August 2015 Brown Gibbons Lang & Company Chicago Cleveland Irvine San Antonio bglco.com Healthcare & Life Sciences The BGL Healthcare & Life Sciences Insider is published by Brown Gibbons Lang & Company, a leading independent investment bank serving middle market companies throughout the U.S. and internationally. Spotlight On: Healthcare Real Estate: Volume & Valuations Influenced by “Perfect Storm” Conditions Investment demand and corresponding sale transaction volume for healthcare real estate have reached historic highs. The recession-resilient asset class continues to attract broad investor appeal, from institutional and private investors alike, as capital inflows continue to drive demand and provide stability for healthcare real estate values. Continued consolidation involving health systems and physician groups, combined with optimal capital market conditions, are fueling investor demand for healthcare real estate, driving sale transaction volume and real estate valuations to unprecedented levels. As of 2Q 2015, publicly traded healthcare REITs had an average EBITDA multiple of 19.6x while publicly traded hospitals and surgical operating companies had lower multiples of 8x–10x. This difference in value, by a factor of 2:1, is prompting many physician-owners of healthcare real estate to consider monetizing their asset(s) through a sale/leaseback, which can also be structured as a tax-deferred UPREIT transaction. Insider Transactions involving securities are conducted at the Chicago and Cleveland offices.
Transcript
August 2015Brown Gibbons Lang & Company
Chicago
Cleveland
Irvine
San Antonio
bglco.com
Healthcare & Life Sciences
The BGL Healthcare & Life Sciences Insider is published by Brown Gibbons Lang & Company, a leading independent investment bank
serving middle market companies throughout the U.S. and internationally.
Spotlight On:Healthcare Real Estate: Volume & Valuations Infl uenced by “Perfect Storm” ConditionsInvestment demand and corresponding sale transaction volume for healthcare real
estate have reached historic highs. The recession-resilient asset class continues
to attract broad investor appeal, from institutional and private investors alike, as
capital infl ows continue to drive demand and provide stability for healthcare real
estate values.
Continued consolidation involving health systems and physician groups,
combined with optimal capital market conditions, are fueling investor demand for
healthcare real estate, driving sale transaction volume and real estate valuations
to unprecedented levels. As of 2Q 2015, publicly traded healthcare REITs had
an average EBITDA multiple of 19.6x while publicly traded hospitals and surgical
operating companies had lower multiples of 8x–10x. This difference in value, by
a factor of 2:1, is prompting many physician-owners of healthcare real estate to
consider monetizing their asset(s) through a sale/leaseback, which can also be
structured as a tax-deferred UPREIT transaction.
InsiderTransactions involving securities
are conducted at the Chicago and
Cleveland offi ces.
Healthcare & Life Sciences Insider
Spotlight On:
2
Healthcare Real Estate Transaction Volume Reaches New Highs
Investment demand, corresponding sale transaction
volume, and valuations for healthcare real estate have
reached historic highs. The investment demand for quality
healthcare real estate assets in 2015 continues unabated.
For the fourth consecutive year, healthcare real estate
sales are at peak levels, with $9.8 billion in total transaction
volume in 2014, a 32 percent increase over the 2013 volume
of $7.1 billion, and topping $11.9 billion for the fi rst half of
2015. Healthcare is now the largest REIT sector for capital
raised with $59.3 billion by all healthcare REITs from
2010 through 2014. This outsized amount represents 21
percent of the total universe of REIT capital raised, while
the healthcare segment comprises only 13 percent of
the total REIT market capitalization. This record volume
of transactions and capital being raised is a function of
an asset class that has gained wide institutional investor
acceptance.
According to Revista, a provider of focused healthcare
property data, of the total transactions for 2014, medical
offi ce buildings (MOBs) represented 63 percent of the
volume with the remaining volume comprised of hospitals
(18 percent) and other medical facilities (19 percent).
