global health & social care report...

GLOBAL HEALTH & SOCIAL CARE REPORT 2015

A CLE ARWATER INTERNAT IONAL HEALTHCARE TEAM REPORT

Ramesh Jassal Head of Healthcare

+44 845 052 [email protected]

Welcome

2014 has proved to be another landmark year in terms of global M&A activity across the health and social care arena.

In this report, we highlight some of the key transactions that have taken place over the past 12 months, analysing the rationale for the deals while also forecasting where we see continued activity in the year ahead.

For instance: in recent weeks shareholders approved the deal which saw Alliance Boots acquired by US pharmacy giant Walgreens; UK care home group Meridian Healthcare was acquired by HC-One, with backing from US investor Formation Capital; Sovereign Capital acquired Nurse Plus; and Kindred Healthcare acquired Gentiva Health Services.

As some of these deals show, the UK has been a particular source of interest among US buyers over the past year, with two-thirds of outbound targets from the US being UK based. Much of this activity has been as a result of President Obama’s healthcare reforms which have forced US companies to diversify their portfolios and invest in English-speaking countries to counter the domestic squeeze on margins.

In particular, North American investors are investing heavily in the UK elderly care home market which is continuing to grow significantly. Indeed, rapidly ageing societies across the developed world continue to pose huge challenges for health providers. However, for the astute investor there also remain significant opportunities as markets consolidate across a broad swathe of health services.

And then there is the fast-changing technological world to consider too. The growth of self-monitoring healthcare apps has become one of the defining trends of the year, so we take a special look at this and other ‘hot’ trends in the market too.

We hope you enjoy the read.

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ContentsGLOBAL MARKET 4

Market review

M&A highlights

Top 10 global deals

US MARKET 7

EUROPEAN MARKET

UK 9

Care homes

Domiciliary care

Primary care

Secondary care

Specialist care

Other

SCANDINAVIA 14

IBERIA 15

OTHER 16

HOT TOPICS 17

Technology

IPO

Tax inversion

DEALS 19

This report is published by Clearwater International Editors: Jim Pendrill and Sarah FernandezDesign: www.creative-bridge.comSubscription: [email protected] part of this publication may be reproduced or used in any form without prior permission of Clearwater International

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Global Market

The health and social care sector saw good levels of deal activity in 2014, with a total of 484 deals during the year and total deal values (where disclosed1) of €25.6bn.

The US continued to dominate the market, accounting for 38% of closed transactions, with the UK representing 17%, followed by Finland with 8%. In terms of targets, again the most popular location was the US, accounting for 36% of deals, with the UK representing 18% and 8% located in Finland. Spain, Germany and France made up a combined 11%.

M&A targets by country

The global healthcare market is being strongly driven by an ageing population, which has more than tripled in size over the last 50 years. The number of people over the age of 60 is predicted to reach two billion by 20502, creating additional demand for healthcare services and driving M&A in the sector as providers look to maintain margins, consolidate positions and source new health and social care solutions. Even in a moving care pathway market, providers are still looking for cost-effective solutions.

Deals by investor type

Trade buyers in 2014 remained the most active investors by volume with 84% of deals, whilst financial investors* still continued to show their interest with 77 deals.

Financial investor highlights

2014 was the most active year by deal value for private equity on a global scale since 2007. Most significantly, this was a rise of 43% on activity in 20133 and represented 21.9% of total global M&A activity.

The healthcare market saw some mega-deals throughout 2014. The biggest private equity deal of the year saw the acquisition of NHP, the owner of UK care home group HC-One, by US private equity firm Formation Capital, US investment firms Safanad and HCP, and UK turnaround firm Court Cavendish, for a consideration of €608m.

* Financial investors include private equity, REITs, angel investors and restructuring funds

1 21% of deal values were disclosed2 Deloitte: 2014 Global healthcare outlook - Shared challenges, shared opportunities

3 Thomson Reuters

407

77

2%

8%18%

36%

27%

5%

4%

2014 marked the best year for dealmaking since the financial crisis of 2007-2008.

