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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

Limitless Minds — a venture spearheaded by Denver Broncos quarterback Russell Wilson and his brother Harry — started out offering business coaching, but pivoted to mental wellness following COVID-fueled demand for its high-pressure scenario training.

Why it matters: The employer-facing wellness coaching startup raised $2.5 million in seed funding, Harry Wilson tells Erin exclusively.

Deal details: Acrisure CEO Greg Williams led the round alongside Future Labs Capital and InterstateFusion. 

Marchex chair Russell Horowitz, Ciara and Russell Wilson (who serves as chief impact officer), Stephen Shaya and Sanyin Siang participated.

Funds will go toward hiring salespeople, Wilson tells Erin.

What's next: The company, which Wilson says is profitable, plans to raise its Series A this fall or the first quarter of next year at the latest.

It's currently focused on making its offerings available directly to consumers.

"We see this product as a Peloton for mental fitness," says Wilson.

Context: Unprecedented demand for behavioral health services is driving a surge in new virtual offerings, from traditional one-on-one therapy to more generalized wellness services for people seeking support for everyday stressors. For instance...

Paraclete in February collected $1.5 million in pre-seed funding to help employees cope with difficult life events. 

Wisq in April raised $20 million in Series A funds for its employee-facing social network.

Calm, the stress and sleep app, in February bought care coordination company Ripple Health.

"There are a lot of people playing in the [wellness] sandbox, but this is unique in looking at successful athletes and how they prepare for games," says Future Labs managing partner Mack Shwab.

Yes, and: Wilson sees potential for Limitless to act as an aggregator or acquirer of various mental wellness platforms, especially with employers growing increasingly overwhelmed by the sheer number of available tools.

"The aggregator model could be somewhere we play as we move forward," Wilson says. "Do I know what that looks like fully yet? No, but our product is called Club Limitless for a reason."

1 big thing: Limitless Minds aims to be a "Peloton of mental fitness"

Illustration of a brain wearing a sweatband.

AmerisourceBergen won the auction for Germany-based PharmaLex, announcing its $1.29 billion all-cash acquisition of the pharma services company from AUCTUS Capital Partners earlier this week, Sarah writes. 

Why it's the BFD: The deal is further evidence that cash-rich strategics are well-positioned as buyers for big-ticket health care assets in today's volatile financing environment. (The credit markets are even tighter in Europe.) 

Catch up fast: Germany's Auctus earlier this year engaged Harris Williams for financial advice on a potential sale, Axios wrote in April.  Evercore advised AmerisourceBergen, per Monday's announcement. 

Behind the scenes: AmerisourceBergen came out on top after prospective private equity suitors — including Blackrock and Blackstone — ultimately dropped, sources told Axios. 

AmerisourceBergen has been increasingly aggressive in its pursuit of pharma commercialization assets, one source says: "They have been sporadically but very engaged on four or five [situations]." 

The company has chased assets in the past such as Real Chemistry (then W2O Group), which went to New Mountain Capital in 2019, and Giant Creative Strategy, which went to Huntsworth in mid-2018, the source says.  

Another source adds that AmerisourceBergen looked at RevHealth, which went to WindRose Health Investors in July. 

Be smart: AmerisourceBergen, one of the world's largest pharmaceutical distributors, has been trying to find ways to get closer to pharma manufacturers with value-added pharma services offerings. 

It already plays in commercialization and packaging — and PharmaLex gives it the regulatory focus that it was missing. 

By the numbers: PharmaLex’s LTM EBITDA was pegged in the mid-60 million euro range in April, whereas forward EBITDA is about 70 million euros.

Applying those figures implies a multiple in the 18-20x range.

Yes, but: Volatile financing market notwithstanding, sponsors also hesitated to move forward on PharmaLex due to questions around platform integration, sources say. 

PharmaLex has grown rapidly via M&A under Auctus, having inked at least 23 acquisitions since October 2015, by PitchBook's count. (Though sources say its add-on count is even higher.) 

"Even if you've done five [acquisitions]" it's extremely challenging, one source notes. 

How it works: PharmaLex's global team of scientific, regulatory, and safety and compliance (GxP) experts provide strategic guidance and regulatory support to biopharma companies throughout a product’s lifecycle. 

Flashback: Baird was previously mandated in 2018 for a potential sale, but the company ultimately did not come to market, sources said.

State of play: Private equity investors have rushed into the pharma commercialization, regulatory compliance and medical affairs areas the last two years, one recent such example being...

Astorg's nearly $1 billion deal for Amulet Capital's Open Health this summer. 

👀 What we're watching: Whether other well-capitalized strategics like McKesson (which has been public about its interest in oncology pharma services) eventually go after a larger pharma services asset. 

Blackstone and Blackrock declined to comment, while Auctus and AmerisourceBergen did not immediately return requests for comment.

2. The BFD: PharmaLex goes strategic

Illustration of a pill, half of which is dollar bills

VitalConnect, a San Jose, Calif.-based developer of remote and in-hospital biosensor tech, received an undisclosed investment from Health Insight Capital, the investment arm of HCA Healthcare Inc. (NYSE: HCA). https://vitalconnect.com

Michael Anderson and Matt Klein launched AIM Equity Partners, targeting subsectors within health tech and software. https://www.aimequitypartners.com/ 

Vivian Health, a San Francisco-based health care jobs marketplace backed by Thoma Bravo and IAC, is acquiring the technology of Lume, a banking startup for health care workers, via a licensing agreement. https://uselume.com

Kyruus, a Boston, Mass.-based health care scheduling company, agreed to acquire Epion Health, a Hoboken, N.J.-based patient engagement startup. https://epionhealth.com/

Valenz, a Phoenix-based health insurance company, acquired Health Cost Control, a Texas City, Texas-based provider of medical cost containment tools. https://www.healthcostcontrol.com/

3. Deals o' the day

Brentwood Capital Advisors named former Agape Care Group chief development officer Dan Beuerlein managing director. 

Forge Health named former Evernorth and Express Scripts CEO Tim Wentworth chair. 

4. It's Personnel

🐪 Happy hump day, Health Tech readers.

🎭 Sarah is going to see "Aladdin" on Broadway this week.

 🙏🏻 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your friends and colleagues to sign up.

September 14, 2022

1 big thing: Limitless Minds aims to be a "Peloton of mental fitness"