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Health Care M&ANEWS

Volume 18, Issue 10October 2013

InsIde the health Care M&a Market

IN THIS ISSUE

Have Cash Flow, Will Acquire

The pharmacy benefit manage-ment market is dominated by a few big players, but there’s a lot of M&A activity going on at the lower end of the market. Private equity firms have taken notice.

eHealth Deals Dry UpEven technology has a life cycle.

The eHealth M&A space is devoid of major deals as investors watch and wait for the next generation of health care IT companies to grow up. Page 1

M&A in SeptemberDeal makers took a holiday, it

seems, but a well-deserved one after all the activity in July. Deals are be-ing driven by strategy, not the easy availability of financing. Page 19

...Departments

Technology

Deal Summaries Page 4Additional Transactions Page 6Health Care Technology Page 10

Services

Deal Summaries Page 11Additional Transactions Page 13Health Care Services Page 15

There’s been a veritable surge of merger and acquisition activity in the pharmacy benefit man-

agement (PBM) marketplace this year. That’s not saying a lot for a sector that saw only four deals announced in 2012, of course, but so far this year the num-ber has doubled to eight, with seven of those deals announced after June 1. In six deals, the buyer was either a private equity firm or a smaller PBM company.

This is a market dominated by 800-lb. gorillas like Express Scripts, Inc. (NASDAQ: ESRX), CVS Care-mark Corporation (NYSE: CVS), UnitedHealth Group (NYSE: UNH)

Someone pulled the plug on eHealth deals this year. Through September 30, 2013, only 38

transactions have been announced, compared with 80 in the first nine months of 2012.

Deal values are also way down, although they are not an accurate gauge of market strength, depending upon how many come with disclosed prices. Still, the 2013 deals have a combined total of $1.53 billion in the first nine months, compared with $4.96 billion in the same period last year. For the

Smaller PBmS Drive DealSBuyers Try To Build someThing ThaT ‘moves The needle’

eHealtH m&a matureSinvesTors WaiT for The nexT-gen Companies To groW up

and Catamaran Corp. (NASDAQ: CTRX), so the sudden round of deal-making at the lower end of the market is intriguing, to say the least.

“It’s getting harder for the smaller guys to compete with the bigger guys, because the PBM business is a scale business,” said Brian Tanquilut, senior vice president at Jefferies. “These companies basically exist to aggre-gate covered lives and find ways to buy drugs cheaper, or administer the pharmacy benefits more cheaply for plan sponsors such as employers and health plans.”

entire year, eHealth deals totaled nearly $5.3 billion. (We consider eHealth to encompass electronic health records, healthcare data analytics, telehealth, mobile medical applications, and other internet-based health care processes and delivery.)

“Year-to-date there have been only about seven or eight deals that were greater than $100 million in value, versus last year, when there were 20,” said Raymond Falci, managing direc-tor at Cain Brothers in New York.

(continued on page 2)


October 2013Health Care M&A News


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(continued from page 1)This year’s activity was sparked in part by Express

Scripts’ $29.1 billion takeover of Medco Health Solu-tions (NYSE: MHS), announced in July 2011 and closed in April 2012. Then came SXC Health Solutions’ (NAS-DAQ: SXCI) $4.4 billion deal with Catalyst Health So-lutions (NASDAQ: CHSI), announced in April 2012 and closed in July of that year, which became Catamaran Corp.

If scale is the name of the game in PBM, then Med-Impact Healthcare Systems is making the right moves. It’s the largest privately held PBM provider in the U.S., and has already made two acquistions so far this year, both for undisclosed terms. The first was ScriptSave, which pioneered the unfunded prescription drug benefit market in the U.S. It provides integrated benefit programs and pharmacy loyalty cards. MedImpact now provides Script-Save clients the opportunity to capture all transaction data to hopefully improve outcomes.

Its second deal was for Apex Affinity, a provider of consumer prescription savings programs to large affinity

groups. The deal gives MedImpact the ability to provide end-to-end prescription discount servics and loyalty pro-grams to health plans, retailers, large employers, financial services and direct marketing programs. Apex was sold by SilverStream Capital, which prefers to focus on health-care IT and tech-related services.

“MedImpact is a sizable PBM, and it’s been specu-lated often that MedImpact would be sold at some point,” said Tanquilut. “I think Catamaran would be very inter-ested in buying MedImpact down the road, because it’s actually a client of Catamaran. They run on Catamaran’s IT systems.”

Two of the deals were made by private equity firms who appear to be just getting into the PBM space. Back in January, Selway Capital Acquisition Corp. (OTCBB: SWCA), whose sole reason for being was to acquire small businesses, paid the equivalent of $74.7 million for Healthcare Corporation of America, a PBM based in Denville, New Jersey. At the time the deal was an-nounced, Selway management expected significant rev-enue growth, and the revenue of the combined company to be “at least $80 million.” Upon closing in mid-March, Selway changed its name to that of its target.

TPG Capital, LP, the global private investment firm, made its bet on the PBM market in July with the acquisition of Envision Pharmaceutical Services. The price, though undisclosed, was probably hefty, given that Envison has consolidated revenues of more than $3.5 billion and it covered more than 10 million individuals.

Although TPG doesn’t have another PBM company to help it realize synergies, it is probably looking to the major players to buy Envision in the future. “Catamaran’s been very vocal about wanting to buy PBMs and roll up the industry,” Tanquilut noted. “Private equity is seeing a willing buyer, and if they can do a lot of the lower-level consolidation, like $50 million to $200 million deals, they’ll have a bigger asset to sell to Catamaran down the road.”

Another attraction for PE firms is that PBM is a very high cash flow business. “Even if you don’t sell it, it generates a lot of cash,” Tanquilut said, adding, “If it’s run properly.”

Catamaran is still being a careful buyer, however. Its sole deal, for $409.5 million, was announced in Au-


October 2013 Health Care M&A News

gust for Restat, LLC, a prescription claim processor and PBM services company. At the time of the announcement, Catamaran expected Restat to contribute about $45 million of annual EBITDA on about $650 million of annual drug spending. It was also looking for $20 million in annualized synergies, after full integration.

Despite Catamaran’s stated acquisition intentions, the other major players aren’t looking to pick up small deals, Tanquilut said. “The small $15 million to $100 million asset will not move the needle for them anymore. Express Scripts won’t buy anything in the $10 to $30 mil-lion range be-cause it doesn’t do anything for them.”