US

UK

Finland

Spain

Germany

France

Other

Trade Financial Investor

A CL E A RWA TE R IN TE RN A T ION A L HE A L THCA RE TE AM REPORT 5

* Others: foster homes, fitness centres, healthcare transport, healthcare staffing, business services, healthcare IT, animal health, finance and administration

NHP’s portfolio includes 275 nursing and residential care homes with over 12,500 beds, including homes operated by HC-One which was formed in 2011 with the acquisition of 240 care homes from Southern Cross.

In another deal, Chindex International, the US-based provider of healthcare services in China via a network of private primary care hospitals and affiliated ambulatory clinics, was taken private by Healthy Harmony – an affiliate of TPG Capital, Shanghai Fosun Pharmaceutical and Ms. Roberta Lipson (the company’s CEO) – and subsequently de-listed from the NASDAQ in a €326m deal. The transaction was valued at 2.5x sales.

Segment breakdown

Over half of the deal volume during 2014 occurred in the primary care and secondary care segments.

9%

16%

7%

19%14%

35%

Secondary care

Care homes

Domiciliary care

Specialist care

Primary care

Others*

Global M&A highlights below €200m

� The management of Cura Day Hospitals Group acquired the company in a MBO backed by Intermediate Capital Group, the UK venture capital firm, for an estimated consideration of €128m. Cura is an Australia-based provider of day hospital facilities which owns and operates 14 day hospitals combining a mix of multidisciplinary facilities and specialist units.

� Switzerland-based hospital group Klinik Hirslanden, a subsidiary of Mediclinic International, acquired Clinique La Colline, a Swiss owner and operator of a chain of hospitals and clinics, for €107m. The deal, which was valued at 2.6x sales and 8.7x EBITDA, helps Klinik Hirslanden strengthen its footprint in Western Switzerland.

� Oral Hammaslääkärit, a provider of dental healthcare services operating 30 dental clinics across Finland, was acquired by CapMan Oyj in a deal valued at €62m. The acquisition is the first in the oral and dental care markets for CapMan, which intends to support the growth of Oral by enhancing its products and service offering.


Top 10 global deals by Enterprise Value

Community Health Systems/Health Management Associates

Brookdale Senior Living/Emeritus Corporation

HELIOS Kliniken/Rhoen-Klinikum

Babcock International Group/Avincis Mission Critical Service

Amsurg Corporation/Sheridan Healthcare

CVS Caremark/Coram

Acadia Healthcare/Partnerships in Care (PiC)

Surgery Partner/Symbion Holdings

Formation Capital, Safanad, HCP and Court Cavendish/NHP

Fidelidade/Espirito Santo Saude

0 1000 2000 3000 4000 5000 6000

Enterprise Value €m

� Photomedex - the US-based skin-care company that offers products which address skin conditions such as actinic keratosis, acne and psoriasis, and sells the popular no!no! hair removal device - acquired LCA-Vision, a US laser eye surgery clinic operator offering LASIK procedures, for €77m. The transaction was valued at 0.8x sales.

� Malcolm Hughes’ (ex-CEO of UK dental chain Oasis Healthcare) newly formed dental company, Hesira, acquired Swiss dental business Adent Cliniques Dentaires Holding. Hesira, which is

looking to build a pan-European group of high-quality dental clinics, has presence in the Netherlands, Poland and now Switzerland - taking the total number of dental clinics to 28. A further 12-15 clinics are planned to open in Poland by the end of 2015.

� CVC Capital Partners acquired French acute care provider Vedici for a consideration of €108m. Vedici, which operates 35 facilities with over 5,000 beds, is one of the main players in the private healthcare sector in France.


US Market

Total value for these deals, where values were disclosed1, was nearly €14.6bn.

It’s likely that US M&A will continue to be influenced by the Affordable Care Act (ACA). The ACA (commonly known as Obamacare) is the most significant piece of social legislation passed in the US since Medicare was added in the 1960s. One of its many goals is to reduce the rising costs of US healthcare and 2014 saw US annual healthcare spending around the $3.8tn (€3.33tn) mark2. To put that figure into perspective, this value is an economic unit greater than the entire GDP of Germany3.

