M&A Transactions

Columbus, OH based CoverMyMeds is snapped up by McKesson for $1.1 billion

This company helps doctors, pharmacists and their staff to work with insurance companies to obtain drug approval for patients. The company’s software automates the entire medication benefit process. The software works with 360 EHR systems and 47,000 pharmacy locations and more than 700,000 prescribers use CoverMyMeds solutions. This is one of the fastest exits by Francisco Partners, which bought the company in November of 2014.

Premier supply chain arm acquires New York, NY-based Innovatix and Essensa Ventures for $325 million plus $43 million of earn out

Premier, which calls itself a healthcare improvement company, already owns 50% of Innovatix which is a supply chain solution and group purchasing organization (GPO) serving 32,000 facilities including senior living communities. Essensa serves senior nutrition centers as well as long-term acute care facilities, labs, imaging centers and other facilities. Together the companies employ 165 people.

This is a substantial acquisition for Premier. The good news is that it is immediately accretive; adding $50-60 million to Premier’s top line and about $20 million to its EBITDA. We like the increased scale and the financial profile of the acquisitions.

Private equity firm, TPG Capital buys Mediware Information Systems, based in Lenexa, KS, from Thoma Bravo

Thoma Bravo paid close to $200 million for Mediware in 2012. The company’s roots go back to providing software for blood banks and pharmacies. Mediware has successfully expanded into homecare, rehabilitation and human services markets.

Mediware is a product of several acquisitions. That activity continued under Thoma Bravo’s ownership adding six companies to its operation. Clearly,  the company has developed a competency to successfully integrate small acquisitions and patiently build its top line revenue.

Ateb, based in Raleigh, NC is acquired by Omnicell for $41 million

This acquisition makes a lot of sense to us. Omnicell, with enterprise value of $1.4 billion, is a leading provider of medication and supply management solutions for pharmacies. Ateb and its Canadian affiliates, is a provider pharmacy-based patient care and medication synchronization to independent and chain pharmacies. The company has an advanced IVR technology. Ateb had $27 million in revenue. For Omnicell, the transaction is accretive immediately.

Castlight Health acquires Jiff based in Palo Alto, CA for $153 million

Jiff, which is in the business of social networks and digital health apps for wellness, had raised close to $70 million to date. Castlight, a struggling price transparency and benefit management company, is esentially betting the company on this acquisition. The enterprise value of Castlight is $240 million so the success or failure of this acquisition has significant consequences for the company. The combined company will have 240 customers, including 70 of the Fortune 500.

Castlight will issue 27 million shares and options at the closing of the transaction. That is 20% of the combined company on a fully diluted basis. Castlight is expected to report revenues of $102 million for 2016 and ARR of $122 million. Jiff is expected to generate $7 million of revenue but it has an ARR of $17 million.

Since the announcement, the market has had a ho-hum reaction to the deal. Castlight’s stock price has been trending downwards in light of the dilution. That being said, we like this deal and we think that it will be a value creator for the shareholders in the long run.

PatientCrossroads based in San Mateo, CA is purchased by Invitae Corporation for $15 million

The target is a provider of patient-centered data solutions through surveys, tracking health outcomes and sharing de-identified disease data. Invitae is a genetic testing company focused on a variety of diseases including cardiology, neurology, pediatrics and others. The target has a database of 75,000 patients. Invitae is certainly an up and coming player with only $19 million in LTM sales and $300 million in enterprise value.

GreatCall is buying Healthsense based in Mendota Heights, MN

Healthsense which has raised close to $30 million and founded in 2001, provides remote monitoring services for seniors. GreatCall also provides personal emergency response systems for seniors. Its platform includes 24/7 access to registered nurses, connection to family and friends as well as medication adherence services. We like this deal – the synergies are ideal.

Kaufman, Hall & Associates acquires Wilton, CT- based KREG Information Systems

Madison Dearborn invested in Kaufman Hall in 2014. We had been surprised that the company had not done any acquisitions since that event. Now Kaufman is expanding its wings and is getting into the business of administrative decision support. KREG’s products cover contract and claims analytics all the way to budgeting and performance. This is a good complement to Kaufman’s core competency in advisory services for capital planning for hospitals.

Telcare, based in Bethesda, MD, is acquired by BioTelemetry for $12 million

Telcare develops cellular-enabled glucose meters for diabetes patients. BioTelemetry has revenues of over $190 million and enterprise value of $600 million. The company’s main business is in the remote monitoring of cardiac patients. The company has made a series of small acquisitions in the past few years.

Entransmedia of Troy, NY is picked up by Formativ Health

The target, with over 400 employees, is a broad based HIT company with solutions ranging from EHR/practice management to billing, coding and credentialing. Formativ, backed by Pompolona and Northwell Health, provides management services to physician practices.

Afsaneh Naimollah

Xen Partners

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Palo Alto, CA 94301
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Afsaneh@XENPartners.com
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