In the November 2007
issue:
Health Care Acquisition Premiums--
Five-Year Study Shows Upward Trend From 2004
Examination of premiums paid in health care
transactions from January 2002 through September 2007 reveals an upward
trend since 2004.
...
October’s M&A
Market--
102 Deals Announced Worth $14.0 Billion
Deal volume surged to its highest monthly level ever. A total of $14.0
billion was committed to fund this robust activity.
...
Infusion Therapy Attracts Investors--
Renewed Buyer Interest Driving Valuations Up
Investor enthusiasm for infusion therapy services is increasing, with
companies acquiring providers to complement their specialty pharmacy
business lines.
...
In the Departments
Services
-Health Care Services
-Deal Summaries
-Additional Transactions
-Transaction Updates
Technology
-Health Care Technology
-Deal Summaries
-Additional Transactions
-Transaction Updates
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Articles Archive
Companies Mentioned in this issue:
November 2007
A
Accredo Health p9
Alere Medical p8
Almost Family p4
Amedisys p4
Amity Group p8
Anacor Pharmaceuticals p10
Apria Healthcare Group p1
Aspreva Pharmaceuticals p16
ATS Health Services p8
B
Biogen Idec p10
Borger Plains Community Hospital p4
Bracco Diagnostics p16
Braff Group p9
Bristol-Myers Squibb p9
Brookside Assisted Living p8
BUPA p8
C
Canyon Creek Development p8
Computer Sciences Corp. p15
Concentra Network Care p8
CORA Health Services p8
Coram p1
Cornerstone Health Group p4
Crdentia Corp. p8
Critical Access HealthCare p4
Critical Care Systems p9
Critical Homecare Solutions p9
Cubist Pharmaceuticals p10
CVC Asia Pacific p8
D
DaVita p9
Deaconess Enterprises p9
E
Elan Corp. p15
Eli Lilly p16
Enpath p16
Excel-Tech p16
F
Family and Children’s Services p4
First Consulting Group p15
Franciscan Missionaries of Our Lady Health System p4
G
Galapagos p10
Galenica Group p16
Genetech p15
Gentiva Specialty Pharmacy p9
GlaxoSmithKline p10
Greatbatch p16
Guardian Healthcare p8
H
Haemonetics Corp. p16
Haemoscope Corp. p16
Health Care Services Corp. p8
Highland Capital Management p4
HomeChoice Partners p9
I
Illumigen Biosciences p10
Inverness Medical Innovations p8
J
Janssen Pharmaceutica p10
Johnson & Johnson p10
K
Kirin Brewery Company p16
Kyowa Hakko Kyogo p16
L
Louisiana HomeCare p4
Louisiana HomeCare of Lafayette p4
Louisiana HomeCare of Monroe p4
M
MacroGenics p16
McKesson Corp. p9
Medco Health Solutions p9
Medical People Health Services p8
Morgan Joseph & Co. p7
N
Natus Medical p16
New American Healthcare p4
O
Oncology Therapeutics Network p9
One Equity Partners p9
OptionCare p9
Orchid Cellmark p8
Our Lady of Lourdes Regional Medical Center p4
P
Pfizer p10
Providence Service Corp. p4
Q
Quality of Life Holdings p4
Quan Emerteq p16
R
Radiation Therapy Services p4
Raytel Cardiac Services p8
Raytel Medical Corp. p8
ReliaGene Technologies p8
Royal Philips Electronics p8
S
sanofi-aventis p10
Select Medical Corp. p8
Shelby Regional Medical Center p4
SHL Telemedicine p8
St. Francis Medical Center p4
Sunwest Management p8
Synta Pharmaceutical Corp. p10
T
TA Associates p8
Tenet Healthcare Corp. p4
Texas True Choice p8
The Bracco Group p16
U
UBS Investment Bank p16
V
Vestar Capital Partners p2
Viant Holdings p8
W
Wachovia Capital Markets, LLC p8
Walgreens p9
WhiteEagle National p8
Z
Ziegler Healthcare Consulting p4
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Infusion Therapy Attracts Investors--
Renewed Buyer Interest Driving Valuations Up
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Email Editor
When Apria Healthcare Group (NYSE:
AHG) announced its $350.0 million acquisition of Coram this month,
one of the largest Home Health Care deals in some time, it highlighted the
recent ascendancy of the home infusion therapy business over the closely
related specialty pharmacy business. A number of recent moves in the
industry, including an IPO, point to renewed investor enthusiasm for
infusion therapy, which some believe is pushing up valuations.
Denver-based Coram is a provider of home infusion therapies to the home
health market. Its services are provided to 65,000 patients through a
network of over 70 branches and 50 ambulatory infusion suites. Coram is
projected to generate revenue of $500.0 million in 2008. In effect, AHG is
paying 0.7x 2008 projected revenue or $5,385 per infusion patient. This
merger will expand AHG’s service offering by creating a leading nationwide
provider of home infusion services. Combined, the two companies care for
over 100,000 patients and are licensed to serve patients in all 50 states.
And while the deal also allows AHG to enter the important, complementary
specialty pharmaceutical market, home infusion is clearly its prime target
in this deal.
This transaction follows several others, which have been discussed in the
pages of this newsletter: Walgreens’ (NYSE: WAG) $850.0 million
acquisition of OptionCare in July; DaVita’s (NYSE: DVA)
acquisition of a 65% interest in HomeChoice Partners for $65.0
million in September; and Medco Health Solutions’ (NYSE: MHS) $2.5
billion acquisition of Accredo Health in February 2005.
As a further expression of interest in this business, in October,
Critical Homecare Solutions, an infusion therapy services provider
based in Conshohocken, Pennsylvania, filed its S-1 to go public. To
prepare for going to the next level, the company has been bulking up by
making a number of acquisitions. In what was arguably a transformative
deal for the business, in January of 2007, it acquired Deaconess
Enterprises, a New England-based provider of infusion therapy
services, for $171.3 million.
As we were going to press, we received confirmation of a rumor that had
been making the rounds. In its third quarter earning report, Medco
announced its acquisition of Critical Care Systems, a home infusion
company smaller than Coram. The deal is interesting because Medco’s
Accredo at one time had a significant infusion therapy business that it
acquired when it bought Gentiva Specialty Pharmacy in early 2002
for $462.3 million; Medco would have inherited that business but for the
fact that Accredo divested much of its acute care business (infusion
therapy) in favor of its chronic care business (specialty pharmacy). Now
that the fortunes of infusion therapy are reviving, MHS is determined to
get back in the business.
We spoke with Dexter Braff of The Braff Group about his take on the
improving fortunes of the infusion therapy business. Part of the shift
away from specialty pharmacy, he observed, is due to the fact that there
have been no new blockbuster drugs recently for specialty pharmacies to
administer, slowing margin growth. Another aspect of the shift to infusion
therapy, Mr. Braff continued, is due to the increasing number of patients
in outpatient settings, either ambulatory sites or patients’ own homes, as
well as the increased linkage of disease management protocols to infusion
therapy. In the near term, specialty pharmacy companies will seek to build
complementary strengths in the infusion therapy market.
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