Dental Products Market Analysis – March 2017

Dental products companies continue international growth and expand scale through acquisition.

Having just wrapped up another bi-annual International Dental Show in Cologne, Germany, attendees are now trying to make sense of the notes they accumulated from dozens of meetings and discussions around the exhibit halls.

Dental product company valuations are as healthy as ever, and have stabilized at robust levels for the past few years. At the midpoint, public companies are trading for 2.1x revenue and 16x EBITDA while recent transactions are tracking at 3.8x and 12.2x, respectively. Since mid-2014 our Dental Products Index has risen 58% compared to a 26% increase in the S&P 500.

The overall dental products space is expected to grow at an annualized rate of 2.9%, and in 2019 the sector is forecasted to reach $55 billion.¹ Some specialties are expected to see much faster growth, such as orthodontic supplies, which are expected to grow 8%.² Growth drivers include demographic trends in the developing world, as middle class disposable income rises and new technologies become available.

Brocair advises Groupe Novasep on its divestiture of TangenX

Brocair Partners LLC, an investment bank serving the healthcare industry, advised Groupe Novasep SAS on the divestiture of its biopharmaceutical manufacturing solutions business TangenX Technology Corporation to Repligen Corporation

NEW YORK, NY – February 13, 2017 – Brocair Partners LLC, an investment banking firm serving the healthcare industry, advised Groupe Novasep SAS, which provides manufacturing solutions for life sciences molecules and fine chemicals, on its divestiture of TangenX Technology Corporation to Repligen Corporation for €37 million.

TangenX Technology Corporation, based in Shrewsbury, MA, produces the single-use Sius™ line of tangential flow filtration (“TFF”) cassettes and hardware used in downstream biopharmaceutical manufacturing processes. Single-use Sius TFF cassettes are used in the filtration of biological drugs and are designed to deliver superior performance to traditional (reusable) TFF cassettes in a cost-competitive format that provides user-ready convenience and flexibility.

Repligen, a NASDAQ-listed life sciences company focused on bioprocessing technology, stated that the acquisition strengthened its position as a leader in single-use bioprocessing technologies and extended its reach into downstream processes, where disposables are increasingly being adopted by biopharmaceutical manufacturers for the convenience, flexibility and cost advantages that they offer.

Gregg Blake, Managing Partner of Brocair, explained, “The process was kept on a tight timeline, and there was substantial strategic interest in TangenX’s technology. In the end the valuation exceeded the sellers’ expectations and was a great endorsement of the past several years of work of the entire management teams at Novasep and TangenX.”

Jean Bléhaut, who led the divestment project for Novasep, said: “I am delighted with the contribution of Brocair Partners to this project. They were able to efficiently jump into a fast track project and were instrumental in entertaining excellent communication between the different stakeholders, which is an essential ingredient in a successful deal recipe.”

Groupe Novasep, based in Lyon, France, is a global provider of cost-effective and sustainable manufacturing solutions for life sciences molecules and fine chemicals. Novasep’s unique offering includes process development services, purification equipment and turnkey processes, contract manufacturing services and complex active molecules to serve pharmaceutical, biopharmaceutical, fine chemical, food and functional ingredients as well as fermentation and chemical commodities industries.

This transaction and other Brocair transactions can be found here.

About Brocair Partners LLC:

Brocair Partners, founded in 2004, provides financial advice to businesses serving the healthcare, wellness, and pharmaceutical industries. We provide mergers & acquisitions, corporate finance, and strategic advisory services to companies worldwide.

Behavioral Healthcare Market Analysis – December 2016

Fragmented behavioral healthcare market continues to consolidate among market leaders and financial buyers to expand geographically and increase service offerings

Over the past three years, valuations have remained strong in the behavioral healthcare industry. Over last twelve months, public company multiplies have been tracking at a median of 1.6x revenue and 9.9x EBITDA while transactions over the last two years are currently tracking at a median of 1.3x and 9.2x, respectively. Since late-2013 our Behavioral Healthcare Index has risen 25.6% compared to a 22.6% increase in the S&P 500.

The main drivers of growth within behavorial health include:

Expansion in insurance coverage: Passage of the Affordable Care Act provides large expansion of mental health and substance abuse insurance coverage building on the Mental Health Parity and Addiction Equity Act of 2008.

