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Healthcare Industry
Quarterly Review – Q4 2014 Contents:
M&A Trends
Public Market Valuation Metrics Bill Rogers, ICD.D
Managing Director & CEO
416‐619‐9120
[email protected]
Robert Bird, CPA, CA, CFA
Managing Director
416‐619‐9117
[email protected]
Hugh Notman
Managing Director
604‐689‐2495
[email protected]
Select Company Trading & Operating Metrics
Featured Transactions
Canadian Announcements
Canadian Banking and Private Equity Trends
March 2015
Introduction
Q4 2014
Welcome to CCC Investment Banking’s Healthcare Industry Review covering the fourth quarter of 2014. M&A Activity Levels – There were 105 announced or completed North American Healthcare transactions in the
fourth quarter of 2014 which is the industry’s second lowest quarterly total dating back to early 2012. This result
is slightly above the 101 total deals announced in the previous quarter, but well below the 148 deals in Q4 2013.
There were three Healthcare sectors that saw an increase in deal volume compared to the previous quarter with
the Services sector rebounding the most with an increase of 75% followed by Supplies at 22% and Technology at
13%. The two sectors to experience moderate declines in volume include the Facilities sector which dropped by
27% to 11 deals (its fifth quarterly decline in a row and lowest quarterly total since 2012) followed by Equipment
which fell by 24%. The Distribution sector remained unchanged with ten transactions for the third consecutive
quarter.
Overall Canadian M&A activity across all industries dipped to 267 change of control transactions in Q4 2014
which is a slight 1% decrease compared to Q3 2014 as well as a 5% decrease compared to Q4 2013.
Buyer Composition – There were nine announced Healthcare Private Equity (“PE”) deals in Q4 2014
representing 9% of the total deal activity in the quarter. This result falls directly in between the quarterly
average of eight for 2014 and ten for 2013 . There were also an additional six non PE financial transactions while
the remaining 90 deals were all completed by strategic acquirers.
Canadian Deals – There were five Canadian‐based Healthcare deals announced in Q4 2014 representing
approximately 5% of the North American Healthcare deal activity. This is surprisingly low compared to the
previous two year quarterly average which typically represents between 7% and 10% of the North American
Healthcare transaction volume.
Public Market Valuations and Profit Margins – The Healthcare market experienced strong gains in overall
market value. The CCC Healthcare Index increased by approximately 20.2% during Q4 2014 which follows a
minimal 2.4% gain in Q3 2014. This is a substantial increase when compared to the NASDAQ which rose by 9.1%
as well as the S&P/TSX which fell for the second consecutive quarter at 2.5%. Enterprise Value/EBITDA1
multiples in every subsector experienced an increase compared to Q3 2014 with the Supplies sector increasing
the most (+2.2x) followed by Equipment (+2.0x), Technology (+1.8x), Facilities (+1.1%), Distribution (+0.9%) and
Services (+0.9x). Overall profitability margins, as defined by sector median EBITDA1/Revenue, experienced an
increase in only the Equipment sector (+0.2%) while the Facilities (‐1.4%), Technology (‐1.0%) and Supplies
sectors (‐0.8%) all experienced declines. Both the Distribution and Facilities sectors remained unchanged.
Thank you,
William (Bill) F. Rogers
Managing Director and CEO CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
Robert Bird, CPA, CA, CFA
Managing Director
1)
2
EBITDA: Earnings before interest, taxes, depreciation and amortization
M&A Trends
Q4 2014
Healthcare M&A Highlights
• 105 majority stake transactions were announced in Q4 2014, compared to 101 in Q3 2014, 121 in Q2 2014 and 148 in Q4
2013. This is the second lowest quarterly deal total dating back to 2012 and a decrease of 29% compared to Q4 2013.
• Three of the six Healthcare sectors saw an increase in deal volume compared to the previous quarter. The largest increase
involved the Services sector with announced deals increasing by 75% to 14 transactions followed by Supplies and
Technology with 22% and 13% increases respectively. The two sectors to witness a decrease in deal volume involved
Facilities which fell by 27% to 11 transactions (it’s lowest quarterly total dating back to 2010) and Equipment which fell
24%. The Distribution sector once again remained unchanged.
• Average transaction value for all deals with disclosed values under US$500M equaled US$86M which is an increase of
39% compared to Q3 2014. This result is the highest average reported over the past three years and is well above the
2014 quarterly average of US$69M. Of these deals, there were six (or 29% of all reported deals) between US$150M and
US$500M.
