Find out the latest news and trends in healthcare M&A – and how they affect you.
2023 was a challenging year for the M&A environment, but the private healthcare market proved resilient, seeing 393 deals transact with activity from both private equity (PE) and venture capital (VC). We've seen a positive start to 2024, with some notable deals kicking the year off, and plenty of appetite for investment and acquisitions.
Announced M&A activity in Healthcare - quarterly
Source: Zephyr, Mergermarket, HealthInvestor, LaingBuisson and Grant Thornton Intel
The private healthcare market remains a place where PE/VC parties explore and invest in small companies through to large corporates, with 48% of deals involving PE/VC in the last six months. During Q1 of 2024 there's been a slight drop off in PE/VC investments in deals but we expect to see this rise through the year as we did last year.
Announced PE activity in Healthcare - quarterly
Source: Zephyr, Mergermarket, HealthInvestor, LaingBuisson and Grant Thornton Intel
Our ‘Behind the Transaction’ podcast recently welcomed guests from leading PE funds – Apposite Capital, Livingbridge, and Queen’s Park Equity to discuss the healthcare sector.
The episode explores the rise of PE investment in healthcare and topics, including:
In the last six months we've seen a renewal in activity in the adolescent market, with Outcomes First Group being acquired by TPG Capital in Q4 of 2023 and Hesley being acquired by Bowmark Capital. Pebbles Group have made the acquisition of BDT Care in Q1 this year, enabling them to grow their service provision, and Aurora acquired a new school to continue their growth in the specialist education space. This demonstrates that there's the appetite for acquisitions in this space despite some investors seeing this as a higher risk investment area.
The specialist adult care market hasn’t been as active over the last six months as in previous months, but we've seen some interesting transactions in the space, with Sue Ryder selling three of their neurological rehabilitation and care units to Brainkind (previously the Disabilities Trust). This sale will allow Sue Ryder to focus on their palliative care offering. Mysa Care, backed by Downing, acquired supported-living provider Partnership of Care in November. This acquisition has given Mysa further coverage in the specialist care space and they continue to have the appetite to grow. Potens acquired complex domiciliary and residential care business Celtic Care (Swansea), giving them a second service in South Wales.
Over the last six months we've seen continued activity in the elderly care sector, with LaingBuisson reporting 54 of the Four Seasons Healthcare portfolio have been sold since June 2023 and a further 15 have conditional sale and purchase agreements in place so we should see them transact in the coming months. Growing elderly-care portfolio companies, Kingsley Healthcare, Malhotra, and National Care Consortium, are where some of the FSHC homes have gone to.
In Q4 of 2023 we saw HC One acquire Ideal Care Group. This is the first acquisition, HC One had made for some time after exiting some of their properties earlier in the year. It supports their strategy for growing a luxury and high-quality care group.
Clariane have exited the UK have exited the UK market and sold their 11 homes operated by Berkley that they acquired in 2021. Elevation Healthcare REIT have acquired the homes, continuing the growth of their elderly care property portfolio. Aedifica and Octopus REITS have also made investments into care properties, meaning we may see more REIT investment through this year after it dropped off last year due to the interest rate rises.
The medical devices market has been active over the last six months, with some sizable transactions and strong interest from PE. Leading global-provider of single use medical devices, GBUK Group, was acquired by A&M Capital. This partnership will enable GBUK to drive innovation and grow through bolt-on opportunities. Halma made two international acquisitions in the last six months; USA surgical instruments manufacturer TeDan Surgical Innovation’s and Netherlands-based cervical, oral, and anal cancer sample collection device manufacturer Rovers Medical Devices BV; showing their continued appetite for growth in this space. Owen Mumford made the acquisition of Lacecu ApS (Empelvic), a Denmark-based pelvic floor training equipment manufacturer; this acquisition enables Owen Mumford to offer an accessible solution for consumers to use at their own pace.
Vernacare, backed by H.I.G Capital, made their first acquisition in two years of Splice Cast Ltd the UK manufacturer of disposable plastic medical devices and fast-growing chronic care company Clinisupplies, backed by KKR, acquired Aquaflush TAI, enabling them to expand its offering to include bowel management products, while also supporting patients living with chronic bowel issues through its nursing services.
Healthcare businesses with a strong digital capability are a continued area of interest for trade and private equity investors. HBSUK, who have an established, clinically led digital triage platform in the form of Virtual Lucy, was acquired by AXA Health in February 2024. This partnership will allow AXA to expand its services and ensure their members have access to the right care, first time, along with utilising HBSUKs NHS partnerships to reduce waitlists. At the end of last year G Square acquired, Mayden, the health tech company behind the leading Electronic Health Record (EHR) for psychological therapies in the UK.
Person Centred Software Ltd has made two acquisitions over the last six months, acquiring Dublin-based ResHub, a platform that helps care workers with planning, wellness, and activities, medication management and care home operations and DepenSys Ltd, a Westbury, UK-based web-based application, that's focused on assisting care home operators and managers application operator. These acquisitions will allow care providers more comprehensive and connected solutions to support resident wellbeing along with promoting independence.
Sciensus Pharma Services Ltd (Sciensus), backed by Vitruvian Partners LLP, has acquired VineHealth Digital Ltd, a London, United Kingdom-based online mobile cancer treatment tracking application software-as-a-service (SaaS) developer. This acquisition will enable Sciensus continue to develop their digital platforms and allow Vinehealth to expand to new geographies.