The focus of reducing healthcare spend has had an adverse effect on the profit margins of many of those involved along the healthcare value chain. Hospitals in particular have suffered as they are receiving less money from Medicaid, the programme that provides coverage for the poor, than they expected when signing up to Obamacare.

Adverse effects of the Act have resulted in US companies diversifying their portfolio by looking at investing into English-speaking countries in order to counter their domestic squeeze on margins.

Consolidation by corporates

Trade buyers remained the most active in 2014, accounting for 91% of US deals. Trade acquisitions were dominated by corporate acquistion sprees, with as many as 18 companies engaging in more than one acquisiton.

� NASDAQ-listed IPC The Hospitalist Company (IPC) continued its acquisition strategy during the year, snapping up 13 companies in the areas of acute & post-acute health and behavioural health. IPC is the leading provider of hospital medicine and related services in the US, with approximately 400 acute care hospitals and 1,100 post-acute care facilities in 26 states.

� MEDNAX, the NYSE-listed medical group, made 10 acquisitions in 2014 in the areas of anaesthesiology, paediatrics and medical billing. The company, which has an annual turnover of over $2bn (€1.75bn) and facilities in 34 states, provides neonatal, maternal-foetal and paediatric physician sub-speciality services.

� Audax Private Equity’s dermatology-focused physician practice management portfolio company, Advanced Dermatology & Cosmetic Surgery (ADCS), acquired six dermatology companies as it sought to expand it cosmetic dermatology service offering. ADCS operates 53 clinics in 12 states providing clinical, cosmetic and pathology services.

As the trend of market consolidation continues, the strategy of horizontal integration among organisations is becoming ever-present which results in new larger entities with the ability to cut costs whilst simultaneously increasing their purchasing power.

Consolidation has also seen organisations integrate multiple stages of their own production (vertical integration). This is particularly seen with hospitals acquiring extended facilities, such as ambulatory centres and home care services.

Both of these strategies for integration - whether vertical or horizontal - make for an exciting US marketplace, further igniting an already active M&A healthcare market.

1 10% of deal values were disclosed2 Forbes: Annual US Healthcare spending hits $3.8 trillion3 World Bank

The US continues to lead the way in terms of M&A activity, with a total of 172 deals in the health and social care sector in 2014.


Segment breakdown of US deals

The primary care and secondary care segments accounted for over half of the deal volume during 2014.


Notable US transactions

� Community Health Systems (CHS), a leading operator of general acute care hospitals, acquired Health Management Associates (HMA), another acute care hospital operator based in the US, for an enterprise value of €5.5bn. With the addition of HMA’s hospitals, CHS now operates 206 hospitals across 29 states - making it one of the largest hospital chains and biggest hospital systems in the US. The transaction was valued at 1.1x revenue and 8.7x EBITDA.

� Brookdale Senior Living acquired Emeritus, a US-based senior living communities operator, in a deal described as a merger, for an enterprise value of €3.9bn. Brookdale is an owner and operator of independent living, assisted living and

7%

6%

11%

20%20%

36%

Secondary care

Care homes

Domiciliary care

Specialist care

Primary care

Others*

dementia-care communities retirement care centres in the US. The acquisition will put the company at the forefront of senior living care, allowing it to serve around 113,000 residents across 46 states. The transaction was valued at 2.8x revenue and 15.6x EBITDA.

� Sheridan Healthcare, a US-based physician outsourcing services provider, was acquired by AmSurg Corporation which, in partnership with more than 1,800 physicians, operates 235 out-patient surgery centres across the US. The deal, which was valued at €1.7bn, allows Amsurg to significantly expand its offering in anaesthesiology and children’s services, differentiating itself from other leaders in the market. It also helps the company grow within both the outsourced physician services and ambulatory surgery centres markets. The transaction was valued at 2.5x revenue and 19.1x EBITDA.

� Healthcare company CVS Health, which operates more than 7,700 pharmacies and drugs stores across the US, acquired the Coram specialty infusion services and enteral nutrition business unit from Apria Healthcare Group (a unit of the Blackstone Group) for a consideration of approximately €1.5bn. The acquisition expands CVS’s infusion capabilities – that of administrating medicine intravenously or by catheter – whilst also generating the opportunity to build a larger, diversified portfolio of assets.

