May
2005 issue
Will The Next Rising Star Of Hospital
Management Start Shining With 10 Hospitals From HCA?
The largest financing announced by a private company this month is a seed
round, for Capella Healthcare, and it is the second time in 15 months a newly formed hospital
management company, focused on growth by acquisition, has secured a large
round of start-up financing.
...
Public Equity Market
If a window is open, selling share-holders are jumping out; but some new
filers have prominent backers, and two new companies that were established
recently to make acquisitions in the health care industry filed for initial
public offerings of units.
...
Merger & Acquisition Market
A renal care deal, one of three billion-dollar deals announced this month,
accounted for more than 37% of the capital committed to finance health care
mergers and acquisitions.
...
Private Equity Market
Both funding and deal flow are down this month in the private equity market
for health care companies, compared with both the prior 30-day and year-ago
periods.
...
Departments
Public Market Chart
M&A Deal Chart
Venture Capital Charts
Private Placement Charts
Notes & Briefs
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Healthcare Corporate Finance
News Read the past
headlines.
Companies Mentioned in this issue: May
2005
5AM Ventures p8
A
A.M. Pappas Life Science p6
aaiPharma p11
Aberdare Ventures p7
ABIOMED p11
AC Immune p6
Acacia Venture Partners p4
Acadia Pharmaceut. p9
Actimis Pharmaceuticals p4
ActiveHealth Management p11
Adams Harkness Ventures p5
Adams Respiratory p9
Advanced Life Scien. p9
Advanced Medical Optics p16
Advancis Pharmaceutical p14, p15
Advent International p7
Aetna p11
Agencourt Bioscience p11
Agfa-Gevaert p11
Alcon Laboratories p16
Alcon Manufacturing p16
Alice Ventures p5
Allen & Co. p5
ALN Medical Management p6
Alpinvest Partners p8
Altachem Pharma p15
Ambit Biosciences p7
America Online p10
Amgen Ventures p6
AMN p9
AMN Healthcare Services p1
Ampersand Ventures p7
Amylin Pharmaceuticals p16
Anacor Pharmaceuticals p7
Apax Partners p6
Apollo Health Street p5
Aravis Ventures p8
Arcadia Resources p11
ARCH Venture Partners p8
Ascend Therapeutics p3
AspenBio p15
Assay Designs, Inc. p7
Atlas Equity p13
Atria St. George p11
AtriCure p9
Attentus Healthcare p1
Aurora Funds p6
Avalon Pharmaceutic. p9
Avalon Ventures p7
Avidia p6
AXM Pharma p13
B
Bain Capital p3
Ballast Point Ventures p5
Banc of Amer p9
Banc of America Securities p12
Banner Capital Markets p13
Barclays Pvt. Eq. p11
Baxter International p9
Bayhill Therapeutics p6
Bear, Stearns & Co. p10
Beckman Coulter p11
BeiJing Med-Pharm p9
BioniCare Medical Techologies p5
Biopheresis Technologies p6
Biotechnology Research Corporation p13
Bone Care International p11
Boston Life Science Venture p6
Business Development Bank of Canada p7
Business Development Bankers of Canada p5
C
C.E. Unter. p9
C.E. Unterberg, Towbin p15
C.E. Unterberg, Towbin p10
Calypte BioMedical p9
Calypte Biomedical p12
Canaan Partners p8
Canadian Medical Discoveries Fund p7
Canyon Creek Devel. p11
Capella Healthcare p1, p5
CardioTech p9
Care Capital p7
CB Health Ventures p7
Celator Pharmaceuticals p5
Cellegy Pharmaceuticals p15
Cellerant Therapeutics p7
Centennial Ventures p4
Cephalon p11