S p e c i a l t y pharmaceuticals is the next growth area, he said, for both the phar-maceutical com-

Pharmacy Benefit Management M&A, through September 30, 2013

Target Acquirer Date Healthcare Corp. of America Selway Capital Acquisition Corp. January 31, 2013 Goold Health Systems Emdeon Inc. June 13, 2013 ScriptSave MedImpact Healthcare Systems July 15, 2013 Apex Affinity MedImpact Healthcare Systems July 31, 2013 Restat, LLC Catamaran Corporation August 1, 2013 Envision Pharmaceutical Service TPG Capital, LP August 8, 2013 Partners Rx Magellan Health Services September 9, 2013 SmartD Medicare Rx Drug Plan Express Scripts September 9, 2013

Source: Health Care M&A News, October 2013

panies and PBMs. Walgreen Co. (NYSE: WAG) just purchased the Kerr Drug chain in North Carolina, which also runs a specialty pharmacy business.

“Walgreen’s and a lot of other players are starting to put their money where their mouth is,” Tanquilut said. “If you’re a good manager, you’re starting to plan ahead, be-yond 2015. As you start thinking about the growth drivers over the long term, specialty pharma will definitely drive a lot of growth for these PBMs in the next five years.” Don’t say we didn’t warn you.



Deal SummarieS—tecHnology BiotecHnology

Deal SummarieS—tecHnology meDical DeviceS

TARGET LISTING ACQUIRER LISTING DATE PRICE

BioFire Diagnostics, Inc. Private bioMerieux NYSE Euronext: 9/3/2013 $450,000,000Salt Lake City, Utah Marcy l’Etoile, France BIM

in Brief: BioFire invented, manufactures and commercializes its multiplex PCR FilmArray system, a rapid molecular biology solution to diag-nose infectious diseases. bioMerieux hopes to strengthen its position as a major player in infectious disease diagnostics.

Verenium Corporation NASDAQ: BASF Corporation DE: BAS 9/20/2013 $62,000,000San Diego, California VRNM Florham Park, New Jersey

in Brief: Verenium focuses on the development and commercialization of high-performance enzymes. BASF plans to combine Verenium with its own enzyme activities and global access to relevant markets and become a bigger player in the strategic enzyme market.


Rochester Medical, Inc. NASDAQ: C.R. Bard, Inc. NYSE: BCR 9/4/2013 $262,000,000Stewartville, Minnesota ROCM Murray Hill, New Jersey

in Brief: Rochester Medical develops and supplies silicone urinary incontinence and urine drainage products. This transaction is a strategic fit for Bard and greatly enhances its position in the $930 million global urology homecare market.

FlowSense Medical Ltd. Tel Aviv: Baxter International Inc. NYSE: BAX 9/10/2013 $9,500,000Tel Aviv, Israel FLSN Deerfield, Illinois

in Brief: Private equity firm Trendlines Group is selling FlowSense, a company it founded in 2009 and took public in 2010. FlowSense’s URINFO fluid monitoring system provides accurate, real-time and continuous monitoring of urine output.

MAKO Surgical Corp. NASDAQ: Stryker Corporation NYSE: SYK 9/25/2013 $1,650,000,000Fort Lauderdale, Florida MAKO Kalamazoo, Michigan

in Brief: Stryker paid $30.00 per share which includes the issuance by MAKO of an additional 3.953 million shares in connection with an anticipated—albeit unannounced—acquisition by MAKO, putting the cost of that acquisition around $118.5 million.

Panasonic’s healthcare unit OTCBB: Kohlberg Kravis Roberts & Co. NYSE: KKR 9/27/2013 $1,670,000,000Osaka, Japan PCRFY New York, New York

in Brief: KKR will own 80% of the outstanding shares in a new company called Panasonic Healthcare Co., Ltd., and Panasonic will own 20%. It has three units: In Vitro Diagnostics, Medicom and Biomedical. The deal is expected to close in the first quarter of 2014.

Deal SummarieS—tecHnology eHealtH


ChemSW, Inc. Private Accelrys, Inc. NASDAQ: 9/3/2013 $15,300,000Fairfield, California San Diego, California ACCL

in Brief: ChemSW’s chemical inventory software is designed to help drugmakers and others comply efficiently and easily with environmental safety regulations.

Greenway Medical Technologies NYSE: Vitera Healthcare Solutions, LLC Private 9/23/2013 $644,000,000Carrollton, Georgia GWAY Tampa, Florida

in Brief: Greenway markets PrimeSUITE, its certified, single-database electronic health record, practice management and interoperability platform. It complements Vitera’s end-to-end clinical and financial technology solutions.



Deal SummarieS—tecHnology PHarmaceuticalS

TARGET LISTING ACQUIRER LISTING DATE PRICEAstex Pharmaceuticals, Inc. NASDAQ: Otsuka Pharmaceutical Co., Ltd. Private 9/5/2013 $866,000,000Dublin, California ASTX Tokyo, Japan

in Brief: Otsuka aims to enhance its discovery and development of drugs with novel working mechanisms by combining Astex’s fragment-based drug discovery technology with its own R&D strengths in areas such as central nervous system diseases, such as Parkinson’s disease.

Rights to antisense technology NASDAQ: Biogen Idec NASDAQ: 9/9/2013 $100,000,000Carlsbad, California ISIS Weston, Massachusetts BIIB

in Brief: Isis Pharmaceuticals sold exclusive rights to the use of its antisense technology to develop therapies for neurological diseases. Isis is responsible for drug discovery and early development, and Biogen is responsible for the creation and development of small molecule biologics.

IgDraSol, Inc. Private Sorrento Therapeutics, Inc. OTCQB: 9/10/2013 $28,200,000Fountain Valley, California San Diego, California SRNE

in Brief: The combined company will form an oncology franschise of potential products with Phase 2 data for multiple solid tumor indications, as well as two synergistic drug discovery and development platforms.

Rights to Inovio vaccines NYSE: INO Roche SIX: RO 9/10/2013 $10,000,000Blue Bell, Pennsylvania Basel, Switzerland

in Brief: Roche acquired an exclusive license for Inovio’s DNA-based vaccines, INO-5150 (targeting prostate cancer) and INO-1800 (targeting hepatitis B), as well as the use of Inovio’s Cellectra electroporation technology for the deliver yof the vaccines.

Rights to MK-1775 NYSE: MRK AstraZeneca plc NYSE: AZN 9/11/2013 $50,000,000Whitehouse Station, New Jersey London, England

in Brief: Merck is selling its rights to WEE1 kinase (MK-1775), which is currently in Phase 2a clinical studies in combination with standard-of-care therapies for the treatment of certain types of ovarian cancer. The sale allows Merck to focus on later-stage oncology programs.