Northstar Healthcare REIT was the largest buyer, by
volume, in 2014 through its acquisition of Griffi n American
Healthcare REIT II in December 2014 for approximately
$4 billion, which included 153 healthcare and senior housing
communities. This was followed by Ventas, Inc.’s (NYSE:
VTR) acquisition of American Realty Capital Healthcare
Trust, Inc. (NASDAQ: HCT) in January 2015 for $2.6
billion, which included 115 healthcare and senior housing
communities.
The investment sales market for MOBs and other healthcare
real estate assets, such as ambulatory surgery centers
(ASCs) and short-stay hospitals, have already surpassed
last year with 1,176 transactions completed through 1H 2015,
totaling approximately $11.9 billion. In comparison, there
were 950 sale transactions, totaling $9.8 billion, for all of
2014. We anticipate continued high volumes in the second
half of 2015 as institutional acquisition groups compete to
deploy and leverage a signifi cant amount of equity in the
third and fourth quarters in order to fulfi ll their acquisition
goals for the year.
Healthcare Real Estate Transaction Volume
Source: Real Capital Analytics.
NOTES:
(1) Medical volume includes property or portfolio sales $2.5 million or greater. Does not include sale transaction data for senior housing communities or skilled nursing facilities.
cap rate is essentially similar to a yield for a bond, or the
inverse of a price-earnings multiple in equities, in that it
compares the net operating income of the property to the
overall value).
Many investors have been laser-focused on how a rise
in U.S. Treasury rates could trigger a rise in cap rates
and therefore a reduction in real estate values. The high
valuation multiples have been fueled by an extended low
interest rate environment, an unprecedented amount
of capital being raised by institutional investors, and
predictable demand drivers for healthcare services as a
result of the nation’s aging demographics and the newly
insured under the Affordable Care Act, which is increasing
demand for healthcare services and facilities.
The average cap rate for transactions that have closed
thus far in 2015 is 6.5 percent, which is down favorably
in comparison to 7.2 percent for 2014. The 2015 average
cap rate of 6.5 percent is infl uenced slightly by Ventas’
acquisition of American Realty Capital Healthcare Trust,
Inc. ($1.04 billion, 78 medical offi ce buildings), which had a
reported cap rate of 6.2 percent. The compression in cap
Healthcare Real Estate Capitalization Rates
Source: Real Capital Analytics.
NOTES:
(1) Medical volume includes property or portfolio sales $2.5 million or greater. Does not include sale transaction data for senior housing communities or skilled nursing facilities.
The fi rst two quarters of 2015 each had an average
capitalization rate of 6.5 percent (a capitalization rate of
6.5 percent is equivalent to an EBITDA multiple of 15.4x),
which are the lowest average capitalization rates recorded
for a quarter since the onset of the Great Recession where
the previous record-setting average capitalization rate was
6.2 percent achieved in 3Q 2007. (A key metric in real
estate valuation is the capitalization rate or cap rate. The
The investment sales market for healthcare real estate
is fundamentally sound from both a capital markets and
an investment demand perspective, creating a market
where capitalization rates and transaction volumes are
exceeding all historic measures for the asset class. Real
estate holders have capitalized on this opportunity and
are realizing signifi cant gains, accessing both proceeds
and tax-deferred liquidity by entering into a transaction
structure known as an UPREIT or DownREIT, which
provides unique income tax advantages, estate tax
planning opportunities, as well as portfolio diversifi cation.
Healthcare & Life Sciences Insider
Spotlight On:
4
rates has been gradual, following trends in previous years,
supported by low interest rates and a disproportionate
amount of capital seeking a limited supply of institutional
quality assets.
Investment demand for stabilized medical offi ce buildings
and other healthcare real estate assets has never been
greater, with the average capitalization rate declining
from 7.7 percent in 2010 to 6.5 percent in 1H 2015. It is
evident that the healthcare real estate investment class has
emerged from the Great Recession as one of the more risk
averse investments in the commercial real estate market.
Further indication of today’s favorable market conditions
is evidenced in the pricing of healthcare real estate. In its
recent Trends & Trades report, RCA cited an average price
per square foot (PSF) of $261. This is a 21 percent increase
over the average PSF of $216 for all of 2014.
