Equiteq Deal Insight: U.S. Healthcare Consulting

Private equity appetite for North American healthcare-focused advanced analytics capabilities remains hot as EQT announces its acquisition of Press Ganey for ~$2.35bn

Healthcare Consulting

Quote - US Healthcare Consulting Blog
In our last quarterly M&A update, we highlighted NTT’s landmark acquisition of Perot Systems as one of the major IT services transactions that would complete this summer. Perot Systems is strong in the U.S. healthcare segment and received bids from a number of prolific strategic technology buyers across the globe. The strong interest in the transaction reflected continued deal activity in the broader U.S. healthcare services sector, a segment which is benefiting from the reforms created by the Affordable Care Act (ACA) of 2010. In addition to the provision of traditional consulting and outsourcing services, analytics models and tools are important for healthcare providers to consider the necessary organizational changes required as part of the ACA reforms. The growth opportunities for consulting companies with advanced analytics capabilities has resulted in a number of recent landmark acquisitions in this space, many notably involving the private equity buyer community.

Healthcare Consulting Table
Last week, Press Ganey, a leader in the provision of patient experience measurement, agreed to be acquired by Swedish investment firm EQT for an Enterprise Value of approximately $2.35 billion. Press Ganey monitors patient satisfaction for healthcare providers in the U.S. by offering surveys, advanced analytics and strategic consulting services. It was acquired by private-equity firm Vestar Capital Partners from American Securities in 2008 for around $673 million according to Bloomberg. The business was listed on the NYSE in May 2015 and Vestar remained invested as Press Ganey then made a number of bolt-on acquisitions including a patient-survey firm called Avatar from the Riverside Company.  Overall returns from the IPO in a little more than one year were approximately 62% according to the Press Ganey investor press release.

Press Ganey marks the first time EQT has invested in North America and forms part of a number of recent material acquisitions in U.S. healthcare-focused advanced analytics consulting businesses. In February, Veritas Capital sold Truven Health Analytics to IBM for $2.6 billion and in April the investment firm agreed to acquire Verisk Analytics’ healthcare services business for $820 million. In June, MedAssets-Precyse acquired Equation, a financial and clinical healthcare analytics and consulting business. MedAssets-Precyse was formed following Pamplona Capital Management’s acquisition of MedAssets, a healthcare performance improvement business, for approximately $2.7 billion at the end of last year. Pamplona merged MedAssets with its existing portfolio business, Precyse, a health information management company, which it acquired in June of 2015.

We are in regular dialogue with both the strategic and financial buyers that are active in the market for healthcare-focused consulting businesses and are unsurprised to see the high levels of private equity appetite for advanced analytics capabilities in this space. As discussed in our recent blog covering private equity buyers, this buyer group typically looks for investments in hot sectors, where the service offering is enhanced by a proprietary expertise. Along with private equity, a broad range of strategic acquirers in the consulting sector are telling us that healthcare remains an industry of strategic importance for them. Furthermore, we continue to receive strong interest across large strategic buyers for opportunities that have unique analytics capabilities, which can be scaled across their organizations and provide synergies through enhancing the buyer’s existing service offerings.

*Financial and operational data, including rumoured Enterprise Value, utilize various third party sources including recent Press Ganey investor data. **Data sourced from Bloomberg.

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