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The global healthcare sector saw significant M&A activity in 2018 with several megadeals being announced, such as the acquisition of Express Scripts by Cigna Corporation, and several others. 2018 also saw a wave of private equity investments in healthcare companies…

The global healthcare sector saw significant M&A activity in 2018 with several megadeals being announced, such as the acquisition of Express Scripts by Cigna Corporation, and several others. 2018 also saw a wave of private equity investments in healthcare companies and practices across the United States. According to a Forbes report, overall deal value in the sector touched USD 103.72 billion in 2018 – a considerable increase from USD 88.87 billion in 2017. Deal volume also remained high with some private equity investors focusing on add-on acquisitions as well.

In this article we take a look at the top 5 healthcare deals that took place in 2018.

KKR & Co acquired Envision Healthcare

Private equity firm KKR acquired Greenwood Village, Colorado-based Envision Healthcare Corporation, Reuters reported. The deal was valued at USD 5.57 billion and was completed in November 2018. Envision Healthcare Corporation is a provider of physician-led outsourced medical services in the United States. KKR had outbid peers Carlyle Group, TPG Global and others to seal the deal. J.P. Morgan, Evercore, and Guggenheim Securities provided financial advice to Envision Healthcare Corporation on the transaction.

Athenahealth Inc. was acquired by Veritas and Elliott Management

Hedge fund sponsor Elliott Management Corporation and private equity fund Veritas Capital Fund Management, LLC agreed to acquire Athenahealth Inc for USD 5.5 billion in November 2018. Based in the United States, Athenahealth, Inc. is a provider of network-enabled services and mobile applications for medical groups and health systems. Athenahealth’s revenue had declined amid a tumultuous 2018, and the deal was aimed at providing a much needed turnaround to the company, said a BusinessInsider report.

Apollo acquired LifePoint Health Inc

Private equity firm Apollo Global Management acquired LifePoint Health, Inc. The deal, completed on November 2018, was valued at USD 5.6 billion. LifePoint Health Inc. is a Brentwood, Tennessee-based healthcare service provider that owns and operates community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in the United States. The deal was aimed at bringing together Apollo’s portfolio company RCCH HealthCare Partners and LifePoint Health to cushion the effects of higher medical costs, fewer patient admissions, and changes in reimbursement policies that had ultimately affected profits, Reuters reported.

Humana, TPG and WCAS completed their take-private buyout of Kindred Healthcare

In July 2018, healthcare service provider Humana Inc. and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) announced the acquisition of Kindred Healthcare, Inc. The deal was valued at USD 4.1 billion. Kindred Healthcare is a healthcare services company based in the United States.

LifeScan Inc. was acquired by Platinum Equity

US-based private equity firm Platinum Equity announced its acquisition of LifeScan, Inc in October 2018. The seller was Johnson & Johnson. The deal was valued at approximately USD 2.1 billion. LifeScan is a provider of blood glucose monitoring system for primary care physicians and pharmacists worldwide.

The Healthcare Research Institute of PwC, in its article titled Top Health Industry Issues of 2019, predicted that over 700 healthcare deals were set to take place in 2019. A recent Preqin report has also confirmed that approximately USD 56 billion in dry powder is currently available for deployment in health care. At the same time, a CMS survey predicted an increase in healthcare spending from 17.9 percent in 2016 to 19.7 percent in 2026. Healthcare deals have been rising in both value and volume over the past few years. Factors such as the availability of investable capital, and a still-fragmented healthcare industry will ensure that this deal activity continues well into 2019 as well.

 

 

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