The proven resiliency, reliable returns, and sound market
fundamentals have led to substantial interest from all
investor profi les, including public and private REITs, pension
funds, life insurance companies, foreign funds, institutional
investors, private syndication, and high net-worth private
investors. As a result, the infl ow of capital in search of stable,
risk-adjusted investment opportunities within the space is
expected to grow, providing stability for healthcare real
estate values.
Solid Occupancy Fundamentals and Expanding Outpatient Job Growth
Overall tenant demand for healthcare real estate continues
to increase. As of 2Q 2015, vacancy rates for medical offi ce
buildings (10.9 percent) fell below 11.0 percent for the fi rst
time since the Great Recession. By comparison, vacancy
rates for medical space are 160 and 340 basis points lower
than those of Central Business District (CBD) and Suburban
offi ce space, respectively. Contributing to the lower vacancy
rates are the long-term leases that are associated with
medical tenants and the high cost of specialty-specifi c
improvements. Since 3Q 2009, vacancy rates for medical
offi ce space have ranged between 10.9 - 11.8 percent
(90 basis points) versus vacancy rates for traditional offi ce
space, which have ranged between 13.4 - 15.9 percent
(255 basis points), further evidencing that medical offi ce
space has a lower economic correlation with the overall
economy than traditional offi ce space since healthcare
services are more need-based driven and less susceptible
to economic swings. Leasing market conditions for medical
offi ce space should continue to improve in 2015 and beyond
as developers, lenders, and healthcare providers continue to
assess and understand the long-term impact of the ACA.
The healthcare sector added jobs through the recession
and continues to expand to meet the growing demand for
services. According to the U.S. Bureau of Labor Statistics,
outpatient care employment has grown 4 percent every
quarter since 2Q 2012 and peaked just under 6 percent in
1Q 2014. However, growth trends vary signifi cantly within
healthcare employment, refl ecting changing provider and
consumer location preferences. For example, at one end of
the spectrum, outpatient care centers have been expanding
in the 4 to 6 percent range over the last three years.
Advancements in technology, provider and consumer cost
pressures, and aging demographics have been driving the
shift in many medical procedures to a lower-cost outpatient
setting that is more conveniently located closer to the target
consumer base. In contrast, hospital employment growth
has been close to zero percent, as smaller community and
non-profi t hospitals cope with reduced reimbursements,
an increasing Medicare patient base, and increased
administrative costs.
Healthcare Reform Driving Consolidation
Uncertainty arising from healthcare reform remains the
biggest concern in the industry. Since the passage of the
Affordable Care Act in 2009, there has been an accelerating
trend of health system and physician group acquisitions,
Healthcare Real Estate Market Analysis - 1H 2015
Healthcare M&A Transaction Volume
Source: S&P Capital IQ.
Based on announced deals, where the primary location of the target is in the United States.Deal counts and value include transactions with undisclosed values.
0
50,000
100,000
150,000
200,000
250,000
300,000
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1H 2
014
1H 2
015
Deal V
alue ($ in m
illions)Num
ber
of T
rans
acti
ons
Number of Transactions Deal Value
The proven resiliency, reliable returns, and sound
market fundamentals have led to substantial interest
from all investor profi les, including public and private
REITs, pension funds, life insurance companies, foreign
funds, institutional investors, private syndication, and
high net-worth private investors. As a result, the infl ow
of capital in search of stable, risk-adjusted investment
opportunities within the space is expected to grow,
providing stability for healthcare real estate values.
5
Healthcare & Life Sciences Insider
Leading Healthcare Real Estate Buyers
Source: Real Capital Analytics.
47%
40%
13%Publicly Traded &Non-Traded REITs
Private Investors
Owner-Occupiers
consolidations, and alliances. 2014 was a record year for
healthcare M&A with 1,556 announced transactions—up
from 931 transactions in 2009. With increased participation
in M&A by hospitals and independent practice groups,
consolidation involving ambulatory surgery centers and
specialty hospitals will also increase.
As the number of provider transactions continues to rise,
so too will the demand for the underlying real estate.
