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Bon Secours Mercy Health recently scooped up Silversmith Capital Partners-backed Nordic Consulting Partners in a deal sources tell Sarah was valued just north of $400 million. 

Why it matters: Hospitals are constantly examining ways to increase productivity and achieve cost savings, and helping those organizations solve IT problems as the industry evolves is a core part of that. 

Bon Secours in combining Nordic with its existing offerings, via its new subsidiary Accrete Health Partners, now owns the largest independent, hospital-dedicated IT outsourcing and consulting company.

Nordic gives Accrete the scale and breadth to compete with the Deloitte’s of the world that have large hospital-based divisions. 

Behind the scenes: Nordic, which came to market late last year, garnered looks from both private equity and HCIT companies that saw the business as a good entry point into health care systems, sources note.

Guggenheim Securities advised the company. 

💭 Sarah’s thought bubble: Bon Secours has already had tremendous success with its revenue cycle management venture — Ensemble Health Partners. Now, the Catholic health system appears to be recreating that playbook with Nordic as its center point of IT consulting for hospitals. 

Berkshire Partners and Warburg Pincus earlier this year injected capital in Ensemble, thrusting its valuation north of $5 billion —more than double its 2019 TEV when Golden Gate invested. 

Between the lines: Bon Secours' big vision for Nordic is TBD, but if it can turbocharge growth in a similar manner, we could be looking at another big win. 

The company is now approaching $300 million in revenue, up from sub-$50 million in top-line a decade ago, one source says. 

Catch up quick: Silversmith Capital Partners in October 2016 led the minority recapitalization of Nordic, becoming its largest investor alongside SV Health investors, Health Enterprise Partners, HLM Venture Partners, and Kaiser Permanente Ventures. 

The company has evolved from an Epic-centric consulting firm doing EHR implementations to a much broader-based IT consulting firm for hospitals spanning the U.S., Canada and Europe. 

It has expanded into M&A integration, optimization, digital health, RCM and data analytics, among other things.  

It supports EHRs beyond solely Epic, including Cerner, Meditech and Infor.

Bon Secours and Nordic declined to comment.

1 big thing: Bon Secours bags Nordic Consulting for over $400M 

Illustration of a sack of money with a medical cross symbol on it.

Encompass Health lowered its FY 2022 outlook yesterday and offered financial figures for its home health and hospice care business that came in on the lighter side than some analysts had expected. 

Why it's the BFD: The home health unit, known as Enhabit, is set to be spun off by Encompass in July. If the division, with an estimated EV of more than $2 billion, comes out of the spin gates not delivering on key metrics and trading down, it could become an M&A target, Axios' Michael Flaherty writes. 

Flashback: Encompass has been the target of activist hedge fund Jana Partners, which campaigned late last year to push the company into separating its home health division via a "spin-merge" with a private company.  

State of play: Encompass opted for a straight spinoff instead.

Suitors interested in buying the home health unit outright also emerged during the company's review, a source close to the situation tells Michael. 

Considering how aggressive UnitedHealth's Optum has been on the M&A front, and its recent $5.4 billion wager for LHC, one could assume it was among those that kicked the tires.

The bottom line: Spincos that underperform are extra vulnerable to an opportunistic buyer. Advisers usually say a spinco needs to wait two years before it can be acquired, but that IRS-related rule has changed over the years, and that rule of thumb is not set in stone.  

Encompass yesterday said Enhabit's EBITDA this year would come in between $165 million and $185 million. Research firm Gordon Haskett points out that two analysts expected the figure to be above $200 million. 

If Enhabit performs well as a publicly traded company, its valuation will rise and soar out of reach of a buyer. If it doesn't, it could end up like LHC. 

2. The BFD: Spinoff watch

CareBridge, a Nashville-based value-based health care company, raised $140m in a round led by Oak HC/FT. https://www.carebridgehealth.com/

Nava Benefits raised $40m in Series B funding led by Thrive Capital with support from insiders Avid Ventures, Quiet Capital and Sound Ventures. New backers GV, K5 Ventures, and Homebrew also participated, as did One Medical founder Tom Lee, former CBRE CFO Jim Groch, and Maven Clinic VP of sales Isha Vij. https://www.navabenefits.com 

CareAcademy, a Boston-based home care startup, raised $20m in a funding round led by Goldman Sachs Asset Management with support from MassMutual through the MM Catalyst Fund, Impact America Fund, Rethink Education, Unseen Capital, First Trust Capital Partners, and insiders. http://www.careacademy.com/ 

Overalls, a New York-based health benefits startup, raised $4.6m in funding led by RPM Ventures and joined by Frontier Ventures and former NFL player Jerod Mayo. https://overalls.ai/

EQT and Novo Holdings are among those exploring bids for SPTLabtech, a British life sciences sample prep company being sold by Battery Ventures, per Bloomberg. Agilent Technologies and Danaher Corp. also have reported interest. http://axios.link/CTFX 

Corza Medical, a surgical technology platform owned by GTCR, acquired Barron Precision Instruments, a Grand Blanc, Michigan-based ophthalmic medical device company. https://bpic.com/

StatLab, a McKinney, Texas-based portfolio company of Audax Private Equity and Linden Capital Partners, acquired CellPath, a British maker of products for the histology and cytology markets. www.statlab.com

3. Deals o' the day

Partners Group hired Ben Breier, the former CEO of Kindred Healthcare. 

Centerview Partners hired Rakesh Mehta and Najeeb Ali as partners from JPMorgan's health care investment banking team.  

Labcorp named Joshua Silverstein associate director of regulatory affairs, companion diagnostics from the FDA, where he was a regulatory adviser in the office of device evaluation.

Komodo Health named Scott Phillips VP of data strategy from Huma, where he was executive director of business development.

Zócalo Health named Mariza Hardin head of operations and strategy from AWS, where she was health and human services manager for state and local government.

Nom Nom named Alison Ehrmann chief marketing officer from Thirty Madison, where she held the same title.

4. It's Personnel

🌋 Inspired by her Icelandic adventure, Sarah is binging "Katla," a drama-mystery based around the eruption of a sub-glacial volcano. 

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June 08, 2022

1 big thing: Bon Secours bags Nordic Consulting for over $400M