Cornerstone Therapeutics NASDAQ: Chiesi Farmaceutici SpA Private 9/16/2013 $251,750,000Cary, North Carolina CRTX Cary, North Carolina

in Brief: Cornerstone Therapeutics is a specialty pharma company focused on commercializing products for the hospital and adjacent specialty markets. This acquisition strengthens Chiesi Farmaceutici’s U.S. presence.

Rights to ALX-0061 Euronext: AbbVie NYSE: ABBV 9/23/2013 $175,000,000Ghent, Belgium ABL Chicago, Illinios

in Brief: Ablynx is selling its right to develop and commercialize ALX-0061, a nanobody used to treat the inflammatory diseases rheumatoid arthritis and systemic lupus erythematosis. AbbVie will be responsible for clinical development beyond Phase 2 clinical trials.

Rights to cystic fibrosis therapies Euronext: AbbVie NYSE: ABBV 9/24/2013 $45,000,000Mechelen, Belgium GLPG.BR Chicago, Illinios

in Brief: Galapagos NV is partnering with AbbVie to develop and commercialize novel therapies for the treatment of cystic fibrosis. The up-front payment of $45 million could be followed by up to $360 million in developmental and regulatory milestones, as well as sales milestones.

SECTOR TARGET ACQUIRER DATEBIOTECHNOLOGY Nano and micro entrapment technology Plandai Biotechnology, Inc. 9/3/2013 ArcherDx, Inc. Enzymatics, Inc. 9/6/2013 PolyMedix assets Cellceutix Corporation 9/9/2013 Silicon Biosystems The Menarini Group 9/12/2013 Rights to CytoSorb Biocon Ltd. 9/13/2013 Partec GmbH Sysmex Corporation 9/24/2013 Inostics GmbH Sysmex Corporation 9/24/2013

aDDitional Deal SummarieS—tecHnology



aDDitional Deal SummarieS—tecHnology (ConT’d)SECTOR TARGET ACQUIRER DATEeHEALTH Consult A Doctor Teledoc, Inc. 9/4/2013 Mirth Corporation Quality Systems, Inc. 9/9/2013 OnTrack Diabetes app Medivo 9/26/2013MEDICAL DEVICES Innovative Medical Device Solutions Golden Equity Investments 9/13/2013 Patent portfolio Trinity Orthopedics 9/16/2013PHARMACEUTICALS Memogain Neurodyn Inc. 9/4/2013 Rights to novel drugs to treat DME ThromboGenics 9/5/2013 Resolute Oncology, Inc. Update Pharma Inc. 9/9/2013 Rights to PWT143 MEI Pharma 9/10/2013 4 generic products Amneal Pharmaceuticals, LLC 9/30/2013 Canterbury Laboratories, LLC Stratus Media Group, Inc. 9/30/2013 Hygeia Therapeutics, Inc. Stratus Media Group, Inc. 9/30/2013

eHealth Deals Dry Up(continued from page 1)

Private equity firms are sitting out most of the big deals this year. Of the transactions announced with more than $100 million in value, only one has been from a private equity buyer. “Last year we had roughly six out of 20 deals of more than $100 million done by private equity firms.”

One reason for their absence is that “valuations are all over the map. It depends on what the company does,” Falci said. For example, data analystics companies are hot commodities, driven by CMS’ meaningful-use require-ments that healthcare providers be able to demonstrate

good patient outcomes and earn financial rewards. Others, such as mobile medical apps makers, may lack a solid business model but are perceived as potential data pow-erhouses. As Falci noted, “Private equity firms are feeling that valuations have gotten a bit frothy.”

However, the largest eHealth transaction announced by a PE buyer was Vitera Healthcare Solutions, LLC’s $644 million acquisition of Greenway Medical Tech-nologies (NYSE: GWAY), made public on September 23. (Vitera is owned by Vista Equity Partners.) The second largest deal in the sector was athenahealth, Inc.’s (NASDAQ: ATHN) $293 million for Epocrates, Inc. (NASDAQ: EPOC). (See chart on page 8.)

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Only three deals have involved publicly traded tar-gets, the third one being GE’s (NYSE: GE) Healthcare Strategic Sourcing division based in Chalfonte, England. It was announced in March. Private equity firm The Gores Group was the buyer, and no price was disclosed.

To make matters more confusing, probably the largest eHealth deal this year was not even publicly an-nounced. UnitedHealth Group (NYSE: UNH) acquired Humedica, a big data aggregator, in January. No mention was made until the Boston Business Journal broke the story. Humedica was owned by a consortium of private equity firms, investment bank Leerink Swann and others who reaped “hundreds of millions of dollars,” according to the story.

market cyclicality

Timing is everything, as investors know, and that’s another thing that is affecting this sector in 2013. For example, the Food & Drug Administration released its final guidelines for mobile medical apps on September 26. They were not as onerous as many in the ehealth industry had feared, and potentially could open the floodgates for mobile app transactions.

In fact, on the same day as the FDA announcement,

lab data company Medivo publicized its purchase of the OnTrack diabetes app, for a price Falci estimates below $10 million. While Medivo’s focus is on effectively dis-seminating lab data to clinicians, it’s now getting into the consumer-facing side of mobile apps. Another recent deal came in August, when GlassesOff Inc. purchased Ucansi Inc., whose main product is a mobile app designed

Top 10 eHealth M&A Transactions, through September 30, 2013

Rank Target Acquirer Price 1 Greenway Medical Technologies Vitera Healthcare Solutions, LLC $644 million 2 Epocrates, INc. athenahealth, Inc. $293 million 3 dbMotion Allscripts $235 million 4 Cardiocom Medtronic, Inc. $200 million 5 Ingenuity Systems, Inc. Qiagen $105 million 6 Jardogs LLC Allscripts $24 million 7 ChemSW, Inc. Accelrys, Inc. $15.3 million 8 ALTA Systems, Inc. ManTech International Corp. $10.2 million 9 eHealthcareIT NetDimensions $3.5 million

10 etrinity NV CTG $2.8 million Source: Health Care M&A News, October 2013

to boost eyesight in people over age 50. Use of the iPad app is supposed to exercise eyeballs that age makes lazy.

In July, the CMS announced that it would stick to its schedule requiring healthcare providers to meet Stage 2 of the Meaningful Use requirements governing implemen-tation of electronic health records. The Stage 1 require-ments drove a lot of building and buying of digital health products, and Stage 2 will usher in more M&A activity.

“A lot of the more mature businesses have transacted in the last couple of years,” Falci said. “We’re lining up for the next generation of companies, which are still in their growth stages, not their harvesting stages.”