Q4 2014 North American Healthcare Deal Volume by Sector
Technology
41%
Distribution
10%
Annual Annual Annual Q1 13 Q2 13 Q3 13 Q4 13
Q1 14 Q2 14 Q3 14 Q4 14
2012
2013
2014
Technology
Distribution
31
37
128
34
43
38
43
158
10
6
12
11
39
13
10
10
10
43
29
27
26
28
110
35
20
21
16
92
Facilities
123
20
31
70
40
161
31
28
15
11
85
Supplies
30
6
6
9
10
31
9
8
9
11
37
Total
Facilities
11%
30
53
Services
Services
13%
30
105
Equipment Equipment
15%
105
148
63
15
14
13
22
64
16
12
8
14
50
522
110
114
161
148
533
138
121
101
105
465
Supplies
10%
Historical Quarterly North American Healthcare Deal Volume by Size(1) and Geography
$90
180
160
140
120
100
80
60
40
20
0
$80
$70
$60
$50
$40
$30
$20
$79 $79 $76 $63 $86 $62 $48 $49 $10
$0
10
8
13
9
14
151
102
12
136
100
125
112
7
5
94
100
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
(1) Average transaction value for all deals with disclosed values under US$500M
Canada
US
Sector Definitions
Equipment: Medical equipment, home Healthcare equipment, testing,
analyzing and diagnostic equipment, therapeutic devices and dental
equipment
Distribution: Healthcare equipment and product distribution
Facilities: Assisted living facilities
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
3
Technology: Technology products and services targeting the
Healthcare industry
Services: Medical laboratories and rehabilitation centres
Supplies: Medical consumables, instruments and optical supplies
Public Market Valuation Metrics
Q4 2014
The charts below show North American Q4 2014 EV/EBITDA and EBITDA/Revenue by sector.
Median Q4 2014 LTM EV/EBITDA by Sector
#(1) Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
Services
Services
Facilities
Distribution
Equipment
Supplies
Technology
9.8x
Facilities
11.5x
Distribution
12.5x
14.0x
Equipment
14.4x
Supplies
11
14
9
56
32
23
8.1x
11.7x
10.5x
12.1x
12.8x
14.5x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
8.4x
15.6x
12.6x
13.7x
13.9x
16.5x
8.7x
10.7x
11.1x
13.0x
14.0x
18.1x
8.9x
10.4x
11.6x
12.0x
12.2x
17.2x
9.8x
11.5x
12.5x
14.0x
14.4x
19.0x
(1) # of publicly traded companies identified
19.0x
Technology
7.7x
13.0x
11.7x
13.5x
15.0x
15.5x
20.0x
Median Q4 2014 LTM EBITDA/Revenue
#(1) Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
Distribution
4.5%
Facilities
9.6%
Services
13.5%
Technology
14.1%
Equipment
19.1%
Supplies
19.3%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Distribution
Facilities
Services
Technology
Equipment
Supplies
9
14
11
23
56
32
3.4%
13.8%
14.1%
14.8%
18.0%
19.4%
3.4%
13.8%
14.1%
13.8%
17.4%
20.0%
3.4%
10.9%
14.4%
14.3%
17.0%
19.5%
4.3%
10.1%
14.9%
13.4%
17.7%
18.6%
4.5%
9.6%
14.9%
15.1%
18.9%
20.1%
(1) # of publicly traded companies identified
20.0%
Below is a chart comparing the CCC Healthcare Index to the performance of the NASDAQ Composite Index and the
S&P/TSX Composite Index. This chart depicts the percentage change in the index value from January 1, 2011 to
December 31, 2014.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
‐10%
‐20%
CCC Healthcare Index
S&P/TSX Composite Index ‐ Index Value
* The index is comprised of 54 Healthcare stocks selected by the CCC Healthcare team
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
4
4.5%
9.6%
13.5%
14.1%
19.1%
19.3%
NASDAQ Composite Index (^COMP) ‐ Index Value
Select Company Trading and Operating Metrics
Ticker
Company
Stock Price
31-Dec-14
(US$)
Technology
NasdaqGS: ATHN
TSX:CCT
NasdaqGS:CERN
NasdaqGS:MDAS
NasdaqGS:QSII
Total
Enterprise
Value
(TEV)
52 Week
High
Low
Total
Debt
LTM
Revenue
Q4 2014
LTM
EBITDA
EBITDA
Margin
Total
Debt to
LTM
EBITDA
TEV / LTM TEV / LTM
Revenue(1) EBITDA(1)
(US$ millions)
athenahealth, Inc.
Catamaran Corporation
Cerner Corporation
MedAssets, Inc.
Quality Systems Inc.
$145.70 $206.70
$51.91 $52.43
$64.66 $66.45
$19.76 $26.09
$15.59 $21.07
$97.30
$34.99
$48.39
$18.15
$13.01
$5,658
$11,291
$20,895
$2,085
$816
$213
$1,437
$147
$909
$0
$711
$20,371
$3,181
$692
$477
$59
$806
$841
$207
$43
8%
4%
26%
30%
9%
3.58x
1.78x
0.17x
4.38x
‐
Avg.
7.96x
0.57x
6.57x
3.01x
1.71x
3.96x
95.31x
14.51x
24.83x
10.05x
18.97x
32.74x
Becton, Dickinson and Company
Boston Scientific Corporation
CONMED Corporation
Hologic Inc.
ResMed Inc.
$139.16 $142.56 $105.21
$13.25 $14.08 $11.10
$44.96 $50.47 $35.55
$26.74 $27.35 $19.91
$56.06 $57.57 $41.52
$28,134
$21,575
$1,421
$11,017
$7,311
$3,971
$4,252
$241
$3,955
$450
$8,432
$7,331
$734
$2,549
$1,616
$2,164
$1,638
$128
$914
$488
26%
22%
17%
36%
30%
1.84x
2.60x
1.88x
4.33x
0.92x
Avg.
