Health Care Deal News, June 22, 2015 -- Managed Care M&A Ramps Up

 

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Week ending June 19, 2015: 

Recent Healthcare M&A Deals

Medical Devices

   
Acquirer Target Price
Hill-Rom Holdings, Inc. Welch Allyn, Inc. $2.05 billion
XIO Group, LLP Lumenis Ltd. $510 million
Teva Pharmaceuticals Industries Ltd.. Drug delivery collaboration $93 million

Other Services

   
Recipharm AB OnTarget Chemistry $1.84 million
VS Health Corporation Target's pharmacy and clinic business $1.9 billion

 

 

Allergan Adds Kythera to Smooth Its Profile

Allergan plc (NYSE: AGN), formerly known as Actavis plc, wasted no time in acquiring another publicly traded company. Last week, Allergan picked up Kythera Biopharmaceuticals, Inc. (NASDAQ: KYTH) for $2.1 billion, payable 80% in cash and 20% in new AGN shares issued to KYTH shareholders. Kythera’s only marketed product is Kybella™, an injectable drug that is the first and only approved, non-surgical treatment for double chin. The acquisition is expected to be breakeven in 2016 and accretive thereafter. Actavis, er, Allergan remains committed to de-levering to below 3.5x debt to Adjusted EBITDA by the end of the first quarter of 2016. 

 

 

The Giant Health Insurers Are Circling 

It began in May, with Humana Inc. (NYSE: HUM) publicly declaring it was exploring a sale. That announcement ignited the smoldering rumors that have been swirling around the healthcare industry since the beginning of 2015: Expect a lot of consolidation in the Managed Care sector this year. By mid June The Wall Street Journal reported that UnitedHealth Group (NYSE: UNH) approached Aetna Inc. (NYSE: AET) with an offer, and that Anthem (NYSE: ANTM) and Cigna (NYSE: CI) were engaged in merger talks. We checked our DealSearchOnline database to see how each of the top five spent on managed care targets since 1994. Check 'em out.   

 

Health Insurers' M&A Spending on Managed Care Targets, 1994 t0 2015

Acquirer

Number of deals completed

Price

Aetna 

14 $13.3 billion
Anthem 10 $21.1 billion
Cigna 13 $8.0 billion
Humana 22 $4.3 billion
UnitedHealth Group 31 $34.8 billion

Source: The Health Care M&A Information Source, June 19, 2015

 

 

Independent Welch Allyn Sells for $2.05 Billion

Welch Allyn, Inc. was a quiet, family-run global medical device company, based in the Finger Lakes region of New York State. We knew the peace couldn’t last. Sure enough, last week Hill-Rom Holdings, Inc. (NYSE: HRC) agreed to pay $2.05 billion for the Skaneateles Falls-based company that makes those physical examination instruments and accessories you so look forward to seeing whenever you visit your doctor. It also makes EMR-connected vital signs and cardiac monitoring devices, with the aid of 2,600 people in 26 countries. Hill-Rom Holdings operates as a medical technology company, and its financial advisors at Goldman, Sachs & Co. expect this transaction to generate $2.6 billion in revenues and more than $500 million in adjusted EBITDA. 

 

Joint Venture Buys Regal Lifestyle Communities

Another good REIT story was made in the long-term care sector. Last week Health Care REIT, Inc. (NYSE: HCN) one of the largest diversified healthcare REITS in the country, agreed to pay $623 million for Regal Lifestyle Communities Inc. (TSX: RLC). Regal operates 23 independent living communities with more than 3,600 units—13 in Ontario, seven in Quebec, and one each in British Columbia, Saskatchewan and Newfoundland. Far-flung as that sounds, about 83% of the NOI is derived from four large metro markets.  HCN will be buying this portfolio in an existing RIDEA joint venture with Revera, Inc., with HCN owning 75% and Revera 25%..............................Click here for a free trial to The Health Care M&A Information Source and download the current issue today.

 

 

 

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