That’s where the venture capital is going, obviously. The digital health incubator Rock Health reported 25% more deals done in the digital health space in the first half of 2013, compared with 2012. Funding levels increased by 12%, to $849 million. VC funding has slowed con-siderably to medical devices and pharmaceuticals, where investors are focusing on late-stage companies.

“Once you have all the infrastructure in place to col-lect data and make it easily available anywhere across the health care world, there are so many things you can do to improve the practice of health care,” Falci observed. “But it’s like the chicken and the egg. These companies needed to wait for the availability of all this data to see their busi-ness opportunities become more tangible.”

So the eHealth sector is poised for more consolida-tion, and 2014 may see new records for M&A transactions. Let’s hope none of them lay an egg.



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4/17 Transitional Care: Leveling Out The Bumps

5/15 Marketing Strategies To Improve Or Maintain Occupancy

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5/1 Key Growth Sectors in the Health Care Services M&A Market

6/5 Home Health & Hospice M&A: Consolidation Is In the Air

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8/7 Ins & Outs Of Health Care Acquisition Financing

9/25 Medical Office Buildings M&A: Get In On The Ground Floor

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11/20 A Primer: How To Sell Your Private Senior Care Company




The Month in M&A at a Glance:Health Care Technology, September

Sector Deal Volume Combined PriceMedical Devices 6 $3,591,500,000 Pharmaceuticals 15 1,525,950,000eHealth 5 659,300,000Biotechnology 9 512,000,000Total 35 $6,288,750,000

HealtH care tecHnology newS

September’s technology deals didn’t reach the acme of August, when deal value surpassed the $12 billion mark. The number is deceiving, of course, because the bulk of that came from the $9.7 billion bid for Onyx Pharma-ceuticals, Inc. (NASDAQ: ONXX) made by Amgen, Inc. (NASDAQ: AMGN). That puts September’s technology sector in a better light, with nearly $6.3 billion spread across the four sectors. The Medical Device sector saw the two billion-dollar-plus deals, while Biotechnology remained quiet (too much attention going to the IPO mar-ket), while eHealth showed a nice rebound from previous months. Third quarter results are right around the corner, so stay tuned.

BiotecHnology

The biggest deal in biotech last month was the $450 million acquisition of molecular biology firm BioFire Di-agnostics, Inc. of Salt Lake City, Utah by French biotech company bioMerieux (OTCBB: BMXMF). In vitro diag-nostics is bioMerieux’s specialty, and BioFire’s multiplex PCR FilmArray system—a simple and rapid molecular biology solution to diagnose infectious diseases—was the attraction.

The only other deal with a disclosed price was BASF Corporation’s (DE: BAS) $62 million cash offering for Verenium Corporation (NASDAQ: VRNM), an indus-trial biotech focused on developing and commercializing high-performance enzymes. BASF plans to combine Verenium with its own “strategic enzyme” activities. UBS Investment Bank served as financial advisor and Cooley LLP served as legal advisor to Verenium. The transaction is expected to close in the fourth quarter of 2013.

Speaking of the strategic enzyme market, Enzymat-ics, Inc. acquired ArcherDx, Inc. for an undisclosed, but probably significant, price. Enzymatics acknowledged its cash-plus-equity offer also included up to $50 million in potential milestones. ArcherDx develops NGS-based kits and software solutions for using in cancer treatment. The purchase adds genomic capabilities to Enzymatics’ supply chain solutions and reagents groups.

The month’s activity had a lot of international ac-quisitions. Because they came without prices, they are not detailed in our summaries, but it’s interesting to note that the privately held Menarini Group of Florence, Italy

purchased Silicon Biosystems, SpA in Bologna. Silicon manufactures the DEPArray platform, using dielectropho-resis to isolate and maniculate cells in suspension with a microelectronic array. Bangalore, India-based Biocon Ltd. purchased exclusive rights to CytoSorb (OTCBB: CTSO), a novel therapy for managing sepsis.

eHealtH

As you already know from the front-page story, Greenway Medical Technologies (NYSE: GWAY), which markets PrimeSUITE, a certified, single-database electronic health record, practice management and in-teroperability solution platform, was taken private by Vitera Healthcare Solutions, LLC, owned by Vista Eq-uity Partners. The $644 million price was cash upfront, with Greenway shareholders receiving $20.35 per share, a 62% premium to Greenway’s 90-day volume weighted average stock price, and a 20% premium to its prior-day closing. Jefferies LLC and BMO Capital Markets were financial advisors to Vitera and Kirkland & Ellis LLP was legal advisor. J.P. Morgan served as financial advisor to Greenway and Paul Hastings LLP was legal advisor.

Reflecting the growing importance of all things federal, ChemSW, Inc., an environmental health and safety compliance solutions provider, was acquired by Accelrys, Inc. (NASDAQ: ACCL) for the lowly sum of $15.3 million. ChemSW’s software makes current, real-time chemical safety and inventory data for pharma and biotech companies, from a cloud-based and on-premesis software tool.

Moving to telehealth, Consult A Doctor, of Miami, Florida was purchased by Teledoc, Inc., which has more than 6 million members nationwide. Consult A Doctor is a cloud-based telemedicine service and technology plat-form with U.S. board-certified physicians in all 50 states



Deal SummarieS—ServiceS Home HealtH & HoSPice

TARGET LISTING ACQUIRER LISTING DATE PRICEHarden Healthcare Holdings Private Gentiva Health Services, Inc. NASDAQ: 9/19/2013 $408,800,000Austin, Texas Atlanta, Georgia GTIV

in Brief: Harden Healthcare operates in 13 states, providing home health, hospice and community care services. As part of the transaction, Gentiva becomes a preferred partner for Harden’s 49 skilled nursing and assisted living facilities in Texas.

Deal SummarieS—ServiceS HoSPitalS

Deal SummarieS—ServiceS laBS, mri & DialySiS

TARGET LISTING ACQUIRER LISTING DATE PRICE43 German hospitals Private Fresenius Helios XETRA: 9/13/2013 $4,175,200,000Bad Neustadt, Germany Bad Homburg, Germany FRE.DE

in Brief: Rhoen Klinikum AG is selling 43 hospitals, with a total of 11,800 beds, as well as 15 outpatient facilities. The acquisition makes Fresenius Helios the largest private hospital company in Europe, with 117 hospitals.

CharterCARE Health Partners Nonprofit Prospect Medical Holdings, Inc. Private 9/25/2013 $95,000,000Providence, Rhode Island Los Angeles, California

in Brief: CharterCare is the corporate parent of Roger Williams Medical Center, St. Joseph Health Services of Rhode Island and Elmhurst Extended Care, with a combined total of 579 licensed beds. The transaction is expected to close by the early part of 2014.