3.34x
2.94x
1.93x
4.32x
4.52x
3.41x
13.00x
13.17x
11.09x
12.05x
14.99x
12.86x
ATRION Corp.
DENTSPLY International Inc.
Haemonetics Corporation
Utah Medical Products Inc.
West Pharmaceutical Services, Inc.
$340.01 $355.91 $254.12
$53.27 $56.25 $42.99
$37.42 $43.60 $29.86
$60.05 $61.00 $44.52
$53.24 $55.29 $39.11
$617
$8,821
$2,220
$213
$3,884
$0
$1,380
$429
$5
$347
$140
$2,957
$925
$41
$1,414
$49
$584
$123
$20
$267
35%
20%
13%
47%
19%
‐
2.36x
3.47x
0.25x
1.30x
Avg.
4.41x
2.98x
2.40x
5.15x
2.75x
3.54x
12.48x
15.12x
17.98x
10.85x
14.57x
14.20x
AmerisourceBergen Corporation
Cardinal Health, Inc.
Owens & Minor Inc.
McKesson Corporation
PharMerica Corporation
$90.16 $92.84 $62.55
$80.73 $83.40 $63.06
$35.11 $37.90 $31.55
$207.58 $214.37 $159.45
$20.71 $30.48 $19.42
$19,904 $1,996 $123,981
$28,257 $3,976 $93,928
$2,371
$766
$9,267
$56,497 $10,572 $161,201
$1,032
$361
$1,822
$1,407
$2,435
$237
$3,557
$115
1%
3%
3%
2%
6%
1.42x
1.63x
3.23x
2.97x
3.13x
Avg.
0.16x
0.30x
0.26x
0.35x
0.57x
0.33x
14.15x
11.60x
10.01x
15.88x
8.95x
12.12x
Equipment
NYSE:BDX
NYSE:BSX
Nasdaq:CNMD
NasdaqGS:HOLX
NYSE:RMD
Supplies
*
NasdaqGS:ATRI
Nasdaq:XRAY
NYSE:HAE
NasdaqGS:UTMD
NYSE:WST
Distribution
NYSE:ABC
NYSE:CAH
NYSE:OMI
NYSE:MCK
NYSE:PMC
Facilities
TSX:ACC
NYSE:BKD
NYSE:CSU
NYSE:KND
TSX:LW
Amica Mature Lifestyles Inc.
Brookdale Senior Living Inc.
Capital Senior Living Corp.
Kindred Healthcare Inc.
Leisureworld Senior Care Corp.
$7.19
$37.03
$26.89
$26.81
$12.43
$5.80
$26.11
$20.33
$17.59
$9.61
$628
$12,903
$1,363
$2,628
$956
$442
$6,415
$666
$1,497
$558
$124
$2,931
$367
$5,081
$393
$33
$522
$57
$291
$55
27%
18%
15%
6%
14%
13.23x
12.30x
11.70x
5.15x
10.15x
Avg.
5.16x
4.40x
3.71x
0.52x
2.52x
3.26x
19.07x
24.73x
23.95x
9.05x
18.01x
18.96x
$32.13 $34.00
$19.05 $19.90
$107.90 $109.84
$31.18 $31.95
$67.06 $68.51
$24.13
$7.35
$87.25
$19.69
$50.46
$929
$1,759
$11,575
$629
$13,443
$55
$1,157
$3,015
$65
$3,762
$832
$1,970
$5,936
$690
$7,435
$109
$154
$1,138
$56
$1,297
13%
8%
19%
8%
17%
0.51x
7.50x
2.65x
1.17x
2.90x
Avg.
1.12x
0.89x
1.95x
0.91x
1.81x
1.34x
8.55x
11.40x
10.17x
11.28x
10.37x
10.35x
$6.07
$36.67
$24.91
$18.18
$12.08
Services
NasdaqGS:BRLI
NasdaqGS:GTIV
NYSE:LH
NasdaqGS:LHCG
NYSE:DGX
Bio‐Reference Laboratories Inc.
Gentiva Health Services Inc.
Laboratory Corp. of America Holdings
LHC Group, Inc.
Quest Diagnostics Inc.
Notes:
As at December 31, 2014
(1) All trading multiples based upon trading currency
Source: Capital IQ
* Quarterly Company Featured: West Pharmaceutical Services, Inc.
Sector: Supplies
Location: Exton, Pennsylvania, United States
Website: www.westpharma.com
Description: West Pharmaceutical Services, Inc. is the world's premier manufacturer of components and systems for injectable drug delivery, including
stoppers and seals for vials, and closures and disposable components used in syringe, IV and blood collection systems. The Company also provides products
with application to the personal care, food and beverage markets. West's customers include the world's leading pharmaceutical, biotechnology, generic drug
and medical device producers. Headquartered in Exton, Pennsylvania, West Pharmaceutical supports its partners and customers from 50 locations throughout
North America, South America, Europe, Mexico, Japan, Asia and Australia.
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
5
Featured Transactions
Q4 2014
Technology
Technology (cont’d)
– U.S.‐based PE firm GI Partners, LLC agreed to acquire Montreal‐
based Logibec Inc. from OMERS Private Equity and others on
December 19, 2014. Logibec offers Clinibase, a clinical solution to
capture, analyze and manage patient information.
