Navigant Capital Advisors Healthcare Services “Quarterly Dialogue”

<ed.note>I met Brad at a Medical Banking Project function and he has been kind enough to keep me in the loop:</ed.note>

2007 continues to be a strong period for the healthcare sector on top of a record year in 2006 as over 250 transactions were announced in Q1. Due to continued liquidity and a buoyant lending market, private equity groups have gained further purchasing power in the marketplace in pursuit of high growth sectors, such as healthcare services and healthcare information technology. Notable first quarter transactions include:

  • In the information services sector, The Blackstone Group’s $3.3 billion cash acquisition of Cardinal Health’s Pharmaceutical Technologies and Services business unit;
  • In the alternate site sector, Texas Pacific Group’s announcement to acquire HealthSouth’s Surgery Division for $945 million; and
  • In the long-term care sector, Formation Capital and JER Partners’ $1.3 billion buyout of Genesis Healthcare.

In addition to the volume of healthcare M&A transactions, underlying valuations continue to be lofty, as numerous transactions were completed at acquisition multiples in excess of 10.0x TTM EBITDA. Further, public equity returns through Q1 were equally impressive; 12%-15% returns enjoyed in the healthcare distribution, healthcare information technology and long-term care segments. Given these factors and the overall market performance within the healthcare services sector, we expect significant transaction volumes for the remainder of 2007.

In response to these market trends and our sole focus on serving the middle market, the Investment Banking Group at Navigant Capital Advisors has enjoyed significant success having completed more than $1.7 billion of merger, acquisition, divestiture, and recapitalization transactions over the past year. In combination with our cadre of dedicated restructuring professionals, the NCA Investment Banking team now numbers more than 50 professionals, led by seasoned deal professionals focusing on the middle market transaction needs of companies, private equity groups, lenders, and management teams competing in the Healthcare, Business Services, Consumer Products & Specialty Retailing, Industrial Growth, and Insurance sectors.

We welcome your comments and hope that you continue to find our Quarterly Dialogue informative.

Best regards,
Brad Burkett
bburkett@navigantcapitaladvisors.com