of capital per transaction to finance the expansion, recapitalization or acquisition of growth companies in a range of sectors within the media/communications, Internet, business services, consumer services, financial technology, healthcare technology, software, and transaction processing sectors. Great Hill is based in Boston (www.greathillpartners.com).

RxBenefits represents Great Hill’s sixth healthcare technology investment. Prior investments include bSwift (sold to Aetna for $400 million in November 2014), Passport Health Communications (sold to Experian for $850 million in November 2013) and SterilMed (sold to Johnson & Johnson subsidiary Ethicon Endo-Surgery in September 2011).

© 2016 PEPD • Private Equity’s Leading News Magazine • 1-12-16

Cortec Group has acquired CVR Management (DBA The Center for Vein Restoration) from Waud Capital Partners. Waud acquired CVR in partnership with its founder and Chief Executive Officer, Dr. Sanjiv Lakhanpal, in December 2011.

The Center for Vein Restoration (CVR) is a provider of vascular medicine through a network of specialty physician clinics. The company provides treatment for patients suffering from vascular diseases, including vein disorders, such as varicose veins, spider veins and venous ulcers. The company has a network of 43 outpatient clinics in Maryland, Virginia, Washington, DC, New York, Connecticut, New Jersey, Pennsylvania and Michigan. CVR is headquartered just outside Washington, DC in Glenn Dale, MD (www.centerforvein.com).

Cortec made the acquisition through is most recent fund – Cortec Group Fund VI, LP – which closed in May 2015 with $1.1 billion in capital commitments. Dr. Lakhanpal will continue to lead CVR under Cortec ownership while retaining a significant ownership stake.

“We are looking forward to working with CVR’s management team and network of physicians to build upon the company’s successful track record of clinic expansion in CVR’s existing markets and strategically entering new geographies,” said Jeffrey Shannon, a Partner at Cortec.

Cortec invests in middle-market specialty healthcare, consumer and business products, distribution and services companies with revenues of $40 million to $300 million and EBITDA of $7 to $35 million. The firm was founded in 1984 and is based in New York (www.cortecgroup.com).

Waud Capital Partners makes investments from $50 million to $100 million in middle-market companies with enterprise values from $50 million to $250 million that operate in the healthcare services and business services sectors.  The firm was founded in 1993 and is headquartered in Chicago (www.waudcapital.com).

Piper Jaffray (www.piperjaffray.com) was the financial advisor to CVR for this transaction.

© 2016 PEPD • Private Equity’s Leading News Magazine • 1-11-16