With more creditworthy tenants taking over additional
practices, rents will be sustainable at maximum fair market
value. Consequently, since the value of the real estate is
dependent upon the rent, this creates an optimal time for
physician-owners of healthcare real estate to monetize their
asset by selling to a REIT or other healthcare real estate
investor during a time where valuations and transaction
structure fl exibility have never been better.
Buyer Composition
Through 2Q 2015, the leading buyers were public REITs,
public non-traded REITs, and other institutional buyers at
47 percent of volume, with the Ventas/American Realty
Capital Healthcare Trust portfolio accounting for the
majority. Private investors made up 40 percent of the
market, with health system, hospital, and physician groups
making up the remaining balance.
REITs are dominating all other buyer types in more ways
than one. According to Revista, during 2Q 2015, REIT
investors acquired MOBs at an average PSF of $308. This
is 7 percent higher than hospital and health system buyers,
which are acquiring at an average PSF of $288. REITs are
also out-buying private investors and owner-occupant
investors by an impressive 29 percent and 62 percent,
respectively. Private investors are purchasing MOBs at an
average price of PSF of $239.
Healthcare Real Estate Market Comparison - 2Q 2015 versus 3Q 2007
Indications of today’s favorable market conditions become
acutely apparent when comparing healthcare real estate
sales in 2Q 2015 with 3Q 2007, which is widely considered
to be the market peak that would never be matched again.
The 2Q 2015 transaction volume of $11.7 billion, comprised
of 47.5 million square feet, has outpaced 3Q 2007 levels
of $8.7 billion (38 million square feet) with comparable
capitalization rates.
Given the current market conditions, many providers
are conducting strategic reviews and looking closely at
monetizing both core and non-core assets, transferring
ownership and valuation risk, and redeploying capital
towards growth opportunities and other core areas of their
business, while maintaining a degree of control over the
asset.
Money Rates
Source: Bloomberg, Wall Street Journal, BankRate.com.
SOURCE: Standard & Poors LCD.*NA: Data not reported due to limited number of observations for period.*NA: Data not reported due to limited number of observations for period. SOURCE: Standard & Poors LCD.
SOURCE: Standard & Poors LCD.
Transactions with Strategic Buyers Transactions with Financial Buyers
Transaction Count by Deal Size
Middle market enterprise values between $25 million and $500 million. Middle market enterprise values between $25 million and $500 million.
EBIT
DA
Mul
tiple
Tota
l Deb
t to
EBIT
DA
EBIT
DA
Mul
tiple
Equi
ty C
ontr
ibut
ion
(%)
Middle Market M&A Activity
SOURCE: PitchBook.SOURCE: S&P Capital IQ.Based on announced deals, where the primary location of the target is in the United States.Middle market enterprise values between $25 million and $500 million.
In July 2015, Medical Properties Trust (NYSE:MPW) signed a defi nitive agreement to acquire Capella Healthcare for $900 million in cash, consisting of a $600 million investment in Capella’s real estate (1,169 beds) and $300 million in Capella’s operating entities. Capella Healthcare is a national leader in the development and operation of healthcare facilities and provides clinical, operational, and fi nancial expertise to community facilities. The company has a nationwide reputation for developing strategic partnerships such as their joint ventures with Saint Thomas Health, which resulted in the joint ownership and operation of four hospitals and potentially 60 additional healthcare facilities in surrounding counties. Transaction Multiples: 2.0x Revenue and 17.0x EBITDA
In July 2015, NorthStar Healthcare Income, through a joint venture with Formation Capital and Safanad Management, completed the acquisition Extendicare’s U.S. operations for $1.1 billion. The acquired portfolio consists of 152 skilled nursing facilities and 6 assisted living facilities located across 12 states, containing 8,500 beds, with the majority of facilities in Kentucky, Ohio, Michigan, and Wisconsin. Northstar is a public, non-traded REIT that creates, acquires, and manages assets for the healthcare real estate market. The company makes investments in independent living, assisted living, memory care, and skilled nursing facilities. Transaction Multiple: 10.4x EBITDA
