New year, old deals: Health care auctions score an incomplete
New year, old deals, who dis? The early 2023 health care M&A market begins with an overhang of processes that didn't cross the finish line last year.
Why it matters: The J.P. Morgan health care conference, starting next week, often sets the stage for auction launches. This year could see some relaunches, too.
What's happening: Of 47 auctions Axios covered last year, 26 have yet to result in a deal.
- Some of these processes were put on ice, as a chasm in valuation expectations persists.
Zoom in: Sources tell Claire the auction for Warburg Pincus-backed specialty electronic health records company Modernizing Medicine, which launched in October, has hit the pause button.
- The company was exploring a partial-stake sale via Evercore, Axios reported in November.
- ModMed is considered a "premium" asset in today's market. The delay signals that even very high-quality platforms aren't commanding the valuations they're accustomed to, one source said.
- Warburg declined to comment.
Meanwhile, Blackstone's HealthEdge, a health insurance SaaS platform that was exploring a sale through BAML and Barclays, has also gone pencils-down over discord on valuation, sources say.
- Blackstone did not respond to a request for comment.
Separately, many other processes hang in the balance and have yet to be announced.
What we're watching: Despite the glut of auctions, the first quarter of 2023 may not bring the deluge of deals the market is hoping for, one health care services lender cautions.
- "The average decision point seems to be [to launch] into the second quarter," he says, noting caution from investors about a potentially rocky Q1.
The bottom line: Even tier-A assets aren't immune to a valuation reset, as can be seen in the lengthy list below.
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- Trivest Partners-backed ScanSTAT Technologies, a provider of release-of-information solutions, launched a Guggenheim Partners-led auction in the fall.
- One source tell Axios this process may be close to crossing the finish line. Trivest did not respond to a request for comment.
- Linden Capital Partners-backed addiction treatment provider Pinnacle Treatment Centers kicked off a Lincoln International-led process in the summer that has since gone quiet.
- Sources told Axios that at one point, behavioral health behemoth Acadia Healthcare was sniffing around the asset. Linden did not respond to a request for comment.
- Founder-owned physician organization Heritage Provider Network was being pursued by Carlyle in November.
- Founder-led compounding pharmacy Empower Pharmacy hired Cantor Fitzgerald to run a process, Axios reported in September.
- Silver Oak-backed dental services organization Smile Partners USA launched a Piper Sandler-run auction in September.
- Tyree & D'Angelo Partners' veterinary platform Western Veterinary Partners was in market with William Blair, Axios reported in October.
- New State Capital-backed United Medical Systems, a provider of mobile medical equipment for urologic conditions, took first-round bids in October for its Houlihan Lokey-run auction.
- Founder-led life sciences communications business Spectrum Sciences hired Houlihan Lokey to explore strategic alternatives.
- BC Partners-backed dental products company Zest Dental launched an auction after Labor Day, with SVB Securities and UBS leading a sponsor-focused process.
- Tenex-backed diversified home care services company Team Select Home Care took first-round bids in October in its Cantor Fitzgerald-led auction.
- Martin Ventures-backed value-based care enabler Wellvana Health launched a process prioritizing a primary capital investment via SVB Securities in October.
- Founder-led dental services organization Dentive was working with Houlihan Lokey on a sponsor-focused sale process, Axios reported in September.
- Pamplona-backed pharma services company Calyx launched a Jefferies-led process over the summer.
- Founder-run men's health clinic Wasatch Medical Clinic launched a Macquarie Capital-led process in August.
- Lee Equity-backed IVF provider Inception Fertility took first-round bids in a Moelis-run process in July.
- Morgan Stanley Capital Partners-backed Clarity Software Solutions was reported to be on the block through TripleTree in July.
- Questa Capital Management-backed clinical trial technology company Medrio was set to launch an auction in May via William Blair.
- Pharos Capital-backed physical therapy provider MotionPT launched an auction through Livingstone in July.
- THL-backed physical therapy franchise ProPT was working with Jefferies on an auction last summer.
- Avista Capital-backed pain management provider National Spine & Pain Centers took indications of interest in May for its Moelis and RBC Capital Markets-led process.
- Summit and DW Healthcare-backed preventive care technology company EHE Health took first-round bids for a Houlihan Lokey-run process in the spring.
- 3M was working with Goldman Sachs to carve out its Health Information Systems, Axios reported in April.
- Madison Dearborn Partners-backed sports rehab product company Performance Health was working with UBS on a process, Axios reported in March.