Find out the latest news and trends in healthcare M&A – and how they affect you.
M&A activity across the private healthcare market continues to rise in the third
quarter of 2023. Peter Jennings and Jessica Sandercock explain the key trends.
The M&A market has proved to be a challenging space this quarter for all so it's positive to see that deal volumes remain high. Nevertheless, some deals have been delayed due to the increased cost of finance and investors aren't proving as confident as they have in the previous two years.
We once again see investment coming from a combination of large corporate investment, private equity (PE), and venture capital (VC) investment.
Announced M&A activity in Healthcare - quarterly
The private healthcare market remains a place where PE/VC parties continue to explore and invest in small companies through to large corporates, with 48% of deals involving PE/VC, which is very similar to last quarter. We're seeing increased numbers of early-stage funding rounds and a slightly more cautious approach in large PE transactions.
Announced PE activity in Healthcare - quarterly
The social care M&A market continues to see transactions, but on a smaller scale. This quarter the market has been dominated by one or two home acquisitions in the elderly care market. With Four Seasons withdrawing one third of their homes from the sales process due to strong performance, people are waiting in the wings before they make a move. It's rumoured that the final quarter of 2023 will see some larger higher profile elderly care assets transact.
The specialist care market has been quiet this quarter compared to the previous 18 months, this quarter we've seen the merger complete of the social care charities: Community Integrated Care and Inspire.
The homecare market saw the largest transaction with the announcement of Sodexo exiting their global homecare assets by selling them to mid-market PE group, The Halifax Group, who have previously invested in homecare. Optimo are undergoing a rapid growth period and remain acquisitive with the purchase of Abbeycare this quarter, with a goal of doubling in size by the following year.
The medical devices sector has seen a number of interesting deals this quarter. Marsden Group, backed by Alcuin Capital, acquired Bailey Instruments in July. KKR-backed Clinisupplies acquired Great Bear Healthcare, the manufacturer and supplier of continence products for managing acute and chronic conditions. This is the first acquisition Clinisupplies have done since joining the KKR portfolio earlier this year.
Training tools manufacturer, Limbs and Things, acquired Eosurgical, who manufacture laparoscopic training packages, including an online training portfolio and instrument tracking software. The Germany-based manufacturer of teaching aids, 3B Scientific, acquired the UK-based Lifecast Body Simulation, which provides mannequins for medical simulation.
Octopus ventures led a funding round to raise £2.5 million for fertility treatment kit manufacturer StepOne Fertility Ltd (Bea Fertility). This funding will allow the startup to launch it’s at-home kits in the UK alongside a pilot with the NHS.
The digital healthcare space remains attractive to domestic and international investors. Medical Healthcare service provider, Oysta Technologies, has been acquired by Access Group. This acquisition will complement Access's existing enabled-care solution. Livingbridge-backed Nourish Care have acquired care planning software provider, CarePlanner. BGF have invested £3 million into the AIM-listed youth digital mental health and wellbeing company Kooth (this was part of a £10 million fundraise) allowing them to hire in the US, following a contract win with the California Department of Health Care Services.
American-based Accel Partners has acquired an undisclosed stake in Lottie, the digital platform that connects care seekers in the UK with the best care home for them. Japan-based M3 have acquired UK-based physician recruiting platform provider Messly Ltd, which will strengthen M3’s position in providing solutions for the doctor shortages in the UK.
The retail, community, and multi-site sector has remained active in Q3 of 2023. BGF have provided investment for Scottish Dental Care Group, allowing them to continue their acquisition strategy with the acquisition of Belhaven dental in Glasgow. Dentex healthcare Group have acquired Queensway Dental Clinic, a local dental and skincare clinic chain-operator consisting of 40 surgeries.
Following on from its acquisition of Medinet in June this year, Fremman Capital's have acquired insourcing Remedy Healthcare Solutions this quarter. The UK insourcing market is a growing one, seeing strong investor appetite over the last 18 months. Ascenti, backed by BD-Capital acquired My Online Therapy, seeing them diversify from physio to the growing mental health market.
PAM Group, backed by LDC, continue to grow with two acquisitions this quarter: Connect Health’s physio business and Corporate Health Ireland, an occupational health provider. Leeds-based physio provider, Primary Care Physio, received £8.25million investment from BGF.
The pharma services and life sciences market are still receiving plenty of interest from investors and transaction activity. Five Arrows-backed Signature Discovery acquired one of North America's largest CROs NuChem Sciences Inc. This acquisition will assist the company with their goal of being one of the largest players in the global drug discovery market. Novacyt acquired genomic medicine company, Yourgene Health plc. This acquisition will bring reproductive health expertise to Novacyts current offering.
This quarter has seen lots of funding rounds for UK pharma service companies. Cambridge-based Lightcast Discovery raised £38 million, led by Merck Ventures, ocular disease therapy developer Tenpoint Therapeutics raised £57 million in a Series A round and Patient Square Capital led a series C funding round for Apollo Therapeutics raising £185 million. These funding rounds prove that plenty of investors are interested in this growing and innovative subsector.
Bailey Instruments acquired by Marsden Group
Bailey instruments, founded in 1984, is based in the North West and supplies high-quality surgical instruments and devices for use in podiatry and ENT procedures to global healthcare markets.
It's been a trusted supplier to the NHS for more than 30 years and also distributes globally to countries including the US, Australia, Singapore, and Ireland.
The founding shareholders asked our Healthcare Corporate Finance team to advise and support them in respect of the sale of the business as they looked to step back and realise their investment in the business.
Marsden Group, backed by Alcuin Capital, are a market leader in the healthcare sector and will provide the investment and support to enable Bailey to continue to thrive.
Founded in 2008 by Mario Zuccaro, Oysta specialises in care technology solutions and operates in the UK and Spain. Oysta’s devices and technology platform work with various partners, including local authorities, housing associations, and social care providers throughout the UK and Spain, to keep vulnerable communities safe, supported, and cared for within their own homes for longer. Access Group is a leading software provider and the acquisition of Oysta fits their strategy on continuing to make a real difference in the provision of technology-enabled care.
Primary Care Physio is a rapidly growing primary healthcare platform which provides physiotherapists and podiatrists to Primary Care Networks. BGF invests in growing businesses and is the most active investor in the UK.
The shareholders had grown the business rapidly since inception and wanted to find a strategic partner to unlock the next growth phase.
We were engaged to provide a full suite of tailored sell-side advisory services, running a focused process aimed at both trade and private equity providers to find the right strategic partner for growth. The investment for BGF will allow Primary Care Physio to achieve their growth plans along with helping navigate the challenges of the primary healthcare market.
Despite the challenging environment, M&A activity in private healthcare has maintained pace throughout 2023 and we've once again seen high volumes of deals. We've seen activity from all sectors, retail, and community healthcare has proven active and exciting this quarter and there's been a noted slowdown of pace in specialist care, and smaller deals in elderly care rather than the larger ones we've been seeing. This isn’t all together unsurprising considering the challenging debt market and challenging deal environment. This, however, looks set to gain momentum as we head into the final quarter with large mandates on the market looking to close before the year is out.
For more insight and guidance, get in touch with Peter Jennings.