TARGET LISTING ACQUIRER LISTING DATE PRICEPocketSonics, Inc. Private Analogic Corporation NASDAQ: 9/20/2013 $11,000,000Charlottesville, Virginia Peabody, Massachusetts ALOG

in Brief: Analogic has held a minority position in PocketSonics since 2010 and the two companies have worked closely to further PocketSonics’ ultra-sound technology. The transaction closed on September 20, 2013.

Phytopharm plc LSE: PLM IXICO Limited Private 9/23/2013 $9,016,000Huntingdon, England London, England

in Brief: IXICO is a medical technology and diagnostics company, and Phytopharm is a shell company that is being acquired in a reverse takeover. Upon completion of the transaction, Phytopharm will change its name to IXICO plc, with the new ticker symbol IXI.

Deal SummarieS—ServiceS long-term care TARGET LISTING ACQUIRER LISTING DATE PRICESkilled nursing facility Private Aviv REIT, Inc. NYSE: AVIV 9/3/2013 $3,500,000Texas Chicago, Illinios

in Brief: This skilled nursing facility is licensed for 96 beds but has only 70 beds that are operational. Aviv has triple-net leased it to Trinity Healthcare, an existing Aviv tenant. The acquisition closed on September 3, 2013.

Hidden Hills Health and Rehab NYSE: AVIV Altitude Health Services Private 9/9/2013 $2,250,000Omaha, Nebraska Evanston, Illinois

in Brief: Hidden Hills was leased to a private operator and the 108-bed facility had been on the federal Special Focus list for several years. It was rebuilt in 1999. Occupancy at the time of the sale was just 30 patients. The new name is Ridgecrest Rehabilitation Center.

Skilled nursing facility Private LTC Properties, Inc. NYSE: LTC 9/11/2013 $14,400,000Trinity, Florida Westlake Village, California

in Brief: This 120-bed facility was developed by a private investor who leased it to Traditions Management. It was built in 2008 and has stabilized occupancy. The transaction is expected to close on or about November 1, 2013.



Deal SummarieS—ServiceS long-term care (ConT’d) TARGET LISTING ACQUIRER LISTING DATE PRICE

2 memory care communities Private Validus Senior Living Private 9/12/2013 $21,250,000Florida Tampa, Florida

in Brief: Ivy Ridge Living in St. Petersburg has 58 units and opened in 2012. It currently has a 65% occupancy rate. Hidden Lake Living in Bradenton has 58 units, although it is licensed for 78 beds, and has current occupany of 40%. Both facilities provide memory care services.

4 retirement communities Private Regal Lifestyle Communities, Inc. TSX: RLC 9/12/2013 $61,800,000Ontario, Canada Toronto, Canada

in Brief: Community Lifecare Inc. is selling four retirement communities that were built or last renovated between 1988 and 2009. They are located in Chatham, London, Ottawa and Port Perry. The average occupancy for the portfolio is 97%, for a combined total of 546 beds.

Franklin Park Sonterra Priavte Harrison Street Real Estate Capital Private 9/13/2013 $47,500,000San Antonio, Texas Chicago, Illinois

in Brief: Franklin Park opened in 2010 with 150 independent living units and 52 assisted living units. Current occupancy is above 97%. Harrison Street purchased this in a 90/10 joint venture with Texas-based Franklin Companies, which developed the property.

Falling Spring Nursing & Rehab Nonprofit Mid-Atlantic Health Care, LLC Private 9/15/2013 $11,000,000Chambersberg, Pennsylvania Timonium, Maryland

in Brief: Falling Spring was built in 1970 with an addition in 1975. The 186-bed facility is being sold with 8.9 acres by Franklin County. Since 2008, it has lost more than $2 million.

Ark Holding Company Private Omega Healthcare Investors, Inc. NYSE: OHI 9/16/2013 $525,000,000Memphis, Tennessee Hunt Valley, Maryland

in Brief: Ark Holding owns and operates 56 skilled nursing facilities in 12 states, with the highest concentration in South Carolina (17), Mississippi (13) and Texas (9). Approximate total number of beds is 5,500. Omega will lease all the facilities back to Ark, under the name Covenant Dove.

Hillcrest of Loveland Private MBK Senior Living Private 9/21/2013 $19,600,000Loveland, Colorado Irvine, California

in Brief: Hillcrest of Loveland offers 58 independent living units, 14 assisted living units and 10 memory care units. Its IL apartments are among the largest in the market. Occupancy is 100%, with a waiting list.

Schenley Gardens Private Blue Harbor Senior Living Private 9/24/2013 $15,675,000Pittsburgh, Pennsylvania Portland, Oregon

in Brief: This is Blue Harbor’s first acquisition in the Pittsburgh market, although it owns another property in the state. Schenley Gardens was family-owned, and offers 164 independent and assisted living units.

Regency Pointe Retirement Private National Health Investors, Inc. NYSE: NHI 9/26/2013 $12,000,000Rainbow City, Alabama Murfreesboro, Tennessee

in Brief: Regency Pointe was built in 2003 and has 72 independent living units, 36 assisted living units and 12 memory care units. Current occupancy is 87%. The new operator, Discovery Senior Living, is leasing the community from NHI for an initial 15-year term with options to extend the lease.

Peachtree Plantation Private National operator Private 9/30/2013 $11,750,000Oakwood, Georgia

In Brief: Peachtree Plantation is a personal care and memory care facility that was built in 1988 and is licensed for 70 beds. It underwent a significant renovation in 2008 that added units to the building. Occupancy was trending above 90% at the time of closing.



Deal SummarieS—ServiceS otHer


Partners Rx Private Magellan Health Services NASDAQ: 9/9/2013 $100,000,000Scottsdale, Arizona Avon, Connecticut MGLN

in Brief: Partners Rx is a full-service commercial pharmacy benefits management company focusing on health plans and self-funded employers. It has more than 300,000 core commercial PBM covered lives, and will become part of Magellan Pharmacy Solutions.