In June 2015, Genesis HealthCare (NYSE:GEN), one of the nation’s largest providers of post-acute care, announced the acquisition of 24 skilled nursing facilities with 3,056 beds along with a contract rehabilitation business owned by Revera, for $240 million. Revera is a leading Canadian-based owner, operator, and investor in the senior living sector. The company oversees the second-largest network of accommodation, care, and services for seniors in North America with over 500 locations in Canada and the United States providing seniors’ apartments, independent living, assisted living, memory care, long-term care, and skilled nursing. The company jointly owns 70 retirement communities across Canada with Health Care REIT and has expanded its footprint by securing a majority interest in Sunrise Senior Living. Transaction Multiple: .86x Revenue
In June 2015, Sabra Health Care REIT (NasdaqGS:SBRA) agreed to purchase a portfolio of four transitional care facilities in Maryland containing 678 licensed beds from NMS Healthcare for $234 million in cash and the assumption of a HUD loan. NMS offers comprehensive short- and long-term healthcare services that include skilled nursing, dialysis, and wellness in Maryland. Transaction Multiple: 2.34x Revenue
In June 2015, HCP (NYSE:HCP) and Brookdale Senior Living (NYSE:BKD) completed the acquisition of CSH Master Care USA from Chartwell Retirement Residences (TSX:CSH.UN) for $849 million. The acquisition includes a portfolio of approximately 5,025 suites. HCP is a fully integrated REIT that invests primarily in real estate serving the healthcare industry. Brookdale Senior Living is the leading operator of senior living communities in the United States with approximately 1,150 communities in 46 states (approximately 7,000 units) and is committed to providing senior living solutions in the independent living, assisted living, and dementia-care spaces. Chartwell is an unincorporated, open-ended trust which indirectly owns and manages a portfolio of senior housing communities in the United States.
The transaction follows the March 2015 announcement of a strategic joint venture between HCP and Brookdale Senior Living that will own and operate entry fee continuing care retirement communities (CCRC). The joint venture will own 14 CCRC campuses valued at $1.2 billion, with Brookdale continuing to operate the communities.
In April 2015, NorthStar Healthcare Income agreed to acquire 15 continuing care retirement communities across 11 states from various subsidiaries of Fountains Senior Living Holdings for $640 million. The transaction assets include 9 rental and 6 entrance-fee continuing care retirement communities totaling 3,637 units. The portfolio post-transaction will continue to be operated by Watermark Retirement Communities.
In April 2015, Ventas (NYSE:VTR) announced the signing of a defi nitive agreement to acquire Ardent Medical Services and affi liate Ardent Health Services (AHS) for $1.75 billion in cash. AHS is one of the top ten largest for-profi t hospital organizations in the United States. Ventas is a real estate investment trust S&P 500 Company with a diverse portfolio containing over 1,600 assets in the United States, Canada, and the United Kingdom.
Transaction Multiples: 0.9x Revenue and 9.4x EBITDA
SOURCE: S&P Capital IQ, Levin Associates, Equity Research, and Company Filings.
In March 2015, HCP (NYSE:HCP) agreed to acquire nine specifi ed facilities from HCR ManorCare for approximately $280 million. HCR ManorCare and its subsidiaries provide post-acute care, skilled nursing care, assisted living, hospice care, home health care, and rehabilitation therapy services in the United States. HCP is an independent hybrid real estate investment trust that primarily invests in healthcare properties such as senior housing, life sciences, medical offi ces, hospitals, and skilled nursing facilities.In March 2015, New Senior Investment Group (NYSE:SNR) acquired a 17-property portfolio of private pay, independent living senior housing properties from Hawthorn Retirement Group for approximately $435 million. New Senior Investment Group is one of the largest publicly-traded owners of senior housing properties with 121 properties across 31 states with approximately 2,082 units. Hawthorn Retirement Group develops and operates senior communities in the United States and Canada and provides housing and health support services to seniors.