Chardan Capital Markets p13
Chester Valley Pharmaceuticals p2
Children’s Memorial Hospital p8
Chindex International p9
Chiron p10
Christopher Place p11
CIBC World Markets p10
Citigroup p10
Clayton Associates p1
Close Venture Management p4
CMEA Ventures p6
CNF Investments p4
Coley Pharma p9
Coley Pharmaceutical Group p1, p9
Columbia Laboratories p15
Community Health Systems p3
Conforma Therapeutics p5
Conning Capital p6
Coqui Capital p13
Corixa Corporation p11
CP Medical p11
Craig Hallum Capital Group p13
Crossbow Ventures p6
Crusader Investments p16
CryoCor p9
Cutlass Capital p6
CX Venture Group p7
Cyberonics p16
Cytochroma p6
D
Danville Regional Med. Ctr. p11
De Novo Ventures p6
Deimos Ventures p5
Desjardins Venture Capital p7
Deutsche Bank p9
DexCom p8
Discovery Laborator. p9
Doctor’s Urgent Care Centre p11
Domain Associates p4
DOR Ventures p5
drugstore.com p10
Dyadic International p9
E
Earlybird Venture Capital p6
EarlyBirdCapital p8, p9
Eastman Ventures p7
Eli Lilly p16
Elron p3
Emerging Technology Partners p13
Emerging Technology Ventures p5
Emigrant Capital p4
Emphasys Medical p8
EpiCept p1, p9
ESP Equity Partners p8
ESP Partners p8
ESP Pharma p8
Essent Healthcare p1
Essex Woodlands Health p4
F
FASgen p7
First Ventury p6
Flag Capital Management p8
Forward Ventures p5, p7
Foursome Investments p4
Frantz Medical Ventures p6
Frazier Healthcare p6
Fred Hutchinson Cancer Research Center p8
Fresenius National Med. p11
Fresenius National Medical p11
Fusion Capital Fund II p12
G
GelStat p13
Genechem p7
General Catalyst Partners p5
Gentris Corporation p4
Genzyme p11
Geospiza p5
Geron Corporation p13
GHN-Online p5
GIMV p7
GlaxoSmithKline p10, p11
Global Med Technol. p9
Golder, Thoma, Cressey, Rauner p2
Grand Cathay Venture Capital Management p6
Great Spirit Ventures p7
Greenway Capital p15
Greystone Communities p11
Griffin Securities p13
Grotech Capital p7
GrowthWorks Capital p5
GTCR Golder Rauner p5
GTCR Golder Rauner p1
GTESS Corporation p5
H
H.C. Wainwright Capital Markets p13
H.I.G. Ventures p7
Hamilton Pharmaceuticals p4
Hana Biosciences p13
Harvest Management p15
HCA, Inc. p2
Health E Monitoring p11
Health Grades p9
Health Management Associates p3
Health Net p16
Healthcare Acquisit. p9
Healthcare Acquisition Corp. p8
HealthCare Ventures p14
HealthTrans p6
Heartlab p11
Hercules Technology Growth Capital p8
HLM Venture Partners p5
Home Health Professionals p11
Hong Kong University of Science and Technology p13
HTG, Inc. p5
I
IASIS Healthcare p3
IDG Ventures Boston p8
IDX Systems p11
Ikaria p8
Imerica Life & Health p3
Immunicon p8
Immunomedics p14, p15
Impella CardioSystems p11
Index Ventures p4
Inglewood Ventures p5
InnerWireless p3, p4
InSite Vision Corporation p15
Intercept Pharmaceuticals p5
InterMune p16
Intersouth Partners p4
IRadimed p4
Israel Health Care Ventures p5
J
Jazz Pharmaceuticals p11
Jefferies & Company p10
JLL Partners p1
Johnson & Johnson p5, p11, p16
JPMorgan p9
K
Kareo p4
Karlin Technology p12
Karolinska Investment p6
KBL Healthcare p9
KBL Healthcare Acquisition Corp. II p8
Kingsway, LLC p15
Knott Partners p15
Kodak Venture Partners p5
KPMG, LLC p10
Kryptiq p4
L
LAB International p14
Laidlaw & Co. p14
Lake Worth Surgical p11
Latterell Venture p6
Laurus Master Fund p14