Molecular Profiles Ltd. Private Columbia Laboratories, Inc. NASDAQ: 9/12/2013 $25,000,000Nottingham, England Boston, Massachusetts CBRX

in Brief: Molecular Profiles provides pharmaceutical development, clinical trial manufacturing, advanced analysis and consulting services for the pharma industry worldwide. Columbia expects to realize a double-digit impact to its EBITDA and operational synergies of up to $400,000 annually.

aDDitional tranSactionS—ServiceS Sector target acquirer DateBEHAVIORAL HEALTH CARE US Community Behavioral LLC Bregal Partners 9/5/2013 The Betty Ford Center Hazelden 9/24/2013HOME HEALTH & HOSPICE Alegis Care Cigna Corporation 9/3/2013 Convenant Companies Ecumen 9/18/2013HOSPITALS Procter Health Care Incorporated Methodist Health & Services 9/9/2013 Terveystalo EQT VI 9/10/2013 St. John’s Health Center Providence Health & Services 9/16/2013 St. Catherine and St. John hospitals Houston Methodist 9/18/2013 Lanier Health Services East Alabama Medical Center 9/30/2013LABS, MRI & DIALYSIS MuirLab Patient Service LabCorp of America 9/4/2013LONG-TERM CARE Griffen Nursing Center Regional operator 9/1/2013 6 Texas nursing facilities Paragon Healthcare Group, LLC 9/17/2013 6 Ohio skilled nursing facilities JAG Healthcare 9/24/2013 Summerfield Healthcare Center Ide Management Group, LLC 9/30/2013MANAGED CARE SmartD Rx Medicare Prescription Drug Plan Express Scripts 9/9/2013PHYSICIANS MEDICAL GRP Northwestern Medical Faculty Foundation Northwestern Memorial Hospital 9/3/2013 Northern Westchester Anesthesia Services PC MEDNAX, Inc. 9/11/2013 Arizona Integrated Physicians DaVita Healthcare Partners 9/16/2013 Metropolitan Pulmonary and Hospital Medicine IPC The Hospitalist Company 9/18/2013REHABILITATION Triad MedSolutions 9/5/2013OTHER Physicians Endoscopy Pamlico Capital 9/4/2013 Bend Research Capsugel 9/5/2013 CryoMist I, LLC and CryoMist II, LLC Incumaker, Inc. 9/9/2013 Enclarity, Inc. LexisNexis Risk Solutions 9/11/2013 LatAm Clinical Trials JSS Medical Research 9/26/2013

TARGET LISTING ACQUIRER LISTING DATE PRICETwo rehabilitation hospitals NYSE: SNH HSRE-TST III, LLC Private 9/20/2013 $90,000,000Woburn and Braintree, Massachusetts

in Brief: The Sanders Trust, LLC and Harrison Street Real Estate Capital, LLC have teamed up to buy two rehab hospitals from Senior Housing Properties Trust: New England Rehabilitation Hospital (198 licensed beds) and Braintree Rehabilitation Hospital (166 beds).

TherEX, Inc. Private Kindred Healthcare NYSE: KND 9/30/2013 $14,000,000Franklin, Tennessee Louisville, Kentucky

in Brief: TherEx provides on-site, hospital-based rehabilitation services in 11 states. Kindred entered the hospital-based rehab services market with its acquisition of RehabCare in 2011.

Deal SummarieS—ServiceS reHaBilitation



for on-demand care anytime. Its TeleCare 3.0 cloud-based platform supports its MyHealthPlan 24/7 and MyHospital 24/7 services.

meDical DeviceS

With all the deals happening in the Medical Device space, it’s hard to relate to the recent report from Evalu-ateMedtech, which characterizes 2013 sales as “gloomy.” By 2018, however, the company predicts that sales growth in the medical device industry will outperform the pre-scription drug market, and that in vitro diagnostics will be the leading category.

In fact, urine was the big market-mover last month, as C.R. Bard, Inc. (NYSE: BCR) paid $262 million for Rochester Medical, Inc. (NASDAQ: ROCM), a leading developer and supplier of silicone urinary incontinence and urine drainage products. The transaction is a strategic fit for Bard, which is already well-engaged in the $930 mil-lin global urology homecare market. The purchase price reflects $20 per share and a 37% premium over ROCM’s

(continued from page 10) average closing price during the 90 trading days prior to September 3, if you’re keeping score. Piper Jaffray & Co. served as exclusive financial advisor to Rochester Medical and Dorsey and Whitney LLP served as counsel.

The other urology-driven deal involved FlowSense Medical Ltd. of Tel Aviv, Israel and its acquisition for a mere $9.5 million by Baxter International Inc. (NYSE: BAX). The Trendlines Group, a private equity firm, founded FlowSense in 2009 and took it public on the Tel Aviv stock exchange in 2010. The company’s URINFO fluid monitoring system provides accurate, real-time and continuous monitoring of urine output.

Of course there were two billion-dollar deals in this sector: MAKO Surgical Corp. (NASDAQ: MAKO) was sold to Stryker Corporation (NYSE: SYK) for $1.65 billion and Panasonic Healthcare Co., Ltd. finally went to Kohlberg Kravis Roberts & Co., LP (NYSE: KKR) for $1.67 billion. MAKO markets the RIO Robotic-Arm Interactive Orthopedic System for surgical procedures and Panasonic would rather make TV sets than deal with all the turmoil in medical devices. Who can blame them?

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The Month in M&A at a Glance:Health Care Services, September 2013

Sector Deal Volume Combined PriceHospitals 7 $4,225,200,000 Long-Term Care 16 748,675,000 Home Health & Hospice 3 408,800,000 Other 7 125,000,000Rehabilitation 3 104,000,000Labs, MRI & Dialysis 3 20,016,000Behavioral Care 2 —Managed Care 1 —Physician Medical Groups 4 —Total 46 $5,631,691,045

PHarmaceuticalS

Several deals transpired in the Pharma sector last month, although none had star-quality status. Announced deals involved the outright company acquisition or else the “rights to” certain late-stage compounds. The combined total of disclosed prices only amounted to $1.5 billion or a little more. Ho-hum for this sector.

The largest deal came from Otsuka Pharmaceu-tical Co. Ltd. of Tokyo for Astex Pharmaceuticals, Inc. (NASDAQ: ASTX), a bio-venture company with a fragment-drug discovery research center in England and a clinical R&D function in California. Otsuka wants to enhance its drug discovery and development by combin-ing Astex’s fragment-based drug discovery technology with its own R&D around diseases of the central nervous system. The $866 million price reflects a tender offer of $8.50 per share for all outstanding Astex common shares, a 48% premium to the average closing stock price for the prior 30-day period. Hmm. Still sounds better than an average 90-day period.

Italian pharma firm Chiesi Farmaceutici gained a better toehold in the U.S. market with its $252 million purchase of Cornerstone Therapeutics (NASDAQ: CRTX) in Cary, North Carolina. Cornerstone is a specialty pharmaceutical company focused on commercializing products for the hospital and other specialty markets. Jef-feries International Limited served as financial advisor and Morgan, Lewis & Bockius LLP was legal advisor to Chiesi. Lazard served as financial advisor and Clifford Chance served as legal advisor to Cornerstone.