The multi-site and NHS support healthcare space remains extremely interesting to investors. We saw Freemen Capital acquiring insourcing provider HealthHarmonie Ltd earlier in the year. This follows their acquisitions of Medinet and Remedy Healthcare in 2023.
Mental health and physiotherapy remain an area attractive to investors. Vita Health Group, who provide NHS outpatient mental health talking therapies, musculoskeletal, and dermatology services, was sold by Archimed to Spire Healthcare Group in October 2023. This acquisition will allow Spire to grow their acute mental health offering and occupational health services.
EMK Capital-backed OneBright acquired Psicon, the psychology-led healthcare provider that provides neurodevelopmental assessments in the UK, allowing OneBright to grow their services in this important and growing area. SixPhysio, owned by Ascenti continue to grow, making three acquisitions of local physio this year. BUPA acquired Blackberry Clinics. a UK-based specialist in treating muscle, bone, and joint conditions. This consists of 22 clinical facilities that will become part of BUPAs health clinic portfolio.
We've seen investments from VC and PE in the pharma services and life sciences space, which continues to be active due to its broad service offering and impact on future development. PE house, NorthEdge, made two acquisitions in the space. They've acquired Torbay Pharmaceuticals, a provider of sterile injectable contract manufacturing services that supply healthcare and pharmaceutical companies in the UK and internationally. They've also invested development capital into Antibody Analytics Ltd, a UK-based CRO focussing on immunology research services.
UK life science businesses continue to invest internationally with Livingbridge-backed Veramed acquiring Clinical Trial Data Services Inc. (CTDS), a USA-based data management, bio statistics, and medical writing-related services provider which will enhance Veramed’s global presence and companies’ data management capability. Prime Global, a leading company in healthcare communications backed by Levine Leichtman Capital Partners acquired Aventine Consulting LLC, a USA-based management consulting services provider. This will bolster Primes US presence for evidence and access services in the UK.
Aspire Pharma, backed by H.I.G, have acquired Cenoté Pharma, the manufacturer of medicines that treat rare metabolic disorders. Aspire are looking to grow internationally in Europe through M&A and by gaining regulatory approvals in the global market.
In the London public markets, Renalytix announced it had received interest from another listed diagnostics company, and in the fundraising arena, interest in Avacta led to the upscaling of the share issue during the quarter, raising over £30 million, including the results of a retail offer.
HBSUK is a multi-disciplinary provider of online outpatient services and on-site clinical capacity to the public and private healthcare sectors. It's the only provider of blended-care pathways in the UK, whether physically on-site via its insourcing services or remotely via Virtual Lucy, its bespoke digital triage and treatment platform that provides users with accelerated specialist assessments and direct access to clinicians.
We worked closely with HBSUK to prepare the business for sale and maximise shareholder value, positioning and evidencing the key value drivers behind a clinically-led service business, supported by a fast-growing technology platform.
AXA Health, an existing HBSUK partner, were identified as the key strategic partner for the business, benefiting from HBSUK’s ability to improve patient experience across the care pathway for multiple specialities and deliver significant efficiencies through Virtual Lucy.
Partnership of Care (PoC) is a provider of supported living, residential, and day care services for residents with high acuity and complex care requirements. The business has an excellent reputation for the quality of its care and holds strong relationships with local commissioning bodies.
Mysa Care was selected as the preferred partner due to a shared philosophy with the PoC shareholders. The transaction was completed on the terms set out in the original offer, with co-founder, Janine Darling, continuing with the business in a strategic development role.
We provided an integrated, one-team approach, bringing together experts from our corporate finance and tax advisory services to achieve the best result for the shareholders.
2024 has seen a clear increase in lenders’ risk appetite and desire to deploy capital. Whereas in 2023, there remained clear concerns about inflation and borrowers’ ability to maintain margins, the longer trading track record and consensus on falling levels of inflation and consequential Bank of England base rates (albeit with rates staying higher for longer than anticipated at the year) has boosted confidence.
It's important to note that while base-rates remain high, there will continue to be a negative impact on leverage levels due to caution on debt serviceability. Lenders are looking to mitigate this to some extent and be flexible with terms and structures.
However, on deployment the direction is clear, and this confidence can be seen in the Q1 2024 data from Debtwire which shows that European institutional loan market volumes (across all sectors) were triple that for the same period last year, and 83% up on Q4 2023. Funds were overwhelmingly deployed in refinancing and recapitalisations, but our expectation is that this will follow into the M&A led deployment across the healthcare and life sciences sectors.
Despite the challenging M&A environment in 2023 we still saw multiple deals done across all subsectors with activity from both trade and investors. The market has remained buoyant and 2024 has been very active with certain sectors gaining momentum. For example, we're part way through Q2 2024 and this quarter has already see two large deals in the elderly care space, with Akari Care being sold to OMEGA and Hartford Care being sold to Foundation Capital and Deer Partner, with other deals rumoured to happen. The medical devices market is another one which we've seen pick up momentum, with some investment from PE and trade bolt-ons. This is another area we expect to see more activity in the coming year.
The political environment remains uncertain, with elections happening in both the UK and USA, but most investors seem undeterred by this and there's plenty of appetite to keep the market moving.
For more insight and guidance, get in touch with Peter Jennings.
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