� HIG Capital’s portfolio company Surgery Partners acquired Symbion Holdings Corporation, the US-based operator of 44 Ambulatory Surgery Centres and six short-stay surgical hospitals, from Crestview Partners for a consideration of €636m. Symbion, which went public in 2004, was taken private in 2007 when it was acquired by Crestview. The merger allows the company to compete with the likes of Amsurg Corp, United Surgical Partners International and Surgical Care Affiliates.


European Market: UK

The primary care sector remains an attractive segment for trade players, especially in areas where the market is still very fragmented - such as the dental market.

This was typified when dental care services provider Oasis Healthcare acquired dental clinic operators Apex Dental Care and Smiles Dental. Oasis, which was acquired by Bridgepoint in 2013, is actively seeking acquisitions in order to strengthen and build on its existing dental chain network and private dental care offering in the UK.

Further consolidation is expected within this fragmented market, with dental platforms being used to build larger corporate dental practices.

UK deals by investor type – 2012 to 2014

The care home sector has seen increased attraction from financial investors, with nearly one in three deals involving private equity.

REITs are also still continuing to show their interest in the segment, for instance: Target Healthcare REIT acquired a total of 14 homes during 2014, with a combined deal value of around €88m. The REIT, which listed in 2013, also acquired six care homes and a domiciliary care business in 2013 and currently has a portfolio that comprises 26 assets with 1,692 beds.

Also during the year, US REIT HCP acquired 23 purpose-built and converted care homes from Maria Mallaband Care Group for €96m. North American investors are investing heavily in the elderly care home market, where they feel they can generate the highest yields.

In 2014, there were 86 deals in the UK health and social care sector - a 6% increase on 2013. The care homes and primary care segments accounted for the largest value, with 31 and 19 deals respectively.

2012 2013 20140

20

40

60

80

100

16

66

27

54

25

61

Trade Financial Investor

UK segment breakdown – 2012 to 2014

0

5

10

15

20

25

30

35

Secondarycare

Carehomes

Domiciliarycare

Specialistcare

Primarycare

Other*

911

23

31

19

14

6

13

10

15

8

19 19

22

1112

43

2012

2013

2014

Care homes

Health Care REIT, the NYSE-listed company which owns properties operated by Sunrise Senior Living, extended its leading position in the Greater London and Southern England care market with the €191m acquisition of Gracewell Healthcare. Eleven of the company’s luxury private-pay care homes were acquired by Health Care REIT with the management company being acquired by Sunrise Senior Living.

The deal marked an exit for Patron Capital which first invested in Gracewell in 2010. However, Patron will still continue to back their partners and Gracewell’s founders on expanding the business further.

In another PE deal: Monarch Alternative Capital, the US-based debt investment firm, acquired Executive Care Group out of administration. Executive Care Group operates 25 care homes that provide elderly, nursing and dementia care services.

In late 2013, Sharia-compliant investment advisory firm 90 North Real Estate Partners made its first venture into the UK healthcare sector by sealing a €47m sale and leaseback deal with care home operator PrimeLife, acquiring 10 of the company’s care homes (comprising a total of 511 beds).

Also in 2013, Apache Capital - another Sharia-compliant investment firm - invested €59m in UK care company Maria Mallaband Care Group, as part of a long-term partnership to help fund the development of new care homes.

The care home sector is also seeing consolidation from large PE-backed corporates. Four Seasons Health Care’s (FSHC) acquisition of Majesticare’s seven premium care homes is just one example.This was FSHC’s second strategic deal since it was acquired by Terra Firma in 2012, having previously acquired Optimum Care in 2013.



Also during the year, Mimosa Health Care Group, the elderly care provider, went into administration as it struggled to deal with significant drops in occupancy levels. The 22-home estate cares for around 1,000 people and provides residential rehabilitation services for people with alcohol dependence.

Domiciliary care

More than 10 million people in the UK are over 65 years old and the number of people aged 85 and over (the age cohort most likely to be in need of care) has increased by 30% between 2005 and 20141.

The magnitude of these figures is a warning to local authorities (LAs) which are already under tremendous financial constraints when it comes to the task of supporting the UK’s ageing population. In response to perceived expensive residential care home costs and funding eligibility criteria generally becoming more difficult, LAs are focusing on home-based care services.

