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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Atlantic Street Capital’s Lab Logistics Management acquired The Allied Group, a fulfillment services provider to health care and life sciences organizations, from Compass Group Equity Partners, Sarah writes. 

Why it matters: 2021 produced a record year of dealmaking, but West Haven, Connecticut’s Lab Logistics is an example of assets that hit the auction block during that robust, high-valuation market but did not trade hands.  

So many assets were up for sale in 2021 that investors were stretched incredibly thin, and therefore pickier about what they spent time chasing.

The result? Buyers opted out of deals they would have sought in normal times, leading many firms and advisers to take a step back and shift companies' focuses to growth.

Catch up fast: A year ago, Atlantic Street hired Lincoln International to advise on the sale of Lab Logistics, Sarah reported at the time. 

Price expectations weren’t clear, but sources ahead of the process estimated EBITDA around the $50 million to $60 million-plus range. 

Not unlike many situations at the time, one source previously cited the company’s big COVID lift, but why a deal never transacted remains unclear.

Details: Lab Logistics provides supplies, kitting and same-day logistics solutions to labs, hospitals and health systems, and CROs. 

The Allied Group, of Cranston, Rhode Island, offers design, print, assembly, and the fulfillment of over 2.5 million diagnostic kits annually. 

The Allied Group follows other M&A including Lab Logistics' 2018 acquisitions of Hospital Couriers and Path-Tec from Fulcrum Equity. 

What we’re watching: Will Lab Logistics, after doubling down on growth, ultimately end up better positioned as an M&A target? The pipeline is certainly less crowded than it was 18 months ago…

“We are actively seeking other complementary add-on acquisitions to round out our products and service portfolio,” Andy Wilkins, Lab Logistics chairman and managing partner at Atlantic Street, says in a news release. 

Potential buyers may view Lab Logistics as a good platform to continue to go after more scale and regional density — which is the key to building a strong logistics network, one source told Sarah last year.

Yes, and: The company in April hired Ruth Abdulmassih as CEO from Alternative Biomedical Solutions, where she held the same role. She has previous experience at Stericycle and spent 23 years with Abbott Laboratories. 

Founder and former CEO Brian McArdle transitioned from his role and continues to serve on the board. 

The bottom line: The backlog of indefinitely on-pause sale processes in concert with today's volatile deal environment doesn't paint a clear picture of the future deal landscape. 

1 big thing: Lab Logistics switches gears

Illustration of a hand in a medical glove holding a beaker full of liquid

Tiger Global led a $20 million Series A funding round for virtual learning startup Parallel, marking its fifth digital health investment of the year and its third such deal as lead investor, Erin writes.

Why it's the BFD: After emerging last year as the world’s most ferocious startup backer, Tiger remains on a spending spree.

Context: Digital health was a key focus area for Tiger this year and last. Already in 2022, the firm has...

Led late-stage funding rounds for digital health infrastructure startup Wheel and disease detection company Viz.ai.

Supported mid-to-late-stage rounds for virtual surgery training company Osso VR and eating disorder treatment startup Equip.

Participated in an early-stage round for price transparency startup Turquoise Health.

Our thought bubble: This could be the sign of an earlier-stage investing trend for Tiger, which also saw its partners recently commit $1 billion exclusively for early-stage tech funds, per The Information.

Details: Obvious Ventures, Barry Sternlich’s JAWS and insider Vine Ventures also participated in Tiger's latest digital health investment.

How Parallel works: Based in New York, Parallel focuses on diagnosing and supporting children with learning differences.

After an initial consultation, Parallel matches students with a care team composed of psychologists, behavioral health therapists and speech therapists.

2. The BFD: Tiger continues ferocious streak with Parallel

Illustration of a tiger holding a fan of cash money in its paw.

BestLife Holdings closed a combined equity round of over $50m, which includes the addition of health brand Cenegenics and $12.4m in capital funding.

SwipeRx, a startup focused on digitizing Southeast Asian pharmacies, raised $27m in Series B funding led by MDI Ventures and joined by the Gates Foundation, Johnson & Johnson and Susquehanna International Group. http://axios.link/xVCM 

Circles, a New York-based virtual emotional support startup, raised $16.5m in Series A funding led by Zeev Ventures with participation from Uber Freight's Lior Ron and insiders NFX, Flint Capital and Sir Ronald Cohen. www.circlesup.com

Moka.care, a French startup that helps HR departments support workplace mental wellness, raised $16m in Series A funding led by Left Lane Capital with support from insider Singular and new backers Origins and Antoine Griezmann. http://axios.link/B0ES 

Auxa Health, a New York-based social care coordination startup, raised $1m in venture funding led by AlleyCorp. www.auxahealth.com

Enhanced Healthcare Partners made a strategic investment in Howard J. Chudler & Associates, a Southern California-based behavioral health provider specializing in autism and intellectual and developmental disabilities. https://chudler.net/

Dexcom is in talks to acquire Massachusetts-based Insulet, a maker of insulin pumps, per Bloomberg. http://axios.link/1uzQ

Central Medical Supply Group acquired three hospice and home care equipment management companies: Allentown, Pennsylvania's Helping Hands Medical Equipment, the hospice assets of New Windsor, New York's Consolidated Medical Surgical Supply, and Mantua, New Jersey's PPD Homecare. Osceola Capital backs Central Medical.

3. Deals o' the day

athenahealth named John Hofmann CFO from Omnitracs, where he held the same title.

DataLink named Ashish Kachru CEO from Altruista Health, where he served as CEO, president and chair.

Real named Olivia Auxier head of consumer partnerships from Tinder, where she was director of global brand and platform partnerships. 

Lead Capital Partners hired Carl Grote as a director from Janney Montgomery Scott. 

4. It's Personnel

👀 Situational awareness: This morning we saw the announcement of a new AWS Healthcare Accelerator focused on health equity. There's no better investment than in the health of the whole community. We will be following. 

🦎 Erin traveled back in time 66 million years watching "Prehistoric Planet" with David Attenborough last night and can’t wait to return to ancient Earth tonight.

🙏 Thanks for reading Axios Pro Health Tech! Please ask your friends and corporate retreaters to sign up.

May 24, 2022

1 big thing: Lab Logistics switches gears