Biogen Idec (NASDAQ: BIIB) kept up its serial acquisitions with a $100 million purchase of the rights to antisense technology from Isis Pharmaceuticals (NASDAQ: ISIS). The deal is part of a six-year research collaboration, and Biogen gets exclusive rights to the use of Isis’ antisense technologies to develop therapies for neurological diseases. Isis will be responsible for drug discovery and early development, while Biogen will be responsible for the creation and development of small molecule treatments and biologics.

Finally, Johnson & Johnson (NYSE: JNJ) received a lot of preliminary offers for its Ortho Clinical Diagnos-tics unit from private equity buyers. The deal may be done by the time you read this, so let’s see if the reported price of $5 billion was met by the suitors.

HealtH care ServiceS newS

The services sector saw a slight bump in deal volume compared with August, and a very welcome bump in deal value—up to $5.6 billion in September versus $1.2 billion the previous month. Once again, the hospital category lead the way, with a $4.1 billion deal between two Ger-man hospital systems. While Long-Term Care stayed in the top-three places, some usually quiet sectors such as Home Health & Hospice and Rehabilitation actually had deals that came with prices.

BeHavioral HealtH care

Two big names in behavioral health care announced their merger last month, as the Betty Ford Center in Ran-cho Mirage, California joined Hazelden of Center City, Minnesota. The merger will help both treatment centers achieve the scale they need to invest in state-of-the-art facilities, and research and development at 14 locations. The combined entity becomes the largest nonprofit addic-tion treatment provider in the country.

Private equity firm Bregal Partners purchased U.S. Community Behavioral, LLC for an undisclosed price. U.S. Community is a multi-state provider of community-based behavioral services to adults and children with intellectual and development disabilities. Cain Brothers represented U.S. Community Behavioral and Dechert LLP represented Bregal Partners in the sale.

Home HealtH & HoSPice

This sector had three announced deals in Septem-ber, the largest of which was Gentiva Health Services’



(NASDAQ: GTIV) $408.8 million acquisition of Harden Healthcare Holdings, Inc. Harden provides home health and hospice services in 13 states. The price included $355 million in cash and approximately $53.8 million in Gen-tiva common stock. Edge Healthcare Partners, LLC, a division of Edge Corporate Finance, LLC acted as financial advisor to Gentiva. Greenberg Traurig, LLP is Gentiva’s legal advisor. Barclays acted as financial advisor to Harden’s board of directors and Alston & Bird LLP was legal advisor to Harden in the deal.

Triton Pacific Capital Partners has one less health care company in its portfolio, following its sale of Ale-gis Care, a multi-specialty health services organization serving homebound Medicare and Medicaid patients. The buyer was Cigna Corporation (NYSE: CI), for un-disclosed terms. Alegis will remain focused on chronic care management and work with Cigna-HealthSpring customers in 10 states.

HoSPitalS

The big deal in this sector was the resurrected sale of 43 German hospitals (11,800 beds) and 15 outpatient facilities by Rhoen Klinikum AG to Fresenius Helios, a division of Fresenius SE & Co. KGaA (XETRA: FRE.

DE). Veteran deal watchers will remember that a similar deal was struck between these two companies back in Q2:12, for $3.9 billion. That would have included all 53 hospitals (16,000 beds) and 39 health care centers owned by Rhoen-Klinikum. The deal was scuttled when hostile bidders showed up, but didn’t buy. This latest acquisition will make Fresenius Helios the largest private hospital company in Europe, with 117 hospitals and $7.48 billion in annual revenue.

Prospect Medical Holdings, Inc., which is backed by Leonard Green & Partners, acquired CharterCARE Health Partners for $95 million. CharterCARE is the corporate parent of Roger Williams Medical Center, St. Joseph Health Services of Rhode Island, with a combined 579 beds, and Elmhurst Extended Care. The terms of the deal call for a $50 million payment over the next four years and $45 million upon regulatory approval.

Brief update: Baylor Health Care System and Scott & White Healthcare completed their previously announced merger, making it the largest not-for-profit health system in Texas. The system, dubbed Baylor Scott & White Health, has $8.3 billion in assets and 43 hospi-tals, more than 500 patient care sites, more than 6,000 affiliated physicians, 34,000 employees and the Scott &

There’s no quicker way to get current on the M&A market and review historic M&A data. Access vital details and crucial transaction information in each specific sector report. Essentials such as revenue and EBITDA multiples, key market statistics, charts and graphs on acquirers, sellers, deals and more are included. Stay ahead of the competition.

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White Health Plan. They need a state as big as Texas to hold everything.

laBoratorieS, mri & DialySiS

A few transactions were announced in this category last month, the largest being Analogic Corporation’s (NASDAQ: ALOG) $11 million bid for PocketSonics, Inc., an ultrasound technology firm. An additional $3 mil-lion may be paid as certain unspecified milestones are met. Analogic has held a minority position in PocketSonics since 2010, as the two companies worked closely together.

In a reverse merger, U.K.-based shell company Phytopharm plc (LSE: PLM) was taken over by IXICO Limited, a medical technology and diagnostics company, for $9 million. Phytopharm will own 45% and IXICO will own 55% of the new company. Upon completion, Phytopharm plc will change its name to IXICO plc and use the new ticker symbol IXI.

Probably the largest deal in this sector did not disclose a price. Laboratory Coporatation of America (NYSE: LH) acquired 26 MuirLab Patient Service Centers across three California counties from John Muir Health. Ref-erence lab services were also included in the deal. John Muir Health retains its two hospital-based labs, and will no longer provide lab services to skilled nursing facilities.

long-term care

In the largest skilled nursing facility acquisition of the year, actually in about two years, Omega Healthcare Investors (NYSE: OHI) announced it reached an agree-ment to purchase 56 nursing facilities from Ark Holding Company. This portfolio was known as the Covenant Dove portfolio. It is based in Memphis, Tennessee, and Behrman Capital was the controlling shareholder. The purchase price comes to $525 million, or $95,500 per bed. Omega will lease the facilities back to Ark Holding for a 50-year term and the tenant will have the right to prepay the remainder of its obligations under the lease starting after 40 years, equal to the sum of the unamortized por-tion of the original $525 million investment. The facilities are located in a dozen states, with more than two-thirds located in South Carolina (17), Mississippi (13) and Texas (9). Jefferies represented the sellers.

It seems that a month hardly goes by without the sale of another county-owned skilled nursing facility, and this

month is no exception. Maryland-based Mid-Atlantic Health Care was the winning bidder for a 186-bed facil-ity in Chambersburg, Pennsylvania that was built in 1970 with an addition in 1975. Financial details are not avail-able, but since 2008 the facility has lost a total of more than $2 million. The purchase price is $11.0 million, or $59,100 per bed, and the sale is expected to close later in the fourth quarter. The county had just $1.7 million of debt on the property, so in addition to freeing up some cash flow by no longer having to fund losses, the county will have more than $9 million of cash available for other uses. Susquehanna Group Advisors represented the count in the sale.

