Newsletter February 2018

ACXIT HEALTHCARE NEWSLETTER
February 2018
HEALTHCARE NEWS
For Europe & Germany
Next French nursing care operator opening its first facility in China
 
In Q1-2018 the Joint Venture of China Merchants, a high-end community pioneering developer, and Groupe Colisee, a French stationary care operator, will open its first facility in Guangzhou. The facility with a capacity of 132 beds is part of the Guangzhou Panyu International Senior Care and Recovery Center combining independent living communities, assisted living facilities, nursing homes and other care services.
 
Waterland enters the elderly care market

The recently established Schönes Leben Group, a subsidiary of Waterland, has acquired the stationary care operator compassio. Schönes Leben Group is a platform for retirement care, new ways of living for older people and innovative service packages for retirees from the age of 65 for which compassio with its 28 care homes and a capacity of more than 3,000 beds represents the first strategic acquisition.

 
Private equity firm Eurazeo interested to acquire C2S
 
The French Eurazeo Group has entered into exclusive discussions with the private equity firm Bridgepoint to acquire the French private clinic chain Compagnie Stéphanoise de Santé (C2S). The Group with 11 clinics is the 8th largest acute care provider in France and generated revenues of more than EUR 150m in 2016. In 2011 Bridgepoint acquired an initial stake in C2S to fund the growth through acquisitions.
 
Ober Scharrer Group

The sale of Ober Scharrer Group, a network of private ophthalmology centers with a focus on ambulant ocular surgeries, is ongoing. In 2011, Palamon Capital Partners acquired the business from the founders who remained minority shareholders. As of today, the company is present at around 50 locations offering a wide spectrum of conservative and operational ophthalmologic treatments to statutory and private insured patients. Ober Scharrer employs around 900 people and 180 doctors.

 
Closing of inoges acquisition by Orpea Group
 
In mid January 2018 Orpea Group, a leading European provider of long- and medium-term care (nursing homes, post-acute, rehabilitation and psychiatric hospitals, as well as homecare services), closed the acquisition of inoges by its German subsidiary Celenus Kliniken. This acquisition represents the strategic opportunity to complement the existing rehabilitation service offering of Celenus by ambulant services and to generate synergies between the two businesses.
 
Private clinic operator Paracelsus to restructure in insolvency proceedings

In late December 2017 Paracelsus Kliniken, one of the largest German private acute and rehabilitation clinics operators, filed for insolvency. The Group with 5,200 employees operates nation-wide approx. 40 facilities in 23 locations. The group’s financial position was pressured by several underperforming facilities throughout the last years. ACXIT Capital Partners has been mandated to support the insolvency administrator in the restructuring process.

 
Source: Company Information (China Merchants-Colisee, Waterland, Eurazeo Patrimoine); ACXIT Capital Research
HEALTHCARE TOPIC OF THE MONTH
Review Transactions in the European Healthcare Services Market 2017
Review 2017
 
In 2017 the volume of European M&A transactions involving Healthcare Service companies outperformed 2016 both in value and volume. In addition, share prices of leading Healthcare Service companies outperformed European stock market indices like MSCI, DAX etc.

Transaction volumes and valuations were driven in particular by the nursing care industry. Especially in France and Germany, several major market players in the stationary care sector changed hands in 2017. In addition, these transactions represented the largest deals in terms of Enterprise Value with prices exceeding EUR 500 million. Furthermore, all of these 4 transactions were secondary buy-outs, meaning that financial investors sold their investments after a successful implementation of a buy-and-build strategy to another financial investor.

Notably, consolidation trends have also reached further  fragmented healthcare services sectors such as radiology, diagnostics & laboratory services, ophthalmology or dental clinics. In particular, financial investors – sitting on increasing amounts of funds, which need to be invested – were attracted by the Healthcare Services industry due to its proven resilience to economic turbulence and unbeatable long-term trends based on the demographic change in Europe.

On the other side, strategic buyers seek to expand their regional and international presence or service offering through acquisitions.

While many factors have contributed to an active M&A environment, historically high valuation parameters have certainly been an incentive for sellers to enter into transactions.

In this demand driven investment environment, valuation plateaued at levels around 12-13x EBITDA for attractive targets.

HIGH VALUATION ENVIRONMENT IS THE KEY DRIVER 
 OF THE M&A MARKET FOR HEALTHCARE SERVICES IN EUROPE

 
Outlook 2018
 
Sceptics look at potential negative effects of Brexit, tightening of monetary policy or an aggravation of international crises. Investors seem to think differently sending public market valuation levels to new highs creating a sound environment for transactions. In the same light, leading investment banks report that deal pipelines are well filled in the Healthcare Services sector. This does not come as a surprise as macro trends remain intact and the health care industry continues to become more consolidated and internationalized. Lastly, capital for investments continues to be piling up at financial and strategic investors.  In consequence, M&A transaction volumes and valuation parameters are set for another record year in 2018.
 
Key European Healthcare Services Transactions 2017
Source: mergermarket, ACXIT Capital Research
HEALTHCARE VALUATION ANALYSIS EUROPE
European Healthcare Companies Outperform EURO STOXX 50
Comparable Company Analysis
Healthcare Indices vs. EURO STOXX 50
Note: 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 31.01.2018
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, Leipzig, Zurich and Hong Kong as well as strong alliances in France, China, India and the USA. 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, Mobile & Telecom, Healthcare & Pharma, Retail & Consumer Goods, General Industries and Real Estate.
ACXIT HEALTHCARE CONTACT
THOMAS KLACK
Managing Partner
thomas.klack@acxit.com
+49 69 247 414 120
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