In March 2015, Tenet Healthcare Corporation (NYSE:THC) and Welsh, Carson, Anderson & Stowe signed a defi nitive agreement under which Tenet and United Surgical Partners International (USPI) will combine their short-stay surgery and imaging center assets into a new joint venture for approximately $425 million in cash. The new joint venture will be the largest provider of ambulatory surgery in the United States with ownership interests in 244 ambulatory surgery centers, 16 short-stay surgical hospitals, and 20 imaging centers. The combined operations will be partnered with 50 health systems and over 4,000 physicians at the facility level. The transaction signifi cantly expands Tenet’s ability to participate in and benefi t from the growing demand for lower-cost, more consumer-friendly services provided in freestanding ambulatory facilities and also enhances Tenet’s position as a diversifi ed healthcare services company. In its acute care markets, the partnership with USPI will enhance Tenet’s ability to develop and expand ambulatory services, build integrated networks, and participate in value-based and other risk-based models with payers. Transaction Multiple: 12.5x EBITDA
In March 2015, Tenet Healthcare Corporation (NYSE:THC) agreed to acquire Aspen Healthcare Limited from Welsh, Carson, Anderson & Stowe for approximately $215 million in cash. Aspen Healthcare operates acute hospitals, a cancer center, and ambulatory day surgery in the United Kingdom and offers services in the areas of health screening, physiotherapy, general surgery, cancer care, fertility care, diagnostic screening, orthopedics, pharmacy, radiotherapy, X-ray, outpatient consulting and a variety of other services. The acquisition of Aspen Healthcare’s nine private hospitals and clinics is expected to signifi cantly expand its footprint in the United Kingdom.
NOTABLE ACTIVITY IN LIFE SCIENCES &
MEDICAL PRODUCTS
In July 2015, SJM International entered in a defi nitive agreement to acquire Thoratec Corp. (NasdaqGS:THOR) for approximately $3.7 billion in cash. Thoratec manufactures proprietary medical devices used for mechanical circulatory support for the treatment of heart failure patients. The company is the global leader in the $750 million ventricular assist device (VAD) market and recently announced CE Mark approval of its percutaneous heart pump, allowing Thoratec to enter a global market estimated to exceed $300 million in 2016. With the acquisition, St. Jude Medical gains entry to new markets totaling more than $1 billion that are expected to grow approximately 10 percent annually, according to a company press release. Transaction Multiples: 7.3x Revenue and 44.6x EBITDA
In May 2015, Danaher Corporation (NYSE:DHR) entered into a merger agreement with Pall Corporation (NYSE:PLL) in a cash transaction valued at $13.8 billion. Pall Corporation is a leading global provider of fi ltration, separation, and purifi cation solutions that remove or separate substances from a range of solids, liquids, and gases for the healthcare and industrial industries. Pall’s healthcare business segment serves customers in the biopharmaceutical market as well as medical end markets. The company has strategic partnerships with CytoMedical Design Group LLC for exclusive global distribution rights of their cord blood processing technology, as well as partnerships with various distributors across the globe. This transaction offers Danaher a unique opportunity to drive greater shareholder value with each company being more focused due to access to the necessary capital to pursue organic and inorganic growth opportunities alike. Transaction Multiples: 4.9x Revenue and 20.4x EBITDA
SOURCE: S&P Capital IQ, Levin Associates, Equity Research, and Company Filings.