LTC Properties (NYSE: LTC) has agreed to pur-chase a 120-bed skilled nursing facility in Trinity, Florida for $14.4 million, or $120,000 per bed. This facility was developed in 2008 by a local investor who then leased it to Traditions Management, and occupancy at the time of sale was stabilized. LTC will lease the facility to Traditions for an initial 10-year term. Because Traditions already has four leased properties with LTC, this lease will be added to the Master Lease.

Altitude Health Services has purchased a troubled nursing facility in Omaha, Nebraska that had been on the federal Special Focus list for several years. The facility had been leased to a private operator, and occupancy had plunged to less than 30% and the Alzheimer’s unit had closed. The 108-bed facility will be re-branded under the name Ridgecrest Rehab Center. The facility was rebuilt in 1999, so the physical plant is in good shape; it was just poor management by the previous operator. Altitude plans to reopen the Alzheimer’s unit and believes it will take a maximum of 18 months to increase the census to 80 pa-tients with a 20% Medicare census. Altitude has two other facilities in Nebraska, so it knows the local landscape. The purchase price was $2.25 million, or $20,800 per bed, and financing was provided by MB Financial Bank.

PHySician meDical grouPS

More than half of U.S. physicians—53.2%—were self-employed in 2012, according to a study recently released by the American Medical Association. Sixty percent of physicians reported they worked in practices owned by physicians. Just 29% either worked directly with a hospital or for a practice that was partially owned by a hospital. We’d bet those percentages have changed somewhat, as the acquistions of physician medical groups



have continued unabated. In September, four more were made public (no terms disclosed, of course), involving more than 1,700 physicians and anesthesiologists. That’s called “moving the needle.”

reHaBilitation

It isn’t every month (or often) that we can highlight a deal in this sector that also comes with a price. September was a special month in that regard. Kindred Healthcare (NYSE: KND) announced the acquisition of TherEX, Inc. for $14 million. TherEX provides on-site, hospital-based services in 11 states, and adds to Kindred’s con-tinuum of post-acute services. TherEx will become part of its RehabCare hospital rehabilitative services business, which managed 103 hospital-based inpatient rehabilita-tion facilities in 25 states, prior to this acquisition.

otHer

Partners Rx, a full-service commerical PBM with more than 300,000 covered lives, was purhcased by Ma-gellan Health Services (NASDAQ: MGLN), a specialty health care management company with expertise in man-aging behavioral health care programs for special popula-

tions, for $100 million cash. Partners Rx will become part of Magellan Pharmacy Solutions, and closing is expected in the fourth quarter of this year.

Still more clinical research organization (CRO) deals are coming to light. Last month, Molecular Profiles Ltd., in Nottingham, England, was acquired by Boston-based Columbia Laboratories, Inc. (NASDAQ: CBRX) for $25 million. The price included $16.7 million in cash and 1,051,323 shares of Columbia common stock, represent-ing 10x to 11x Molecular’s projected EBITDA for its fiscal year ending July 31, 2014. Columbia also expects to real-ize a double-digit impact to its EBITDA and operational synergies of up to $400,000 annually.

In another multi-national CRO deal, JSS Medical Research, a full-service CRO based in Montreal, Canada, acquired LatAm Clinical Trials, with offices in Miami, Florida, Columbia and Panama. It provides support to the pharmaceutical industry for Phases 1 through 4 and post-marketing studies. The research staff is located in the An-dean countries of South and Central America. Partnerships with other CROs extend its reach to Mexico, Argentina, Brazil and Chile, with operations in Costa Rica, Guate-mala, Dominican Republic, Venezuela and Ecuador.

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Mergers and acquisitions started off slowly in September, thanks in part to the early Labor Day holiday. As the month rolled along, however,

deal making activity began to pick up and up and up.

After the dog days of August 2013, almost anything would have been an improvement. So it was gratifying to note a nearly 27% boost in deal volume compared to the previous lackluster month. Preliminary results show we’re approximately 7% ahead of September 2012’s deal volume, as well. If you recall, that’s when M&A activity was tapping the brakes for a third-quarter slowdown, so September 2013’s results aren’t exactly stellar, just sound.

As we’ve noted elsewhere in this issue, certain servic-es sectors saw renewed interest, particularly Behavioral Health Care, Home Health & Hospice and Rehabilitation. These categories may be getting some juice from the pend-ing implementation of the Affordable Care Act in January,

as investors look forward to millions more people with Medicaid coverage taking advantage of these services. Physician Medical Groups, where the deals involving one- and two-physician practices and hospitals are not reported widely, held steady with four deals, bringing the total number to 43 announced so far this year.

September’s uptick may be short-lived, as Congres-sional impasse over funding the ACA (now a fight over raising the debt ceiling) shut down the federal government beginning October 1. Announced deals slowed consider-ably that first week. True, the federal government doesn’t do health care deals, but without the FDA, some long-awaited trials and approvals for drugs and medical devices are being delayed, which will have a spill-over effect for some deals in the fourth quarter.

The fourth quarter is usually busy for health care deal makers, and we hope this year is no exception.

Deal Volume by Sector, August and Sept. 2013 and Sept. 2012 9/2013 8/2013 9/2012 deals deals % change deals % change Services Behavioral Health Care 2 0 200.0% 1 100.0% Home Health & Hospice 3 0 300.0% 2 50.0% Hospitals 7 5 40.0% 5 40.0% Labs, MRI & Dialysis 3 4 -25.0% 4 -25.0% Long-Term Care 16 18 -11.1% 18 -11.1% Managed Care 1 1 0.0% 3 -66.7% Physician Medical Groups 4 3 33.3% 2 100.0% Rehabilitation 3 0 300.0% 0 300.0% Other 7 9 -22.2% 12 -41.7%

Services subtotal 46 40 15.0% 47 -2.1% Technology Biotechnology 9 5 80.0% 10 -10.0% eHealth 5 5 0.0% 10 -50.0% Medical Devices 6 5 20.0% 5 20.0% Pharmaceuticals 15 9 66.7% 4 275.0%

Technology subtotal 35 24 45.8% 29 20.7% Grand total 81 64 26.6% 76 6.6% Source: Health Care M&A News, October 2013

Deal making recoverS, SligHtlysepTemBer’s m&a aCTiviTy shoWs promising upTiCk



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