Lazard p9
Leerink Swann & Company p9
Liberty Health Care p11
LifeCare Management Services p2
LifePoint Hospitals p2, p11
Lilly BioVentures p5
Lilly Ventures p6
Lumenos p11
Luminetx p5
M
MacroPore Biosurgery p14
Magellan Hlth. Svcs. p9
Matritech p9
Maverick Capital p6
Maxim Group p9
MAZOR Surgical Technologies p5
McNeil Nutritionals p16
Med-i-Bank p11
MedAssets p7
MedCap Management & Research LLC p4
Medi-Partenaires p11
MedImmune p4
Medtronic p11, p12, p14
Merlin Biosciences p6
Merrill Lynch p9
Merrill Lynch & Co. p9
Merrimack Pharmaceuticals p3, p8
Metavante p11
Millennia Hope Inc. p15
Mitsubishi p7
Mitsui & Co. (U.S.A.) p4
Molecular Insight Pharmacueticals p4
Molina Healthcare p9, p10
Molina Siblings Trust p10
Montagu Newhall p4
Montigen Pharmaceuticals p7
Montreux Equity p6
Morgan Keegan p5
Morgan Stanley p9
Morgenthaler Ventures p6
Mosaix Ventures p6, p13
Mountain States Health Alliance p8
MPM Capital p6, p7
MVM Life Sciences p7
N
NeoRx p9
NeoRx Corporation p10
Neurologix p14
Neurologix Research p14
New Enterprise Associates p4
New Science Ventures p5
NewQuest, Inc. p2
NextCare Urgent Care p11
Nippon Sigmax p5
NIR Group p14
Northwest Technology Ventures p4
NovaMin Technology p4
Novartis p12
Novel Bioventures p7
Novo A/S p5
Nulens Ltd. p3
O
Oakwood Medical Investors p7
Omega Fund p14
On Demand Venture Fund p4
One Equity Partners p5
OnSource Corporation p14
Opinion Research p1, p9
Oppenheimer & Co. p15
Orix Venture Finance p6
Orphan Medical p11
Oscient Pharmaceuticals p15
OSI Pharmaceuticals p9
Osmotics Pharma p14
P
PAC-LINK Bio Management p6
Pacific Rim Ventures p7
PainCare Holdings p11
Para- mount BioCapital p15
Paradigm Medical Industries p14
Park City Solutions p2
Peachtree Village Roswell p11
Pediatrix Medical p11
Peninsula Pharmaceuticals p8, p11
Perry Corp. p15
Perseus-Soros Biopharmaceutical p7
Pfizer p9
Pharmaca Integrative Pharmacies p7
Piper Jaffray p9
Plaza Care Center p11
POD Holding p7
Pogue Capital p13
Polaris Venture p4
Preferred Medical Group p11
Prestwick Pharmaceu p9
Princeton University Investment Company p8
Private Consulting Group p15
ProQuest Investments p5
Proseed Venture p5
Prospect Medical p9
Prospex Medical p4
Protein Design Labs p8
Protein Polymer Technologies p13
Province Healthcare p1
Prudence Venture p6
Q
QMed, Inc. p11
Quaker BioVentures p4
Quest Diagnostics p6
Quest for Growth p6
Quintiles’ BioPharma p6
R
RBC Capital Partners p5
RealTimeImage p11
Receptor BioLogix p4
Red Abbey Venture p7
Renaissance Deerfield Bch p11
Renal Care Group p11
Renal Care Group, Inc. p11
ResMed p11
Resolution Health p8
Rho Ventures p7, p14
Ridgeline Management p11
RiverVest Venture Partners p5, p6
RMD Networks p3
Roche Venture p7
Rodman & Renshaw p5
Roth Capital Partners p10
S
S.G. Cowen p13
S.R. One, Ltd. p5
Saegis Pharmaceuticals p7
Saime p11
Salix Ventures p6
Salmedix p11
Sanderling Ventures p4
sanofi-aventis p10
Santarus p8
Sapling Foundation p16
Scandinavian Life Science Venture p6
Senesco Technologies p15
Senior Comfort & Care p11
Sevin Rosen p3
SG Cowen p9
Shelter Capital p4
Shire Pharmaceuticals p11, p12
Siemens Venture Capital p4
Silicon Valley Bank p13
SJ Investments p15
SkinMedica p8, p9
Skyline Ventures p4
SmartForest Ventures p4
Solexa p13, p15
Solstice Capital p5
SomaLogic p6
