Scoop: Carousel Capital shelves Palmetto Infusion process
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.