The second quarter of 2023 saw 97 private healthcare deals. This is an 11% increase on Q1 2023 and shows continued recovery from the reduced levels of Q4 2022, but the wider M&A UK environment remains challenging.
The continued increase in activity in the private healthcare market has shown the robust nature of the sector in all areas. We've seen a combination of large corporate investment private equity (PE) investment and venture capital (VC) investment.
This quarter has seen investor interest across many private healthcare subsectors. PE/venture capital-activity has remained high this quarter by volume, with 49% of deals involving PE/VC, which is the same as last quarter. We've seen an increase in deal value since last quarter, but this is heavily weighted by the acquisition of Dechra Pharmaceuticals Plc by EQT AB along with Abu Dhabi Investment Company for £4.5 billion.
The social care M&A market has seen a strong flurry of activity the quarter. This shows the strength of the sector despite the bleak economic climate and sector fee increases.
The elderly care sector has seen BN Care (backed by BGF) acquire one home in Exeter, taking their total homes to five with potentially more acquisitions on the horizon. Downing are continuing to invest in care homes with an investment of £16.4 million into two development sites in Essex. Acalis care who entered the UK market last year have made a second acquisition of Cleveland Healthcare Group Ltd. Optimo continued their acquisition spree with a further two.
The specialist care market has also seen activity from trade and investors. Liaise, backed by Intriva Capital have acquired Jeesal Residential Care Services Group, which owns eight homes in Norfolk. This latest acquisition takes them up to 45 care homes in the Southeast of England. Tristone Healthcare has acquired children’s support provider South West Intervention Services (SWIS). It will allow Tristone to grow geographically and add additional services to their portfolio. Resicare Alliance, the independent provider of supported living for children and young adults, has acquired three homes from Astons Children’s Care Holdings.
The medical devices sector has seen a steady level of activity through the quarter with a mixture of takeovers and funding rounds. German-based radiology and radiotherapy provider acquired 4 Ways Healthcare, which will help Evida on its path to be the largest pan European radiology provider. Medequip have acquired long term partner Ross care the wheelchair specialists from Millbrook. Specialist Equipment supplier Nurture Care has been acquired by home adaption firm Innova Care Concepts enabling them to offer a larger range of solutions to their clients.
BGF and Downing led a funding round for TidalSense Ltd. 7.5 million has been raised for the UK based handheld respiratory care device manufacturer. GMC Life Sciences Fund LP have raised 1.5million for ScubaTx a UK-based technology-enabled organ preservation service provider. A funding round co-led by Aviva plc, YZR Capital GmbH, Oxford Capital Partners LLP, TriplePoint Capital LLC, Simplyhealth Ventures has raised £9.6million for startup National MRI Scan Ltd (trades as Scan.com), a London, UK-based private MRI scan services provider.
The digital healthcare space remains attractive to investors and continues to grow through the year. Listed company M3 Inc acquired the Kantar’s specialist healthcare research assets Kantar Profiles - Health and Kantar Media Healthcare Research. This acquisition will enhance M3’s extensive offering. Phlo Technologies the UK based digital pharmacy company acquired UK assets from the United States based software-Medical Technology company TruePill. IK Partners have acquired Medica Group plc, the UK-based radiology remote reporting services company for £269million allowing the company to grow in the private market.
This is another subsector where we've see VC led funding rounds, BGF led a funding round of £13million for Caristo Diagnostics Ltd, an Oxford, UK-based AI-based cardiovascular risk prediction software developer. Octopus ventures led a £3.4million funding round for Perci Health Ltd, a London, a UK-based web based cancer recovery platform developer, and BGF joined Morningside Ventures to lead a funding round of £10million for Cyted Ltd, a Cambridge, UK-based digital cancer diagnostic infrastructure and pathology services provider. These funding rounds show that investors are eager to invest in the digital healthcare market
Activity in the retail and multi-site healthcare space has seen lots of interest from investors. Following the announcement in February that Lloyds Pharmacy were going to close stores, we've seen 30 of the Scotland based Lloyds pharmacies be acquired by Rowlands Pharmacy in May. Well pharmacy has also announced the acquisition of Lexon UK Holdings Ltd, a Redditch, UK-based pharmacy wholesaler and Asurex Ltd, a Redditch, UK-based pharmaceutical wholesaler.
NHS outsourcing and insourcing remains a talking point in private healthcare. Freeman Partners announced the acquisition of Medinet in June. Clinical Partners has acquired Oxford ADHD Centers enhancing their offering. The USA-based provider of independent medical and ambulance services has acquired Polaris Medical Services Ltd, the UK-based provider of health and social care services.
Dental, fertility, and veterinary have all seen M&A activity across the quarter. London’s Women’s Clinic made the double acquisition of iTrust Fertility and the Hospital Fertility Group Ltd. BGF back SDC Group have acquired two dental practices in Glasgow; their first acquisition this year, and Todays dental have acquired a group of dental practices in Shropshire. VetPartners UK backed by BC Partners and Ares management have acquired three veterinary services and practices in Ireland doubling its practices in Ireland.
The pharma services and life sciences market is going from strength to strength attracting investors to the market. The quarter has seen the £4.5billion acquisition of UK-based veterinary pharmaceuticals manufacture Dechra Pharmaceuticals by EQT AB, along with Abu Dhabi Investment Company. Limerston Capital continues its growth in the space with the acquisition of Concept Life Sciences Ltd, the Edale, a UK-based biopharmaceuticals discovery, a development and analytical services provider.
The industry has also seen multiple funding rounds for gene therapy, therapeutics, CROs and drug discovery companies. British Patient Capital led a series B funding round of £10million for UK based biotechnology company OMass Therapeutics Ltd, Abingworth LLP and Petrichor Healthcare Capital Management LP have raised over £100million for Ascend Gene & Cell Therapies Ltd, the Altrincham, UK-based gene and cell therapy developer and PharmEnable Ltd, a Cambridge, UK-based medicinal drug discovery service provider has raised £7.5 million in a pre-series A funding round led by MP Healthcare Venture Management Inc.
2023 continues to move from strength to strength in the M&A market in the private healthcare space, seeing an increase in deal-activity compared to last quarter. All sectors remain active with medical devices, medical technology, and pharma services continuing to grow in the space, and social care building momentum following the market barriers it has had to overcome.
This quarter has seen continued investments from private equity, venture capital, and commercial firms, showing UK private healthcare as a strong place for investment. There have been many investments across the sub sectors once again demonstrating the attractiveness of private healthcare assets and businesses.