More structured reimbursement environment: Private insurers are beginning to reimburse using a value-based care model, resulting in decreased spending and better patient outcomes.

Awareness of behavioral health issues: One in five Americans have a mental health condition with only 44% of adults receiving treatment. This figure is expected to increase as treatment options become more accessible.

The segment is currently a $19 billion industry and has grown at a 4.7% CAGR over the last five years.

CRO Market Analysis – September 2016

Middle-market CROs continue to consolidate in order to expand their menu of service offerings

Over the past two years, valuations have remained consistently strong in the CRO industry. Since mid-2011 our CRO Index has risen 200% compared to a 79% increase in the S&P 500. Public company multiplies have been tracking at 2.4x revenue and 12.5x EBITDA while recent transactions have been tracking at 2.2x and 11.0x, respectively.

The CRO industry is expected to grow to $45.2 billion by 2020 at a compound annual growth rate of 6%.¹ This growth is being driven both by an increase in venture capital investment in small biotech drug discovery firms and greater focus on research and development by larger pharmaceutical companies.

The largest volume of M&A activity in the CRO space has occurred in the middle market as smaller firms look for opportunities to expand their service offerings both locally and internationally. Consolidation has also been a way for firms to address high customer concentration. Through acquisition, companies are able to obtain new customers and offer a new breadth of services. The CRO market has recently become a major target for private equity, such as the acquisition of eResearchTechnology by Nordic Capital in March 2016 for nearly $1.8 billion. Recently there have been announcements by Advent, which is buying inVentiv Health for $3.8 billion, and Cinven, which is acquiring BioClinica for $1.4 billion.

Although smaller firms have dominated M&A activity, larger strategic players have also made significant acquisitions to gain market share and expand their clinical technology applications. The $13.6 billion acquisition of IMS Health Holdings by Quintiles, a provider of biopharmaceutical development and outsourcing, creates the largest global CRO and will enhance Quintiles’ offerings through IMS Health’s global information solutions for clients.

Over the past two years, Charles River Laboratories has completed five acquisitions to strengthen its service offerings and expand its geographical presence both in the United States and internationally. Through its acquisition of Oncotest in November 2015, it was able to reach new markets in Germany expand its reach in preclinical pharmacological services. In June 2016, the acquisition of Blue Stream Laboratories expanded its offerings in the contract analytical, formulations, and development-support laboratory services segments.

Pharmaceutical Product Development has also been active over the last two years with four acquisitions. Most notably, the $257 million of Synexus Clinical Research Topco helps PPD expand its presence in the U.K.

Brocair Advises Briggs Healthcare in Acquisition of SimpleLTC

Brocair Partners LLC, an investment bank serving the healthcare industry, advised Briggs Healthcare in its acquisition of data analytics provider SimpleLTC

NEW YORK, NY – August 23, 2016 – Brocair Partners LLC, an investment banking firm serving the healthcare industry, advised Briggs Healthcare, a leading provider of products and services to the senior care, home care, acute care, physician and retail markets, on its acquisition of SimpleLTC Systems, Inc.

Founded in 2003, SimpleLTC offers software products that help long-term care providers simplify data management and analytics, automate manual processes, and comply with regulatory requirements. Over the past three years, SimpleLTC, based in Richardson, Texas, has launched a suite of new analytics tools allowing providers to use predictive intelligence in order to improve quality measures, reduce rehospitalizations, and optimize reimbursement.

The transaction size was not disclosed.

Briggs Healthcare has a long history of delivering documentation tools which support regulatory compliance and quality outcomes in the long-term care and home care industries. With the addition of SimpleLTC, its customers will have the ability to use the data they collect to gain insight to improve their day to day operations, and provide a higher quality of care.

Gregg Blake, Managing Partner of Brocair, explained, “Briggs has deep experience in the long-term care and home health markets, and its products are the standard of care for documentation of patient encounters. But with greater demands for the measurement of the quality of care, Briggs needed to expand its data analytics offerings to provide additional tools for its customers. This acquisition represents an important transformative step for the firm, allowing Briggs to enter the downstream data utilization space and to provide a more complete package of services to its extensive customer base.”

Bruce Dan, CEO of Briggs Healthcare, remarked “Brocair’s professional and experienced team was instrumental in proactively identifying SimpleLTC as the ideal acquisition for our digital expansion plans. Their industry knowledge and patience was a critical part of the acquisition process of introduction, data collection, and close. We have worked with Gregg and his team for several years and look forward to future M&A successes as well.”