Following its €138m acquisition of Enara Group in 2012, Mitie Group acquired Complete Care from Housing 21 in January 2014. The deal, valued at €11m, allows Mitie to strengthen its offering in the growing healthcare market whilst also complimenting its existing domiciliary care operations.

Complete Care provides high acuity complex care to individuals with ongoing complex care needs within their own homes. The move by Mitie is another example of facilities management (FM) providers - like Sodexo, Interserve and Mears - deploying their capital as a way of accessing higher-margin outsourcing services.

City & County Healthcare Group has made six acquisitions since 2012, recently acquiring Spirit Care and HFH Homecare, in an attempt to diversify its service offering and expand its business into different regions. Spirit Care delivers homecare services across the UK for people with complex needs, whilst HFH Homecare provides a range of domiciliary care services.

1 The Guardian: “Can the UK’s ageing population usher in a new age of economic prosperity?”

Primary care

Mobeus Equity Partners acquired an undisclosed stake in Bourn Bioscience, which trades under the name of Bourn Hall Clinic, for a consideration of €4m. Bourn Hall, the world’s first IVF clinic, is the largest independent fertility provider in the East of England. The business has plans to acquire and partner with existing IVF providers as well as to open several new, full service fertility centres and satellite clinics by the end of 2015.

This deal follows a number of investments from PE in this space over the last couple of years, and illustrates the continued interest in asset-light platforms in services that are enjoying rising demand, as higher returns can be generated in a shorter period of time.In 2013, Living Bridge acquired Create Health for €6m, whilst in 2012 Bowmark Capital acquired CARE Fertility Group and CBPE Capital acquired Assisted Reproduction & Gynaecology Centre (ARGC).

The dental market still remains a hot sector for M&A activity. Private healthcare group Bupa expanded its private dental offering with the acquisition of Barbican Dental Care, bringing their total number of dental centres in the UK to 31. Bupa also owns the Dental Corporation, which has 190 clinics in Australia and New Zealand, and Sanitas, which has 145 dental clinics in Spain. The acquisition is in line with Bupa’s plan to become one of the largest private dental chains in the UK with around 50 clinics by the end of 2015. Currently, the biggest player in the UK market is Independent Dental Holdings (IDH) which has a network of 600 practices.



Secondary care

Spire Healthcare, the LSE-listed portfolio company of Cinven, is one of the largest players in the market with 39 private hospitals throughout the UK employing more than 6,900 people. In 2014, it bought St Anthony’s Hospital - a 92-bed private hospital for complex major procedures, providing a range of services including health screening and diagnostic treatments.

Spire, which currently offers care to patients funded through medical insurance or who pay for their own treatment, will use the acquisition as a central platform to enhance its growth in cardiology among other areas of acute care. This trend was also typified in 2013 when Care UK, a portfolio company of Bridgepoint Capital, acquired UK Specialist Hospitals. Care UK is streamlining its business, focusing on elderly, dementia and secondary care.

Specialist care

There has been more deal activity involving specialist care in 2014 compared to previous years. This is a consequence of the increasing interest in high-end UK specialist care services businesses from US companies.

This trend was typified by the deal which saw Acadia Healthcare, the in-patient behavioural healthcare services provider, acquire UK mental healthcare provider Partnerships in Care (PiC) for €485m.

Another deal saw Universal Health Services’ (UHS), a US-based hospital company that operates behavioural health facilities, acute care hospitals and ambulatory centres, acquire Cygnet Health Care, a UK mental health and addiction centre operator, in a

deal valued at approximately €255m.

Major behavioural health operators are using acquisitions to increase their market share and consolidate the highly fragmented market, thereby increasing the competition for high-quality specialist care groups.

LSE-listed specialist care provider Cambian Group acquired Ansel, a clinic for men suffering from personality disorders. The acquisition is in line with Cambian’s strategy to reach new regions and deliver new services, expanding its range of adult mental health services.

Cambian also acquired learning disabilities care provider Woodleigh Care, which operates 13 residential homes and supported living units, for €80m in 2014. The transaction, which was valued at 3.5x sales and 9.3x EBITDA, enables Cambian to enter the Yorkshire and Humber region.