– New York‐based manufacturer of medical diagnostic equipment
Welch Allyn, Inc. acquired Nebraska‐based HealthInterlink, LLC,
a medical software company, on December 8, 2014.
– Maryland‐based imaging and information management
solutions provider DataBank IMX, LLC acquired Pennsylvania‐
based Griffith, Inc., trading as Alpha Systems, on November 25,
2014. Alpha Systems provides data and document management
solutions for hospitals and large Healthcare systems in the U.S.
– Texas‐based provider of Healthcare vendor credentialing services
IntelliCentrics, Inc., doing business as Reptrax, acquired Toronto‐
based Vendorlink.ca Ltd. from Liuna Capital Corp. and others on
October 7, 2014. Vendorlink.ca provides a web‐based vendor
management solution for hospitals in Canada.
– Oakville‐based provider of pet medical insurance Pethealth Inc.
acquired U.S.‐based HumaneSolution.com on December 26,
2014. HumaneSolution.com provides a hosted line‐of‐business
service for spay/neuter clinics in the U.S.
– California‐based MedeAnalytics, Inc., a provider of cloud‐based
Healthcare analytics solutions, acquired Tennessee‐based
ONFocus Healthcare Inc. on November 18, 2014. ONFocus
offers enterprise performance management (epm) software and
support services for Healthcare companies.
– Toronto‐based investment firm Syncordia Technologies and
Healthcare Solutions, Inc. acquired California‐based Health
Services Integration, Inc. on November 10, 2014. Health Services
Integration operates as an EMS claims management company
that specializes in air and ambulance billing services.
– New York‐based digital health and wellness solutions provider
Everyday Health, Inc. (NYSE:EVDY) acquired North Carolina‐
based DoctorDirectory.com, Inc. for US$65M in cash on
November 12, 2014. DoctorDirectory.com operates an online
directory for finding a Healthcare professional by specialty.
– Ontario‐based Maple Power Capital Corporation agreed to
acquire Michigan‐based Intrinsic Medical Imaging LLC from Envy
Capital on October 14, 2014. Intrinsic Medical provides software
solutions for patient screening and surgical planning.
– Minnesota‐based ABILITY Network Inc. acquired New Jersey‐
based electronic Healthcare solutions provider MD On‐Line, Inc.
from Abingworth LLP and others on November 12, 2014.
– Atlanta‐based health information solutions company iMedX,
Inc. acquired Texas‐based Superior Global Solutions, Inc. and
Anaheim‐based Medwrite Inc. on November 7, 2014. Superior
Global provides revenue cycle and health information
management solutions while Medwrite operates a portal that
facilitates workflow automation of medical transcriptions.
– Illinois‐based Abbott Laboratories (NYSE:ABT) acquired Nebraska‐
based UNeLAB LLC from Prairie Ventures, LLC on December 24,
2014. UNeLAB provides laboratory automation technology.
– Michigan‐based information technology (“IT”) provider HTC
Global Services, Inc. acquired Michigan‐based CareTech
Solutions, Inc. from Compuware Corporation, Oakwood
Healthcare, LLC and Detroit Medical Center, Inc. on December 18,
2014. CareTech provides IT and Web products and services for
Healthcare, business and higher education markets in the U.S.
– Philadelphia‐based eResearchTechnology, Inc. acquired
Massachusetts‐based eClinical Insights, Inc., a provider of a
cloud‐based clinical software, on November 6, 2014.
– Europe’s largest media group, Bertelsmann SE & Co. KGaA
acquired Florida‐based Relias Learning, LLC from Vista Equity
Partners and LLR Partners Inc. for US$540M in November 2014.
Relias provides online training solutions for senior care, health
and human services along with various other industries.
– Nashville‐based revenue and payment cycle management
provider Emdeon Inc. acquired Texas‐based AdminiSource
Communications, Inc. from Alegeus Technologies, LLC for
US$35M in cash on December 10, 2014. AdminiSource develops
Healthcare payment distribution solutions for insurance carriers
and Healthcare organizations.
– U.S. PE firm New Mountain Capital, LLC agreed to acquire
Georgia‐based HealthPort Incorporated on October 31, 2014.
HealthPort provides release of information (ROI) services and
audit management and tracking technology for various sections
of the Healthcare industry.
– Nebraska‐based
National
Research
Corporation
(NasdaqGS:NRCI.B) acquired Atlanta‐based Digital Assent LLC
from various investors on December 9, 2014. Digital Assent
develops a tablet‐based technology that enables patients to
make educated and informed decisions at the point of care.
– Virginia‐based Booz Allen Hamilton Holding Corporation
(NYSE:BAH) acquired Boston‐based health data and analytics
solutions company Epidemico, Inc. on October 29, 2014.
– Nashville‐based revenue and payment cycle management
provider Emdeon Inc. acquired Tennessee‐based Change
Healthcare Corporation from various investors for approximately
US$190M on December 8, 2014. Change Healthcare provides
Healthcare cost transparency and consumer engagement
solutions for health plans in the U.S.
