Newsletter December 2019

ACXIT HEALTHCARE NEWSLETTER
December 2019
OUTLOOK 2020:
INVESTMENT OPPORTUNITY – HEALTHCARE SERVICES
The year-end of 2019 arrives in large steps. Looking back, the year has been as eventful as 2018 with overall 44 observed transactions in the segments nursing care, acute clinics and rehabilitation, surpassing the previous year even by four deals.
Valuation levels of transactions and listed peer groups plateaued slightly below the peeks of previous years and still show evidence of the robust momentum of the healthcare M&A market. However, investors became more selective for individual segments and assets within the healthcare market due to investor-unfriendly regulatory rhetorics and persisting workforce shortage creating operational restrictions. Notable examples are the abandoned sales processes for GHD or Median in 2019.
From a macroeconomic perspective the market is still intact and the new inaugurated ECB chief Lagarde, in a statement published on December 12, confirmed, that the ECB will not change key interest rates for the foreseeable future.
In an environment of continuing uncertainties, the health care market remains the “the fattest pitch currently existing” as a result of favorable macroeconomics supported by low level of interest and inflation rates. Nevertheless, general consensus exists that the money of smart investors is getting more choosy.
In general we as ACXIT Capital Partners have taken a positive and good resumé of the year 2019 and expect at least a similar event- and successful year 2020.
HEALTHCARE TOPIC OF THE MONTH
Current Developments in the German Healthcare Sector
Duty files or digitization boom – what is the status of digitization in Germany’s healthcare system?
A positioning from a corporate finance point of view by Thomas Klack.
 
E-prescription, tele-medicine, etc. may have long been standard. As shown in a study by Bertelsmann Stiftung from 2018, where Germany ranks second last, this has long been the case in our neighboring countries. Belgium introduced e-prescription as early as 2013 and enables automatic exchange between healthcare providers and health insurance companies via MyCareNet. Austria has been offering the electronic patient file since 2016. Comparable medical strategies and more can already be found in many of our European neighboring countries.

What does digitization mean?

Digitization in the healthcare sector is taking place in both non-medical and medical areas, with borders becoming blurred. In the non-medical area, digitization supports the administrative infrastructure in terms of information processing, storage and transfer through cloud and platform solutions for patient files, prescriptions, appointment coordination, billing systems, etc. Digitization in the medical sense deals with the R&D process of treatment methods, active ingredients and (digital) products in the life science / medtech / pharmaceutical industry as well as with the improvement of medical care (e.g. tele-medicine or big data analysis in medical diagnostics). The focus is on the innovative use and combination of new technologies such as 3D printing, IoT, virtual reality and artificial intelligence & analytics. A prominent pioneer in this field is the NHS in Great Britain – usually considered to be backward – which tests the evaluation of large data sets of treatment successes and disease progressions with the help of Google and AI in order to draw conclusions about processes and therapies. (read more…)
Note: Article “Verstaubte Akten oder Digitalisierungsboom” by Thomas Klack, Managing Partner ACXIT Capital Partners, published in Plattform Life Sciences issue 4/2019 “Medizintechnik & Digital Health”
HEALTHCARE NEWS
for Europe & Germany
Capvis to acquire Swiss nursing care operator Tertianum

Close to the end of 2019 the Zurich-listed real estate company Swiss Prime Site concluded to sell its nursing care operations to the Swiss financial investor Capvis.
Teritianum is the Swiss market leader for elderly care and assisted living and operates 78 facilities in the upper-price segment with a total capacity of 5,237 beds.
In August 2019 SPS announced to evaluate the sale of Tertianum (~CHF 500m sales) in a process led by Credit Suisse and attracting interest of both financial as well as international strategic investors. In the end the “Swiss-roots” of Capvis provided for the most attractive solution for SPS.

 
French REIT Icade Healthcare enters Germany by acquiring real estate of 19 nursing care facilities

End November the French REIT Icade Healthcare announced the acquisition of the real estate of 19 nursing care facilities from the Hamburg-based MK-Kliniken.
The real estate portfolio operated by Chequers Capital-owned emvia Living has a total capacity of 2,300 beds on more than 112,000m².
The transaction with a disclosed transaction volume of EUR 266m represents a first major investment of Icade Healthcare in Germany.

 
Irish nursing home group TLC prepared for sale

The privately-owned Irish group TLC Nursing Homes has been put on sale by owner Michael Fetherston expecting a transaction volume of EUR 155m.
TLC Nursing Homes operates five facilities in the upper-price segment in the Dublin area with 513 beds. The transaction scope includes the operations as well as the respective real estate.
Interest is rumored from both international financial as well es infrastructure investors.
Source: Company Information, Reuters, mergermarket, ACXIT Capital Research
HEALTHCARE VALUATION ANALYSIS EUROPE
Comparable Company Analysis
Healthcare Indices vs. EURO STOXX 50
Note: 1) IFRS 16 Accounting rule change from 2018 to 2019 effects EBITDA; Indices for Nursing (EU) and Acute & Rehabilitation (EU) correspond to the companies listed in the CCA, equally weighted
Source: S&P Capital IQ as per 13.12.2019
ACXIT HEALTHCARE CONTACTS
THOMAS KLACK
Managing Partner
thomas.klack@acxit.com
+49 69 247 414 120
RUTA HILDEBRAND
Managing Director
ruta.hildebrand@acxit.com
+49 69 247 414 170
ACXIT CAPITAL PARTNERS
About us

ACXIT Capital Partners is a leading international corporate finance and investment advisory firm for mid-market clients and entrepreneurs in Europe and beyond. As an independent, privately owned firm, we maintain offices in Frankfurt, Berlin, Munich, Zurich, Hong Kong and New York as well as strong alliances in Great Britain, France, China and India. Our clients are corporations, family-owned businesses, entrepreneurs, financial sponsors and family offices.

Our Services

Since 1998, we offer our clients comprehensive corporate finance advisory services including M&A and capital markets advisory as well as restructuring, debt and strategic advisory. To date, we have completed 400 transactions with a total deal/financing volume of approx. EUR 20bn. While our home market is in the German speaking region, most clients are international and transactions cross-border.

Our Industries

Our advisory expertise is founded on an in-depth understanding of the key industries served by the company, covering the industrial and technology sectors as well as the real estate sector. We have successfully advised clients in their key sectors: Internet & Media, Software & IT, Next-Gen Mobility, Mobile & Telecom, Healthcare & Pharma, Retail & Consumer Goods, General Industries and Real Estate.
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