Another standout transaction saw Duke Street Capital, along with French partner Tikehau Capital Partners and Swiss Investment firm Partners Group, acquire Voyage Care in a €470m deal.

Voyage Care is a specialist in providing services for people with learning disabilities, brain injuries and other complex needs. The company was originally sold by Duke Street to HgCapital back in 2006, and under their ownership made a number of acquisitions including Solor Care, Ingleby Care and Independent Living Group.


Greater investor confidence in the sector is driving the increase in M&A, as well as the amount of capital awash in the market available for investments which is further pushed by the recovering debt markets.

PE firms, which often have the funds to outbid trade buyers, are using companies as platforms for further acquisitions which allows them to expand their service offering in the specialist care market, where demand is significantly high.

An example saw Montreux Capital Management and Macquarie Group acquire The Regard Partnership for €153m. Regard is a provider of accommodation and specialist support services to people with learning disabilities and mental health needs.

Other

An interesting deal in 2014 was the €2bn acquisition of Avincis Mission Critical Services, the UK-based provider of aerial transportation services for operations such as medical emergency, search & rescue and other mission critical services, by engineering support services company Babcock International Group.

Avincis, which has contracts with governments and blue-chip corporations in multiple geographies, operates a fleet of around 350 aircraft. The deal allows Babcock to expand its offering in the critical services market and provides the company with a strong growth platform for further acquisitions.


Scandinavia

One interesting deal saw Avincis Mission Critical Services acquire Scandinavian AirAmbulance (SAA) for €75m, just one month after its acquisition by Babcock International.

SAA provides air ambulance services in Sweden and Finland from 12 permanent bases, as well as having newly established operations in Norway. The deal provides SAA with opportunities for growth throughout the Nordic region.

Nordic Capital, the Sweden-based private equity investment firm, acquired GHD GesundHeits GmbH Deutschland (GHD) from its existing shareholders, including majority owner IK Investment Partners. GHD is Germany’s leading homecare service company, providing services to 3,000 out-patient and in-patient customers, as well as to more than 140,000 patients.

The investment further supports growth for GHD and provides Nordic with a platform that it can use to further expand its presence within homecare and other adjacent healthcare areas.

Nordic Capital has significant experience in the healthcare space through several current and former portfolio companies including Atos Medical, Convatec and Permobil.

In a related transaction: Capio Narsjukvard, a subsidiary of Nordic Capital-backed Capio - the leading pan-European healthcare provider with a network of over 100 hospitals and clinics across Sweden, Norway, the UK, France and Germany, acquired MPCA Konsult, the Sweden-based provider of medical services.

Swedish deal activity showed a particular focus on mental health in 2014. Team Olivia, a portfolio company of Swedish venture capital firm Procuritas, acquired Selfhelpgruppen and Behandlingshemmet Ulfshyttan, two Sweden-based substance abuse rehabilitation centre operators, and AssisterMeg, Norway’s largest private assistance company.

The dental sector saw continued consolidation, with private equity and corporates continuing to show interest. OMX-listed dental chain operator Orasolv acquired M-Dental, a Sweden-based dental clinic operator, as part of its strategy to strengthen its operations.

Maj Invest Equity, the Denmark-based private equity firm, acquired a majority stake in Godt Smil Holding, the dental chain operator. The Danish dental care market has historically been driven by private practices which are owned and operated by the dentists themselves.

There were 18 deals in the health and social care sector in Scandinavia during 2014 - acquisition targets were predominately located in Sweden (61%), with 28% of deals accounted for by Denmark and 11% by Norway.


The biggest deal saw Fosun International, the Chinese privately-owned investment company, outbid UnitedHealth Group to acquire a 51% stake in Portuguese-listed hospital and clinic operator Espírito Santo Saúde SGPS for an enterprise value of €650m. The deal marked Fosun’s second Portuguese acquisition in 2014, following its purchase of Portugal’s largest insurance group, Caixa Seguros, for €1.0bn.

