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Scoop: Carousel Capital shelves Palmetto Infusion process

Sep 20, 2022
Illustration of a book shelf with a health plus made from negative space.

Illustration: Aïda Amer/Axios

Carousel Capital has suspended the sale process for Palmetto Infusion Services, multiple sources tell Axios.

Why it matters: While investors are eager to build out ambulatory infusion center networks to disrupt a market historically dominated by hospitals, this Southeast-centric player is punting sale plans to a future date.

Details: As is often the case, a mismatch in buyer and seller value expectations contributed to the shelved process, sources say.

  • Pawleys Island, S.C.-based Palmetto couldn't get full credit for EBITDA adjustments accounting for recent expansion outside of South Carolina, where clinics are not fully ramped up, some of the people say.
  • South Carolina has an attractive reimbursement environment, but investors had questions around how repeatable Palmetto's model is in other geographies, sources say.
  • Choppy debt markets likely didn't help, though we've seen lower- and midmarket deals succeed in arranging financing.

Catch up quick: Carousel, three years into its investment, engaged Raymond James early this year to explore options for Palmetto.

  • Around $40 million of adjusted EBITDA was marketed for the company, which provides ambulatory- and home-based infusion services for chronically ill patients.

Be smart: Investors' increasing enthusiasm around AIC organizations reflects the large innovation opportunity in what is a massive and growing market.

  • Payors are calling for more affordable and quality infusion care options, outside of the traditional hospital setting, as an aging population demands a better experience and more convenience.
  • That's led investors to build platforms in more cost-effective settings — ambulatory clinics and the home — with the former arguably more appealing given its labor efficiencies.
  • As the FDA approves more specialty therapies, there's a big opportunity for these businesses to become more diversified as drugs come off the pipeline.

What they're saying: Whereas some AICs are prioritizing a high-end patient experience that comes with luxury private rooms or smaller, intimate sites, Palmetto tends to have larger clinics — which might better position it for any potential reimbursement cuts in the future, one investor notes.

  • Even if reimbursement pressure is inevitable, "the long-term volume story [of infusible therapies] is overwhelmingly positive," the source says.

👀 What else we're watching: KabaFusion, an intravenous immunoglobulin (IVIG)-focused in-home infusion platform, whose deal we hear is around the corner. Carousel, Palmetto and Raymond James did not immediately return requests for comment.

Claire Rychlewski contributed reporting.

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