In March 2015, Becton, Dickinson and Company (NYSE: BDX) acquired CareFusion Corporation for $12.2 billion. CareFusion offers product lines in the areas of medication management, infection prevention, operating room effectiveness, and respiratory care. Upon completion of the acquisition, CareFusion became a wholly-owned subsidiary of BDX. Becton, Dickinson and Company is a global medical technology company that is focused on improving drug delivery, enhancing diagnoses of infectious diseases, and advancing drug discovery. Transaction Multiples: 3.1x Revenue and 13.6x EBITDA
In February 2015, Thermo Fisher Scientifi c (NYSE: TMO) acquired Advanced Scientifi cs (ASI), a global provider of single-use technologies for customized bioprocessing solutions, for $300 million in cash. ASI manufactures customized single-use systems and equipment for the preparation, processing, storage, and transportation of biopharmaceuticals. The company has 380 employees and operations in Pennsylvania and Mexico. Transaction Multiples: 3.8x Revenue
In January 2015, Eurofi ns Scientifi c SA (ENXTPA:ERF) acquired Boston Heart Diagnostics Corporation from an investor consortium that included Bain Capital Ventures, Beacon Angels, Cherrystone Angel Group, Launchpad Venture Group, and others for $200 million. Boston Heart Diagnostics is a heart health management company that provides an advanced diagnostics platform to help identify and reduce the risk of cardiovascular disease and other chronic conditions. With this acquisition, Eurofi ns strengthens its clinical testing and genomic service offering, building on the presence in the specialty clinical testing market created with the acquisition of Vira-Cor-IBT in July 2014. This acquisition, like VIBT, is a further demonstration of Eurofi ns’ commitment to serve the emerging needs of the clinicians, pharmaceutical, and biotechnology leaders with laboratory services of the highest quality and reliability in multiple diseases.
NOTABLE ACTIVITY IN OUTSOURCED SERVICES/
INFORMATICS
In May 2015, MEDNAX (NYSE:MD) acquired Virtual Radiologic Corporation (VRC). VRC provides radiology coverage to over 2,100 healthcare facilities across the United States and internationally and has a proprietary technology and workfl ow platform. MEDNAX provides neonatal, anesthesia, maternal-fetal, pediatric cardiology, and other pediatric physician services. Transaction Multiple: 2.7x Revenue
In May 2015, CVS Pharmacy (NYSE:CVS) entered into a defi nitive agreement to acquire Omnicare (NYSE:OCR) in a transaction valued at $11.6 billion. Omnicare specializes in the management of pharmaceutical care and provides a wide variety of outsourced services for manufacturers and distributors. With the acquisition, CVS will signifi cantly expand its ability to dispense prescriptions in assisted living and long-term care facilities, as well as expand its presence in the rapidly-growing specialty pharmacy business. CVS Pharmacy operates over 7,800 retail pharmacies and 900 walk-in medical clinics across the United States retaining more than 65 million plan members. Transaction Multiples: 7.7x Revenue and 15.0x EBITDA
In November 2014, Cognizant Technology Solutions Corporation (NasdaqGS:CTSH) acquired TriZetto Corporation from TZ Holdings for $2.7 billion in cash. TriZetto Corporation develops and provides information technology and software solutions for health plans, benefi ts administrators, care providers/physicians, payer clients, hospitals, and healthcare systems. The combination of TriZetto’s market-leading platforms with Cognizant’s strengths in consulting, IT, and business process services is expected to put the company at the forefront of creating new models for future healthcare needs. Transaction Multiples: 4.0x Revenue and 37.8x EBITDA
In February 2015, Laboratory Corp. of America (NYSE:LH) acquired Covance (NYSE:CVD) for $6.0 billion. This combination creates a leading global healthcare diagnostics company, providing comprehensive clinical laboratory services and end-to-end solutions for drug and diagnostics development and commercialization. Complementary services and capabilities will enable the combined entity to pursue multiple strategic opportunities in both the clinical laboratory and drug development businesses. Transaction Multiples: 2.3x Revenue and 14.0x EBITDA
The BROWN GIBBONS LANG | Real Estate Partners (BGLRP) National Healthcare Group is one of the nation’s leading advisors in healthcare real estate, specializing in providing healthcare real estate investors and developers with acquisition and disposition strategies as well as assisting healthcare providers in developer selection and monetizing healthcare real estate assets. For healthcare organizations, BGLRP supports their commitment to providing quality care by collaborating with providers to maximize their capital resources through asset monetization of core and non-core real estate, as well as planning and financing new development to meet their needs for exceptional community care. With access to BGL’s resources and extensive market research, the National Healthcare Group offers the specialized expertise, local market knowledge, and personalized service found in boutique firms, while maintaining access to the scope, scale, and breadth of a leading investment banking and real estate advisory company.
