Axios Pro: Health Tech Deals

January 21, 2022

Axios Pro Exclusive Content

Hello, health tech readers. We made it to Friday, marking the end of our first week! Questions? Comments? Tips? Write to us.

Did you miss our launch event? Here's the replay. Erin speaks with Google chief medical officer Karen DeSalvo at the 15:50 mark. (More below.)

💾 Situational awareness: It’s the end of an era. IBM, which forked out more than $4 billion to build out Watson Health over a series of deals, has successfully locked down a buyer in Francisco Partners for the various assets.

  • You heard it here first: Big Blue was originally seeking $1 billion-plus for the health care data and analytics businesses, sources told Sarah in December. Stay tuned for more details.

1 big thing: Frazier's Parata explores options

Illustration of a robot arm dropping a pill into a prescription bottle.

Illustration: Gabriella Turrisi/Axios

Five years into its investment, Frazier Healthcare Partners is exploring strategic alternatives for Parata Systems, sources familiar with the firm’s plans tell Sarah.

What’s happening: The Seattle-based firm has engaged Baird and William Blair for financial advice, but a process has not formally launched, sources say. 

  • Led by CEO Rob Kill, the Durham, North Carolina-based company, which offers the various technology solutions and tools needed to run a fully automated pharmacy, is generating north of $50 million in EBITDA.  
  • All potential outcomes appear to be on the table. Sources say Parata would make a great private equity deal, is a logical M&A target for publicly traded Omnicell, or could even consider a go-public route. 

Why it matters: There’s a huge opportunity to improve efficiencies and lower costs across the pharmacy industry, which is facing heightened headwinds, including a tight labor supply fueled by the global pandemic.

  • Parata offers everything from medication adherence packaging to high-speed robotic dispensing technologies and pharmacy workflow solutions. 
  • It also provides data that pharmacists can use to better measure and manage pharmacy operations. This is particularly valuable for pharmacy operations with scale, whether that's or those with a centralized filling station and multiple locations. 

Between the lines: While industry giant Omnicell is largely focused on the hospital market, Parata is serving the traditional players and digital-first disruptors.

  • The company’s technology is sold to big-box retail pharmacies, those affiliated with the large grocers of the world, as well as long-term care pharmacies. 
  • Demand for its pharmacy technology is also an outgrowth of the proliferation of virtual pharmacies such as Hims & Hers or Amazon Pharmacy. This direct-to-home category also accounts for a big slice of the pie, sources tell Sarah.

Flashback: Frazier’s platform investment dates to 2017 when it bought TCGRx, following a year later with its purchase of Parata. 

  • M&A has remained critical to Parata’s playbook, most recently buying Synergy Medical in July 2021 to create a combined company servicing more than 4,000 pharmacies. 

Frazier and Baird declined to comment. Parata and Blair didn't return requests for comment.

View archive