Sontra Medical p9
Sorenson Development p3
Sound Surgical Techn. p9
Sound Surgical Technologies p1, p10
Spherics p7
Split Rock Partners p8
St. Paul Venture Capital p8
Stanley Medical Research Institute p7
Stiefel, Nicolaus & Company p10
Sunesis Pharmaceuticals p11
Sunrise Senior Living p11
Sutter Hill Ventures p6
Synergetics p11
Synta Pharmaceu p9
Synta Pharmaceuticals p1
T
TA Therapeutics p13
Takeda Research Investment p4
TargetRx p4
Temasek Holdings p5
Tenet Healthcare p16
The Health Research Group p16
The Institute for OneWorld Health p16
The Solidarity Fund p7
The Sugar Association p16
The Washington Research Foundation p8
Theragenics p11
Theravance p9
ThinkEquity p9
Thoma Cressey Equity Partners p1
Thomas Securities p13
Thomas, McNerney & Partners p7
Ticonderoga Capital p6
Tisch Family Interests p15
TL Ventures p5
TPG Ventures p6
Transaction Advisory Services p16
Transkaryotic Therapies p11, p12
Tranzyme Pharma p7
Trestle Holdings p9
Triad Hospitals p3
Trident Capital p8
Tucson Desert Angels p5
Tudor Investment p4
Tufts Center for the Study of Drug Development p16
TVM Techno Venture Manage- ment p6
U
U.S. Venture p6
UBS p9
UBS Investment Bank p10
Unigene Laboratories p9, p12
Unilever Technology Ventures p3
University of Pittsburgh p15
University of Virginia p15
University of York p4
Upsher-Smith Laboratories p12
Uroplasty, Inc. p13
V
Valley Forge Scientific p11
Valley Ventures p5
Vantage Oncology p6
Vectis Life Sciences p7
VenGrowth Advanced Life Sciences p6
Venrock Associates p7, p8
Venture Capital Market p6
Ventures West p5
Versant Ventures p6
Vertical Group p6
Village Ventures p5
Vivo Ventures p4
Voyager Capital p4
W
Wachovia p9
Wachovia Securities p10
Wasatch Advisors p4
WebMD Corp. p9, p10
WebMD Health p1, p9, p10
WellPoint Hlth. Ntwks. p11
Wharton Biotechnology Partners p3
Wilex AG p6
World Health Initiatives p16
WR Hambrecht p9
WT Investment Advisors p3
Wynnfield Crossing p11
X
Xceleron p4
Xmark Capital p13
Xoft p6
Xtent Medical p8
Z
Zero Stage Capital p7 |
Will The Next Rising Star Of Hospital
Management Start Shining With 10 Hospitals From HCA?
There is something to be
said for moving in quickly on the right opportunities, but two former
executives of Province Healthcare seem to have been busier seizing
the day than talking about it. Empowered by years of experience, a few
great contacts and a commitment to quality health care, the founders of
newly formed Capella Healthcare, Inc. secured $200 million in
equity funding from GTCR Golder Rauner, LLC. After just weeks of
negotiations, Dan Slipkovich and Tom Anderson solidified their
relationship with GTCR as the equity partner to found Capella and agreed
to co-invest in the round, which was the second start-up financing
announced by a hospital management company in the past 15 months.
Attentus Healthcare
got into the hospital business last year, with $77 million in equity
backing; its current investors are JLL Partners Inc. and Clayton
Associates, LLC. Attentus and Capella are based near Nashville, where
Essent Healthcare has its headquarters, and all three hospital
companies are designed to grow by acquisition and development in non-urban
markets. Six years ago, Essent got its start with $50 million from
Thoma Cressey Equity Partners.