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
– U.S. PE firm North Bridge Growth Equity acquired a majority
stake in Atlanta‐based Ingenious Med, Inc. from Council Capital,
BIP Opportunities Fund, LP and others on October 22, 2014.
Ingenious Med provides the leading cloud‐based, patient
encounter platform, IM1, for the Healthcare industry.
6
Featured Transactions
Q4 2014
Technology (cont’d)
Equipment
– New York‐based provider of cloud‐based clinical development
solutions Medidata Solutions, Inc. (NasdaqGS:MDSO) acquired
California‐based Patient Profiles, LLC on October 14, 2014.
Patient Profiles develops software for patient profile design and
automated clinical data analytics in clinical trials.
– Massachusetts‐based medical device developer ZOLL Medical
Corporation, a subsidiary of Asahi Kasei Corporation (TSE:3407),
agreed to acquire Minnesota‐based intrathoracic pressure
regulation product manufacturer Advanced Circulatory
Systems, Inc. on December 22, 2014. In two related
transactions, ZOLL acquired San Diego‐based temperature
modulation therapy product developer Post‐Hypothermia
Corporation from Philips Electronics North American
Corporation on November 17, 2014. ZOLL also acquired New
Jersey‐based respiratory care product manufacturer Impact
Instrumentation Inc. on October 28, 2014.
– California‐based Box, Inc., an enterprise software platform for
secure content collaboration, acquired San Francisco‐based
Clariso, Inc. on October 9, 2014. Clariso provides data sharing and
collaboration tools for the Healthcare industry.
– Florida‐based NexTech Systems, Inc., a leading provider of
specialty‐focused Healthcare technology solutions for physician
practices, acquired Florida‐based MDIntelleSys, LLC on October
9, 2014. MDIntelleSys provides cloud based electronic health
records for eye care specialists.
– Netherlands‐based Kononklijke Philips N.V. (ENXYAM:PHIA)
agreed to acquire San Diego‐based Volcano Corporation
(NasdaqGS:VOLC) for approximately US$1.2B on December 16,
2014. Volcano is a leader in intravascular imaging for coronary
and peripheral therapeutic devices. The deal represents a Total
Enterprise Value (“TEV”) to Last Twelve Months (“LTM”)
EBITDA of 75.7x and a TEV to LTM Revenue of 3.0x.
Supplies
– Switzerland‐based Roche Holding AG (SWX:ROG), a
pharmaceutical and diagnostics provider, acquired San Jose‐
based Ariosa Diagnostics, Inc. from various investors on
December 19, 2014. Ariosa offers Harmony prenatal test, a non‐
invasive blood test for pregnant women.
– New York‐based Medical Depot, Inc., doing business as Drive
Medical Design, acquired Ohio‐based Primus Medical, LLC on
December 15, 2014. Primus manufactures fall prevention and
wound care treatment products for the long term care industry.
– Pennsylvania‐based specialty pharmaceuticals company BTG
International Inc. agreed to acquire California‐based PneumRx,
Inc. from various investors for approximately US$480M in cash
on December 3, 2014. PneumRx develops products to treat
emphysema using minimally invasive techniques.
– Luxembourg‐based Eurofins Scientific SA (ENXTPA:ERF), an
analytical testing service provider, agreed to acquire Boston
Heart Diagnostics Corporation (BHDC) from various investors
for US$200M on December 8, 2014. BHDC develops lipid tests
and methodologies for cardiovascular risk assessment and
disease management.
– Illinois‐based Allegheny Health Network and Maryland‐based
Johns Hopkins Home Care Group Inc. acquired an unknown
majority stake in Pennsylvania‐based home medical equipment
supplier Klingensmith, Inc. on December 2, 2014.
– German‐based Leica Microsystems GmbH, a global leader in
anatomic pathology workflow solutions and automation,
acquired Cincinnati‐based Devicor Medical Products, Inc. from
GTCR, LLC on December 4, 2014. Devicor develops breast biopsy
instruments and consumables and had revenues of
approximately US$170M in 2013.
– New Jersey‐based Integra LifeSciences Holdings Corporation
(NasdaqGS:IART), a leader in medical technology, acquired the
Foot And Ankle Product Portfolio of Koby Ventures Ltd. in
December 2014. The acquired portfolio includes the DigiFuse,
MemoFix, Ti6®, BioMotion® and TruArch®.
– Illinois‐based Healthcare product manufacturer Abbott
Laboratories (NYSE:ABT) acquired San Diego‐based Topera, Inc.,
a catheter ablation company, from Alafi Capital Company LLC,
New Enterprise Associates and others for approximately US$250
in cash on October 29, 2014.
– Georgia‐based surgical products producer Stradis Healthcare, LLC
agreed to acquire Illinois based Medikmark, Inc., a disposable
medical kit packing company, on November 7, 2014.
– Wisconsin‐based TIDI Products, LLC, a manufacturer of single‐use
infection prevention products, acquired Michigan‐based
RAWCAR Group, LLC, doing business as Contour Fabricators, Inc.,
on November 6, 2014. RAWCAR supplies disposables and system
components for OEM customers in the medical imaging industry.
– Amsterdam‐based medical device company Tornier N.V.
