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Week ending July 24, 2015:
Recent Healthcare M&A Deals
Home Health & Hospice
Acquirer
Target
Price
Almost Family, Inc.
Ingenios Health Co.
$13.4 million
Managed Care
Anthem, Inc.
Cigna Corp.
$54.2 billion
Medical Devices
St. Jude Medical Inc.
Thoratec Corp.
$3.4 billion
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Health Care Insurer Mergers: Who Got the Best Deal?
You’ve heard the prices, now here are the multiples. After hours of teasing about a definitive agreement, Anthem, Inc. (NYSE: ANTM) finally reached an agreement to acquire Cigna Corp. (NYSE: CI) for $54.2 billion. That works out to 1.5x price/revenue and 13.9x price/EBITDA. The deal followed Aetna’s (NYSE: AET) $37 billion acquisition of Humana Inc. (NYSE: HUM), which gives us a multiple of 0.7x price/revenue and 13.7x price/EBITDA. Cigna is more “administrative services only” versus “full risk” insurance. ASO is lower revenue, but higher margin business than is full risk, which helps explain the P/R difference between the two deals. The much smaller combo between Centene Corp. (NYSE: CNC) and Health Net, Inc. (NYSE: HNT) for $6.8 billion, which started the whole parade on July 1, works out to 0.5x price/revenue and 19.5x price/EBITDA.
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Physician Medical Group M&A Is Going Strong
Nearly seven full months through the year, M&A in the Physician Medical Group (PMG) sector is on pace to post its second-highest deal volume since 2000. As of July 24, we’ve recorded 47 acquisitions, which is second only to 2011, when 56 transactions were announced in the same time period. The biggest deal in the second quarter of 2015 was MEDNAX’s (NYSE: MD) $500 million acquisition of Virtual Radiologic Corporation (aka vRad). That works out to 2.7x price/revenue, 20.0x price/EBITDA—and a whopping $1.4 million per radiologist. Keep ‘em coming.
Physician Medical Group M&A, through July 24
Year
Deals as of
July 24
Full Year Total
2015
47
n/a
2014
30
60
2013
34
65
2012
45
70
2011
56
115
Source: The Health Care M&A Information Source, July 27, 2015
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Almost Family Buys into In-Home Assessments
Almost Family, Inc. (NASDAQ: AFAM) made a strategic acquisition last week that moves it into the growing health assessment market. The company paid $13,354,200 ($2 million in cash and approximately 260,000 shares of AFAM common stock) to buy Ingenios Health Co. of Jacksonville, Florida. Ingenios provides technology-enabled in-home clinical assessments for Medicare Advantage, Managed Medicaid and Commercial Exchange lives in seven states and Washington, D.C. Last year it performed more than 10,000 in-home assessment visits, which works out to $1,335 per visit, for Almost Family.
Indian Drug Maker Gains a Manufacturing Toehold in the U.S.
Mumbai-based Lupin Limited (NSE: LUPIN.NS) produces a wide range of branded and generic formulations and APIs globally. Last week it paid $880 million for bought GAVIS Pharmaceuticals LLC and a subsidiary, Novel Laboratories. The acquisition enhances Lupin’s scale in the U.S. generic market and broadens its pipeline in dermatology, controlled substance products and other high-value and niche generics. Gavis had sales of $96 million in FY 2014 and currently has 66 ADA filings pending approval with the FDA, and a pipeline of more than 65 products under development. Its New Jersey-based manufacturing facility is Lupin’s first manufacturing site in the United States……………………………Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
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