CVC portfolio company IDCsalud, the private Spanish healthcare services company, acquired a 50% stake in Instituto Extremeño de Reproducción Asistida (IERA), a Spanish fertility clinic operator. In a separate transaction, CVC plans to merge IDCsalud with Quirón, the largest private hospital group in Spain, creating a private hospital chain with sales of €1.5bn. The merger is in line with CVC’s strategy of building one of the leading hospital groups in Europe.

US-listed healthcare company Centene Corporation acquired a 50% stake in Spanish hospital provider Ribera Salud from Bankia. Ribera Salud is well known for its public-private partnership (PPP) model and

the acquisition allows Centene to expand its business in order to establish a footprint in Europe.

Asistencia Dental Europea (ADE Group) acquired Spanish dental practice operators World Wide Dental Assistance and Gestión de Infraestructuras Odontologicas. ADE Group provides customised dental services for insurers in over 3,300 clinics in Spain, Portugal, Italy and Poland. Spain and Portugal are becoming increasingly popular destinations for dental tourism due to their lower dental treatment costs in comparison to the UK and Germany.

One area that seems to be generating buzz is the medical transportation services space. Spanish health and medical transportation services company Grupo Ambuibérica, a portfolio company of French private equity firm PAI Partners, acquired Spanish health transport company Ambulancias do Atlantico. In 2013, Ambuibérica also acquired a 51% stake in Med Salva Emergências Médicas, the Brazil-based provider of ambulance services.

IberiaThere were 28 deals in Iberia, dominated by Spanish acquisitions which accounted for 93% of deals completed, nearly all of which were domestic.

GLOBAL HEALTH & SOC I AL C AR E R EP OR T 2 0 1 516 GLOBAL HEALTH & SOC I AL C AR E R EP OR T 2 0 1 516

OtherG Square Capital’s Finnish portfolio company Mikeva, the rehabilitation and therapeutic services company, acquired four Finland-based residential care companies during the year: two providing mental health services and two providing elderly residential care.

Mikeva is likely to be an active player on the M&A front in coming years - with many small targets within mental health, the market is ripe for consolidation.

Also in Finland, Med Group - the healthcare company that provides ambulance, physician, dental, home care and personal assistance services - was acquired in a management buyout transaction backed by Swedish private equity firm Adelis Equity Partners.

Germany’s major demographic shift continues to drive demand for elderly care and the treatment of age-related conditions, increasing the level of M&A in the healthcare sector.Waterland Private Equity snapped up its second German rehabilitation chain during 2014 with the acquisition of Median Kliniken from US-based buyout firm Advent International and UK venture capital firm Marcol. Waterland is set to merge Median with another rehabilitation portfolio company (RHM Group) which it acquired in 2011, thereby creating an acute care and rehabilitation group with 72 facilities.

Staying in Germany, hospital operator HELIOS Kliniken, a subsidiary of Fresenius SE & Co, acquired 38 hospitals and 11 out-patient facilities from Rhoen-Klinikum for an enterprise value of €3.1bn. Specialising in hospital management with a focus on acute treatment and subsequent medical rehabilitation, HELIOS is one of the largest and most medically-advanced hospital groups in Europe with around 110 acute care & rehabilitation facilities and seven tertiary care hospitals.

In France, Eurazeo PME - a subsidiary of French listed investment company Eurozeo - invested €65m for a 64% stake in France’s fourth largest retirement home operator, Colisee Patrimoine Group. The total enterprise value was approximately €175m, a valuation of 1.2x sales.


Technology

Consumers want an increased amount of control over their health information and the global trend of self-monitoring shows no sign of slowing down. This can be seen by the vast availability and variety of self-monitoring goods on the market, from fitness tracker wrist bands such as the Nike Fuelband through to toys such as Teddy the Guardian which measure heart rate, oxygen saturation and body temperatures.

The smartphone revolution is also leading to a mass of healthcare-specific mobile applications with big brands leading the way such as Apple Health, Google Fit and Samsung S Health. Apple’s App Store not only has a category for Health & Fitness (the largest area for mobile application growth in 2014) but also a separate ‘Medical’ category, with many of these apps aimed specifically at the professional market.