(NasdaqGS:TRNX) and Memphis‐based specialty orthopedic
company Wright Medical Group, Inc. (NasdaqGS:WMGI) have
entered into a definitive merger agreement under which the
two will combine in an all stock transaction with a combined
equity value of approximately US$3.3B on October 27, 2014.
– Missouri‐based life science and high technology company Sigma‐
Aldrich Corporation (NasdaqGS:SIAL) acquired California‐based
Cell Marque Corporation for US$170M on November 4, 2014.
Cell Marque is an industry‐leading provider of in vitro diagnostic
(IVD) antibody reagents and kits.
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
– Connecticut‐based CooperSurgical, a subsidiary of Cooper
Medical, Inc., acquired California‐based hysteroscopy
instrument developer Endosee Corporation for approximately
US$44M on October 8, 2014.
7
Featured Transactions
Q4 2014
Equipment (cont’d)
Services (cont’d)
– New Jersey‐based medical technology company Becton,
Dickinson and Company (NSE:BDX) agreed to acquire CareFusion
Corporation (NYSE:CFN) from The Vanguard Group, Inc. and
others for US$12.2B in cash and stock on October 5, 2014.
CareFusion delivers products and services that help hospitals
improve the safety and quality of care. The deal represents a TEV
to LTM EBITDA of 13.6x and a TEV to LTM Revenue of 3.1x.
– Illinois‐based pharmacy benefit management services provider
Catamaran Corporation (TSX:CCT) acquired Florida‐based Salveo
Specialty Pharmacy, Inc. from various investors for US$260M in
cash on January 2, 2015. Salveo provides medications and
clinical services to patients with chronic conditions. The deal
represents a TEV to LTM EBITDA of 13.0x.
– U.S. PE firms Elm Creek Partners, Bowside Capital and 747
Capital LLC acquired Houston‐based home health respiratory
medical equipment services provider TCG Interests, Ltd., doing
business as The Care Group of Texas, Inc., on December 2, 2014.
Distribution
– Toronto‐based The Canadian Bioceutical Corporation(TSXV:BCC),
a developer of nutraceutical products for the treatment of
common ailments, acquired Canadian‐based CGX Life Sciences,
Inc. for CAD$0.45M in stock on November 18, 2014. CGX sells
CinG‐X supplements used to reduce blood sugar and support
cognitive functions in North America.
– San Diego‐based Healthcare workforce solutions provider AMN
Healthcare Services, Inc. (NYSE:AHS) acquired Nebraska‐based
Avantas, LLC from Alegent Creighton Health for US$25M on
December 22, 2014. Avantas provides labor management
solutions and services to the Healthcare industry in Nebraska.
– Quebec‐based Valeant Pharmaceuticals International, Inc.
(TSX:VRC) acquired U.S.‐based NicOx Inc. from international
ophthalmic company NicOx SA (ENXTPA:COX) for US$20M in cash
on November 17, 2014. The deal involves most of NicOx’s
commercial infrastructure in the U.S. associated with diagnostics.
– New Jersey‐based molecular diagnostics company Interpace
Diagnostics, LLC acquired Pittsburgh‐based RedPath Integrated
Pathology, Inc. for US$34.8M on October 31, 2014. RedPath
provides molecular diagnostic and clinical testing services to
diagnose various types of cancer.
– Toronto‐based Novadaq Technologies Inc. (TSX:NDQ), a
developer of real‐time imaging systems for use in the operating
room, has agreed to acquire all marketing and distribution rights
of SPY Elite System from LifeCell Corporation on October 30,
2014. SPY Elite imaging provides clinically relevant information
that empowers surgeons to make better‐informed critical
decisions in the operating room.
– Alaska‐based Chenega Corporation, a provider of government
and commercial contract services, acquired San Antonio‐based
AQTS Home Health Care on October 27, 2014. AQTS provides
nursing, physical, occupational, speech therapy and home
health aide to patients in their homes.
– Louisville‐based Kindred Healthcare, Inc. (NYSE:KND) agreed to
acquire Atlanta‐based Gentiva Health Services Inc.
(NasdaqGS:GTV) for approximately US$720M in cash and stock
on October 9, 2014. Gentiva provides home health, hospice and
community care services in the U.S. The deal represents a TEV
to LTM EBITDA of 11.7x and a TEV to LTM Revenue of 0.9x.
– Minnesota‐based dental and rehabilitation supplies distributor
Patterson Companies, Inc. (NasdaqGS:PDCO) agreed to acquire
Wisconsin‐based Holt Dental Supply, Inc. on December 15, 2014.
– U.S.‐based PE firm Ridgemont Equity Partners acquired a majority
stake in Wisconsin‐based Allied 100, LLC from Thompson Street
Capital Partners on December 3, 2014. Allied 100 engages in the
supply of automated external defibrillators (AEDs).
Assisted Living Facilities and Services
– U.S.‐based investment firms Formation Capital, L.L.C. and
Safanad Inc. agreed to acquire Milwaukee‐based Extendicare
Holdings, Inc. for US$870M on November 7, 2014. Extendicare,
through its subsidiaries, owns and operates Healthcare centers
providing post‐acute and long‐term care. The deal represents a
TEV to LTM EBITDA of 10.4x and a TEV to LTM Revenue of 0.8x.
