New year, old deals, who’s this? The early 2023 health care M&A market begins with an overhang of processes that didn’t cross the finish line last year.
Why it matters: The JP Morgan health care conference, starting next week, often sets the stage for auction launches. This year could see some relaunches, too.
What’s happening: Of 47 auctions Axios covered last year, 26 have yet to result in a deal.
- Some of these processes were put on ice, as a chasm in valuation expectations persists.
Zoom in: Sources tell Claire the auction for Warburg Pincus-backed specialty electronic health records company Modernizing Medicine, which launched in October, has hit the pause button.
- The company was exploring a partial-stake sale via Evercore, Axios reported in November.
- ModMed is considered a “premium” asset in today’s market. The delay signals that even very high-quality platforms aren’t commanding the valuations they’re accustomed to, one source said.
- Warburg declined to comment.
Meanwhile, Blackstone’s HealthEdge, a health insurance SaaS platform that was exploring a sale through BAML and Barclays, has also gone pencils-down over discord over valuation, sources say.
- Blackstone did not respond to a request for comment.
The latest: Partners Group-backed vet care platform Blue River launched an auction last fall after hiring William Blair, but has since paused, Axios reported in December.
Separately, Many other processes hang in the balance and have yet to be announced.
What we’re watching: Despite the glut of auctions, the first quarter of 2023 may not bring the deluge of deals the market is hoping for, one health care services lender cautions.
- “The average decision point seems to be [to launch] into the second quarter,” he says, noting caution from investors about a potentially rocky Q1.
The bottom line: Even tier-A assets aren’t immune to a valuation reset, as can be seen in the lengthy list below.
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- Trivest Partners-backed ScanSTAT Technologies, a provider of release-of-information solutions, launched a Guggenheim Partners-led auction in the fall.
- One source tells Axios this process may be close to crossing the finish line. Trivest did not respond to a request for comment.
- Linden Capital Partners-backed addiction treatment provider Pinnacle Treatment Centers kicked off a Lincoln International-led process over the summer that has since gone quiet.
- Sources told Axios that at one point, behavioral health behemoth Acadia Healthcare was sniffing around the asset. Linden did not respond to a request for comment.
- Founder-owned physician organization Heritage Provider Network was being pursued by Carlyle in November.
- Founder-led compounding pharmacy Empower Pharmacy hired Cantor Fitzgerald to run a process, Axios reported in September.
- Silver Oak-backed dental services organization Smile Partners USA launched a Piper Sandler-run auction in September.
- Tyree & D’Angelo Partners’ veterinary platform Western Veterinary Partners was in the market with William Blair, Axios reported in October.
- New State Capital-backed United Medical Systems, a provider of mobile medical equipment for urologic conditions, took first-round bids in October for its Houlihan Lokey-run auction.
- Founder-led life sciences communications business Spectrum Sciences hired Houlihan Lokey to explore strategic alternatives.
- BC Partners-backed dental products company Zest Dental launched an auction after Labor Day, with SVB Securities and UBS leading a sponsor-focused process.
- Tenex-backed diversified home care services company Team Select Home Care took first-round bids in October in its Cantor Fitzgerald-led auction.
- Martin Ventures-backed value-based care enabler Wellvana Health launched a process prioritizing a primary capital investment via SVB Securities in October.
- Founder-led dental services organization Dentive was working with Houlihan Lokey on a sponsor-focused sale process, Axios reported in September.
- Pamplona-backed pharma services company Calyx launched a Jefferies-led process over the summer.
- Founder-run men’s health clinic Wasatch Medical Clinic launched a Macquarie Capital-led process in August.
- Lee Equity-backed IVF provider Inception Fertility took first-round bids in a Moelis-run process in July.
- Morgan Stanley Capital Partners-backed Clarity Software Solutions was reported to be on the block via TripleTree in July.
- This Capital Management-backed clinical trial technology company Medrio was set to launch an auction in May via William Blair.
- Pharos Capital-backed physical therapy provider MotionPT launched an auction through Livingstone in July.
- THL-backed physical therapy franchise ProPT was working with Jefferies on an auction last summer.
- Avista Capital-backed pain management provider National Spine & Pain Centers took indications of interest in May for its Moelis and RBC Capital Markets-led process.
- Summit and DW Healthcare-backed preventive care technology company EHE Health took first-round bids for a Houlihan Lokey-run process in the spring.
- 3M was working with Goldman Sachs to carve out its health information systems, Axios reported in April.
- Madison Dearborn Partners-backed sports rehab product company Performance Health was working with UBS on a process, Axios reported in March.