August 02, 2022
Happy Tuesday, Health Tech readers.
1 big thing: Cardiology care deals beat higher
Pivotal Healthcare Partners, a privately held cardiology group, is gearing up for a potential sale, sources familiar with the company's plans tell Sarah and Axios' Claire Rychlewski.
- That presents a massive opportunity to curb costs and deliver higher quality care, and investors are increasingly taking notice.
Driving the news: Pivotal, a Jacksonville, Florida-based cardiovascular practice management company, recently hired Triple Tree for sell-side financial advice, sources say.
- A process has not launched and is not imminent, with timing yet to be determined, sources caution.
- Pivotal is expected to generate mid-teens of EBITDA in 2022, they add.
State of play: Outpatient cardiology care consolidation lags behind other specialties. However, an aging population underpins growth in demand for cardiovascular specialists, suggesting investment into the segment could be heading higher.
- Like other specialties, sponsors see an opportunity to shift procedures to lower-cost care settings, like ambulatory surgery centers. Payors, physicians that see the appeal of working outside of the hospital, and patients' calling for greater convenience are driving this shift to outpatient care.
- An attractive Medicare reimbursement environment and a continued push toward value-based care are stoking investor interest.
- Ancillary services like lab services can yield additional revenue streams, adding to the opportunity.
Yes, and: Private equity tends to have a herd mentality. We could see more independent doctor groups step up to the auction block, as sponsors look to replicate the specialty PPM playbook well played out in other verticals.
Context: Recent PE bets on heart health include...
- Cardiovascular Associates of America, formed by Webster Equity Partners in December 2021.
- Arizona's Pima Heart and Vascular, which scored an investment from Ares Management in late 2021 for around $300 million, per MergerMarket.
- Cardiovascular Health Partners, which launched in November 2021 in partnership with Assured Healthcare Partners.
- Novocardia, a value-based cardiovascular platform, which pulled in $54m in Series A financing led by Deerfield Management in July 2021. (And then bought First Coast Heart and My Cardiologist.)
- Bee Cave, Texas-based Partners First Cardiology, which Varsity Healthcare Partners backed in November 2020 as one of private equity's first forays in the specialty.
Meanwhile, digital health startups aimed at heart health are also gaining traction. For example:
- Hello Heart gathered $70m in Series D funds in May led by Stripes growth equity.
- Cleerly raised $192m in a hearty Series C last month in a round joined by Peter Thiel.
- Story Health raised $22m in a Series A round in February co-led by Northpond Ventures and B Capital Group.
The bottom line: We expect more PE and VC firms will set their hearts on cardiology care, amid a highly fragmented sector ripe for innovation.
Pivotal executives did not immediately return a request for comment, while Triple Tree declined to comment.