– Virginia‐based developer and distributor of over the counter
pharmaceuticals ScripsAmerica, Inc. (OTCPK:SCRC) agreed to
acquire a 90% stake in Miami‐based PIMD International LLC on
December 1, 2014. PIMD distributes pharmaceuticals and medical
devices for Healthcare clinics in the U.S.
– U.S.‐based National Health Investors Inc. (NYSE:NHI) and
Bickford Senior Living, LLC acquired a 101 unit assisted living
and memory care community in Ohio comprising 101 units for
US$18.1M on November 3, 2014.
– New York‐based Curbell Plastics, Inc. acquired Illinois‐based O&P
Enterprises, Inc. on November 4, 2014. O&P supplies plastics and
foams to create orthotic and prosthetic solutions for patients.
Services
– U.S.‐based Aviv REIT, Inc. acquired two skilled nursing facilities
in Dallas for US$28.5M on October 17, 2014.
– Mississauga‐based Bayshore HealthCare Ltd., one of Canada’s
leading providers of home and community Healthcare services,
acquired Mississauga‐based pt Health Senior Wellness, a
provider of physiotherapy and rehabilitation services, on October
14, 2014.
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
– California‐based Sabra Health Care REIT, Inc. (NasdaqGS:SBRA)
acquired three assisted living facilities in Florida for US$27.6M
on October 1, 2014.
8
North American Announcements & Trends
Q4 2014
Estimated Number of Patients Receiving Canadians Continue to Leave Canada For Medical Care
Treatment Outside of Canada (by province)
The number of Canadian patients who travelled abroad in 2014 to receive non‐
emergency medical treatment increased 26% from 2013, according to a study
Province
2014
2013 % Change
conducted by Canadian independent research organization the Fraser Institute.
Ontario
26,252
19,118
37%
• In 2014, 52,513 Canadians travelled beyond Canada to seek medical treatment,
British Columbia
9,799
8,146
20%
compared with 41,838 in 2013.
Quebec
6,284
4,904
28%
• The percentage of Canadian patients who travelled abroad to receive non‐
Alberta
5,988
5,527
8%
emergency medical care was 1.1%, an increase compared to 0.9% in 2013.
Saskatchewan
1,050
714
47%
• Physicians in British Columbia reported the highest proportion of patients Manitoba
1,048
1,636
‐36%
receiving treatment abroad, while Ontario had the largest number of patients Nova Scotia
975
927
5%
seeking medical treatment elsewhere.
New Brunswick
742
372
99%
• The study showed that physicians specializing in procedures such as Newfoundland and Labrador
327
486
‐33%
colonoscopies, gastroscopies and angiographies reported the highest number of Prince Edward Island
48
8
500%
patients leaving Canada for treatment. As for highest proportion of patients Total
52,513
41,838
26%
travelling abroad, Neurosurgeons reported the highest proportion (2.6%), while
plastic surgery reported the lowest (0.3%), indicating a gap in the field of neurosurgery treatment throughout Canada.
• The study also speculates as to why Canadian patients left the country to pursue treatment elsewhere. The reasons include a lack of
available resources and equipment in their home jurisdiction; the desire for more advanced health care facilities and technology and long
wait‐times within the Canadian Healthcare system.
• Results were based on a physicians’ survey, which means patients who left the country without consulting a specialist are likely not
included in the estimates.
Source: Fraser Institute (March 2015)
Canadian Healthcare Ranks Poorly for Aging Population
Recent results from The Commonwealth Fund (CMWF) 2014
International Health Policy Survey of Older Adults (55+), Canada
ranks near the bottom when compared to other countries in
regards to demand for medical attention when dealing with
seniors.
Canada
Norway
53%
United States
Sweden
United Kingdom
The 53% shows no improvement since 2007
Key findings from the survey include:
• 53% of Canadians aged 55 and up waited at least two days to
see a doctor or nurse the last time they were sick or needed
medical attention, highest among 11 countries. Next worse
was Norway at 43%. The best was France at 17%. No
improvement for Canada since 2007.
• 30% of older Canadians waited at least six days to see a doctor
or gave up waiting.
• 25% of older Canadians waited for at least two months to see a
specialist. Norway was just below at 24%. United States and
Switzerland had best ranking at 3% each.
• 51% of older Canadians couldn’t get medical care in evenings
or on weekends, had to go to emergency room instead.
Highest among 11 countries, second worst was United States
at 40%. Best was Netherlands at 8%.
• 37% of older Canadians went to an emergency department for
a condition that could have been treated by their regular
doctor. Second worst among 11 countries. U.S. was last at 40%.
Best was Netherlands at 19%.
CMWF AVERAGE
32%
Australia
Switzerland
30% Netherlands
of Older Canadians waited at least 6 days or gave up
New Zealand
Germany
France
25%
Canada
Norway
New Zealand
25% of Older Canadians waited for at least 2 months to see a specialist; these waits have not improved over time
Sweden
Germany
Australia
CMWF Average
United Kingdom
France
Netherlands
Switzerland
United States
Source: Canadian Institute for Health Information
The Commonwealth Fund 2014 International Health Policy Survey
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
53% of Older Canadians waited for at least 2 days to see a doctor or nurse
9
15%
Canadian Banking and Private Equity Trends
Q4 2014
We are including some general Canadian PE and banking trends. Although some of the trends may not be specific to Healthcare, they are a barometer of M&A and financing activity in the general Canadian mid‐market.