Medical professionals are using mobile applications to work more efficiently by having access to large volumes of information at their fingertips, whilst patients are using mobile apps for a variety of health measures.

Whether healthcare mobile apps are reliable and trustworthy is up for debate, as is the topic of how we should approach the safeguarding of such medical information. However, it is clear that 2014 saw a giant leap for healthcare and mobile-related technology.

IPO

Global initial public offering (IPO) issuance reached the highest levels in 2014 since 2010 and the US saw the highest number of listings since 2000, representing an increase of 27% over the previous year. By volume, the healthcare sector was the most active with more than 100 IPOs taking place and with nearly ¤8.76bn raised.

UK companies Cambian, Spire Healthcare and Saga all floated, re-igniting the debate as to whether an IPO should once again be revisited as a worthy exit option for those within the healthcare sector. Previous to these listings, the last care company to list was Circle Holdings in 2011.

Global analysts say that there is a strong appetite for healthcare deals across various jurisdictions and a robust pipeline is already in place for 2015. More specifically, the possibility of more healthcare IPOs taking place in the next 12-18 months cannot be ruled out.

Hot Topics


Tax Inversion

Tax inversion deals have been used by US companies to move to lower tax domiciles, especially in Europe. A number of US healthcare companies have sought to do such deals over the past year, using the acquisition of overseas rivals to move their tax domiciles off-shore.

The UK is seen as a particularly attractive tax home for US companies for various reasons, with corporation tax rates being the most significant tax factor. The UK corporate tax rate falls to 20% in 2015, compared to a rate which can be as high as 35% in the US - the highest in the developed world.

Ireland has also been a popular tax inversion destination. The tax strategy works by allowing companies with Irish operations to make royalty payments for intellectual property to another Irish subsidiary. This subsidiary (incorporated in Ireland) is physically located in a jurisdiction with zero corporation tax, such that no tax is paid on revenue derived from intellectual property for the Irish registered company.

A notable tax inversion deal saw medical device maker Medtronic acquire Ireland-based Covidien in a €38bn cash and shares transaction, whilst the acquisition of Synergy Health plc by Steris Corp will also result in the lowering of its tax burden. However, both Medtronic and Steris insisted that the deals were more about global corporate strategy than to do with tax savings.

However, the US government has now introduced legislation which makes it much harder for companies to meet the requirements for an inversion and tougher for businesses that do invert to access their overseas cash without paying US taxes.


Provider of enterprise software solutions for hospitals

Clearwater International advised the shareholders of Cetrea on the sale to Getinge AB

Provider of safe patient handling solutions

Clearwater International advised the MBO team on debt financing for the transaction, after running a competitive process with funders

Specialist provider of staffing solutions and homecare services to the healthcare industry

Clearwater International advised Sovereign Capital on its significant investment in Nurse Plus

Nurse Plus

Supplier of prescription laryngectomy, tracheostomy & ostomy products

Clearwater International advised the shareholders of Countrywide on its cross-border sale to Atos Medical

World’s largest fleet of mobile healthcare facilities

Clearwater International advised management on securing a €21m refinancing deal with AIB

Market leader in special care transport services in Denmark

Clearwater International advised on the merger and subsequent sale to Catacap

Countrywide Supplies VanguardHandicap-Befordring

Specialist provider of personality disorder services

Clearwater International advised the vendor on its sale to London Stock Exchange-listed health services provider Cambian Group

Ansel

Provider of devices and solutions to eyecare professionals

Clearwater International advised Optos on securing off balance sheet financing to assist with core requirements and support continued international growth

Optos

Fast-growing manufacturer, distributor and seller of prescription OTC products

Clearwater International advised the shareholders of Peckforton on its sale to Abbey Pharma

Peckforton

Danish animal hospital which treats 12,000 patients annually

Clearwater International advised Djursjukhusgruppen on the acquisition of the business

Aarhus Dyrehospital

Manufacturer of protein purification products used in life sciences

Clearwater International advised on the sale of BAC BV to Life Technologies Corporation, a NASDAQ-listed global biotechnology business

BAC BV

Leading UK dedicated health and social care consultancy

Clearwater International advised the company on its sale to GE Healthcare

Finnamore

Prism Medical Cetrea A/S

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