Mr. Slipkovich, who became
President/COO of Province Healthcare the summer before merger talks with
LifePoint Hospitals Inc. (NASDAQ: LPNT) began, is Chief Executive
Officer of the new company. Mr. Anderson had been with Province since
1989, most recently as Vice President of Acquisitions and Development, and
is the President of the new company—as well as the person responsible for
its name, Capella, which he said means bright star in Latin. In a recent
interview, the two revealed their aspirations for Capella to become the
brightest star of hospital management in the communities it serves.
Already the young company
has expressed an interest in acquiring the portfolio of 10 acute care
hospitals HCA, Inc. (NYSE: HCA) announced for sale at the end of
March and expects to divest by the fourth quarter. As Capella grows,
management expects to be able to leverage the initial equity investment
three to four times over, and to pull talent from a rich pool of health
care executives in the area of its headquarters in Brentwood, Tennessee.
They also expressed the high level of importance they place on being
selective about the people with whom they work, and that may be one of the
keys to their success. No doubt knowing Joe Nolan, a principal at GTCR,
prior to this deal was one example of capitalizing on the opportunity to
work with the right person. Similarly, a primary aspect of GTCR Golder
Rauner’s investment strategy is to identify and partner with exceptional
executives to build leading companies through acquisition and internal
growth. The firm has been investing in health care services companies
since its inception in 1980. Today GTCR’s portfolio spans nearly all
segments of the health care industry, with investments including
Chester Valley Pharmaceuticals, NewQuest, Inc., Park City
Solutions, Inc. and LifeCare Management Services. The firm’s
predecessor, Golder, Thoma, Cressey, Rauner, was the founding
equity backer for Province Healthcare.
Luckily for them, Capella’s
founders are not hampered by any non-compete agreement with Province, as
their contracts stipulated such a restriction in all circumstances except
change of control, which ultimately was the case after the merger with
LifePoint. Capella revealed that it plans to outshine others in its space
by building active relationships with the communities it serves to create
its own unique position in the hospital management industry. Primarily,
Capella will seek acquisition opportunities in growing markets where the
target is in need of a capital partner to enable advancement and improve
business, such as a hospital requiring a new surgical or MRI suite.
Capella Healthcare is seeking acute care hospitals in non-urban markets
with revenues of $35 million or more, and hopes to be profitable as of its
first acquisition, which is expected to occur within the next nine months.
The founders say they are accustomed to revenue multiples ranging from
0.7x to 1.2x in the hospital acquisition market, and expect to make
acquisitions with EBITDA multiples in the range of 4x to 6x. The only
instance in which Capella would consider a facility with less revenue is
if it was in a growing market with a need Capella could help to fill, and
once the need was filled the facility’s revenue would surpass $35 million
within one year. Corporate structure will be expanded in accordance with
Capella’s growth, expected to come at a rate of two to three hospitals per
year in the Southeast, Southwest, Midwest and Northwest—unless, of course,
the 10-hospital deal with HCA gets done. Capella plans to increase
business at its hospitals by expanding or improving services while
providing excellent quality health care to attract greater patient volume,
and does not expect to have any competition in the communities where it
operates, in terms of the delivery and management of health care. That
strategy seems to be working well for HCA, since its first quarter 2005
profit rose 20% on increased patient volume and led the company to raise
its outlook for the year. In the acquisition market, however, Capella
would not be surprised to compete with Community Health Systems
(NYSE: CYH), Health Management Associates (NYSE: HMA), IASIS
Healthcare Corporation, Triad Hospitals (NYSE: TRI) or even
LifePoint. If acquisitions go as planned, Capella will be looking to raise
additional equity in four to five years.
Essent Healthcare raised its
second round of private equity in January 2004, $80 million from investors
including Thoma Cressey and Vestar Capital Partners; the proceeds
were used to finance the acquisition of a Texas health system and to
recapitalize the company for future acquisitions. Essent currently
operates five hospitals in four states, which generate combined annual
revenues of more than $300 million. Most recently Essent signed letters of
intent to acquire two more hospitals.
Attentus
Healthcare, headquartered in Franklin, Tennessee, currently owns or
operates five hospitals in three states, according to its web site.
Although Attentus could not be reached for comment, the company has not
been idle, having acquired five hospitals during first quarter 2005.
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