Current Canadian Debt Terms
• Lenders continue to aggressively deploy capital into high quality deals. Outside of the quality of the borrower,
lenders differentiate deals by size, relationship & sponsored vs. standalone transactions.
• Incumbent lenders will often significantly improve their pricing and terms in competitive refinancing
situations.
• Large mid‐market deals can receive up to 4.25x (senior) / 6.00x (total) Debt / EBITDA; “typical” mid‐market
financings are up to 3.00x‐3.75x senior / 4.25x‐4.75x total Debt / EBITDA range. Senior debt is now up to 50%‐65%
of the capital structure.
• Senior pricing is at Bankers’ Acceptance (0.9% on 13/03/15) + 1.50%‐3.50% at moderate to high leverage.
Mezzanine pricing is at 12%‐17% total rate of return.
• Conventional senior debt will have a 3‐7 year amortization with a 3‐5 year term. Mezzanine debt is normally a
“bullet” with a 3‐5 year term.
North American Private Equity (“PE”) Trends
Healthcare
• PE firms participated in nine North American M&A transactions related to the Healthcare sector in Q4 2014 which is
slightly above the 2014 quarterly average of eight. This result is a 29% increase compared to Q3 2014 (seven
transactions) but a decrease of 40% compared to Q4 2013 (15 transactions). There were an additional six non PE
financial transactions.
General (1)
• Canadian buyout and PE transactions across all industries hit record levels in 2014. Control‐stake acquisitions,
growth‐related and other PE deals (announced and completed) totaled 410, a 23% increase over 2013. Volume for
Q4 2014 also increased to 105 transactions, up from 94 in Q3 2014.
• The value of disclosed transactions (announced and completed) totaled CAD$32.2B in 2014, more than tripling the
CAD$10.3B reported in 2013. Thirteen large‐cap deals sized CAD$500M or more captured 75% of all disclosed
disbursements, CAD$100M to CAD$500M took 15% and deals less than CAD$100M took the rest.
• The majority of Canadian transactions in 2014 (announced and completed) were based in Quebec (42%) followed by
Ontario (24%) and Alberta (19%). Due to several large‐cap deals, Ontario led market activity in disclosed deal values
taking just under half of all disbursements followed by Quebec and Alberta both receiving 23% of all disbursements.
• In the international market, Canadian funds led or participated in a total of 112 deals which were valued at
approximately CAD$44B. This compares to a total of 67 deals valued at CAD$19B reported in 2013. The United States
accounted for over three‐quarters of disclosed transaction values and two‐thirds of all deals. Most of the remaining
activity occurred in Europe and Latin America.
Sources: (1) Canadian Venture Capital & Private Equity Association & Thomson Reuters
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
10
CCC Investment Banking
Q4 2014
About CCC Investment Banking
Established in 1975, CCC is Canada’s leading independent middle market investment bank. CCC has a specialization in the North American Healthcare Industry. CCC provides advisory services in:

Mergers & Acquisitions  Management Buy‐outs  Divestitures  Financing Strategy and Placement  Restructurings  Strategic Reviews  Valuations and Fairness Opinions
CFI Network
Contact Us
– CCC is the exclusive Canadian member of Corporate Finance International (“CFI”), a global network of leading independent middle‐market investment banking firms with members or partners in North America, Western & Eastern Europe, Asia and South America
– To find out how CCC can add value to your business, please contact our Healthcare coverage team:
Bill Rogers, Managing Director and CEO
• 416‐619‐9120
• [email protected]
– CFI specializes in cross‐border transactions and has significant experience in the Healthcare sector
Rob Bird, CPA, CA, CFA, Managing Director
• 416‐619‐9117
• [email protected]
Hugh Notman, Managing Director
• 604‐689‐2495
• [email protected]
Boris Tsimerinov, Vice President
• 416‐619‐9125
• [email protected]
We welcome your feedback. Let us know what you’d like to see in our next quarterly review.
For more information on CCC, please visit: www.cccinvestmentbanking.com.
Please see information on CFI’s Healthcare experience on our website.
This market overview is not an offer to sell or solicit an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or recommend securities of individual companies, nor does it contain sufficient information upon which to make an investment decision.
The information provided in this market overview was obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not to be construed as legal, accounting, financial, or investment advice. Information, opinions, and estimates reflect CCC’s judgment as of the date of publication and are subject to change without notice. CCC undertakes no obligation to notify any recipient of this market overview of any such change. The charts and graphs used in this market overview have been compiled by CCC solely for illustrative purposes. All financial data and transaction summaries were collected from Capital IQ. This market overview is not directed to, or intended for distribution to, any person in any jurisdiction where such distribution would be contrary to law or regulation, or which would subject CCC to licensing or registration requirements in such jurisdiction.
CCC’s Healthcare specialists can help to add value to your business. Please contact Bill Rogers, Rob Bird or Hugh Notman or visit www.cccinvestmentbanking.com.
11
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