About Briggs Healthcare:

For more than 65 years, Briggs Healthcare has been a leading provider of products and services to the senior care, home care, acute care, physician and retail markets. Headquartered in West Des Moines, IA, Briggs Healthcare serves more than 50,000 customers globally with affiliate operations in Waukegan, Illinois, Moorestown, New Jersey, Waco, Texas, and the United Kingdom. Backed by clinical experience and regulatory knowledge, the company develops and markets products that are designed to improve clinical outcomes and reduce operating costs, including proprietary documentation systems, medical record charting, medical supplies and rehabilitation aids, staff education and resource materials and obstetric products. Visit Briggs online at www.BriggsCorp.com.

About SimpleLTC:

SimpleLTC creates software that simplifies regulatory compliance, reimbursement optimization and quality measurement for long-term care. Specialties include predictive MDS and quality measures analytics, MDS transmission and reporting, and Texas Medicaid reimbursement analytics. More than 2,500 long-term care providers now use SimpleLTC products. For more information: www.simpleltc.com.

Dental Products Market Analysis – June 2016

Industry leaders in the dental products market continue to expand geographically, and increase scale through consolidation.

Over the past three years valuations have remained robust in the dental products industry. Public company multiplies have been tracking at 1.9x revenue and 16.0x EBITDA while recent transactions are currently tracking at 4.0x and 12.2x, respectively. Since mid-2013 our Dental Products Index has risen 77% compared to a 26% increase in the S&P 500.

New technologies and a rise in disposable income among the middle class are expected to drive growth in the global dental products sector. By 2019, the segment is forecasted to reach $55 billion at an annualized rate of 2.9%.¹ Market leaders are actively making acquisitions to create robust product and service platforms. There has also been significant consolidation among these players.

Of particular note is Dentsply’s merger with Sirona Dental Systems which closed in late February 2016. The $5.4 billion merger combined Dentsply’s market leading dental consumables platform with Sirona’s dominant dental technology business. The consolidated company, Dentsply Sirona, will offer the most products and technological solutions within the global dental products market, and is expected to generate more than $125 million in cost-savings synergies over the next three years.

Healthcare Insurance Services Market Analysis – February 2016

The healthcare insurance services market has been undergoing diversification, innovation and consolidation.

As a direct result of the Affordable Care Act, from 2011 to 2019 the profit margins of U.S. insurers could decline by more than 40 percent¹. Recognizing that low-cost services will be fundamental to their success, numerous industry leaders are lowering administrative costs by restructuring their practices and specializing on their core business along with other initiatives to improve efficiency. These regulatory changes to the health insurance industry have led to an increase in acquisitions that promote a more consumer-driven health insurance business model.

Over the past seven years, our Healthcare Insurance Services Index has generally tracked the S&P 500 Index. Given the dynamic nature and complexity of changes in the health insurance industry, the companies that have been more active in pursuing inorganic growth have been able to stay ahead of the competition.

The median revenue multiple for public companies in the space has recently softened to 1.9x while EBITDA multiples have remained around 12.5x for the last-twelve months. Median reported valuation multiples from M&A transactions over the past year have been just under 1x revenue and in the 13-15x range on EBITDA.

Healthcare Insurance Services Industry Perspective – January 2016

New regulations set to transform the U.S. healthcare landscape are providing strong growth opportunities for the firms that service health insurance companies.

In 2013, MarketsandMarkets valued the U.S. insurance services industry at $11.1 billion. The industry is expected to grow at a 30% compound annual growth rate (CAGR) through 2016.

Insurance services companies provide outsourced services to healthcare payers and administrators. Healthcare payers are the institutions that finance the delivery of healthcare and include insurance carriers, employers, and government entities. Healthcare administrators include managed care organizations and third party administrators (TPAs), organizations that are contracted to administer and manage health plans for healthcare payers.

These companies employ highly complex business processes, which historically have been manually intensive and prone to error. For this reason, they look to insurance services companies to manage their costs, mitigate risks, and improve the operational efficiency of back office processes, allowing them to focus on their core competencies.

Healthcare Staffing Market Analysis – October 2015

M&A activity in this industry has continued to grow as market leaders seek to consolidate this highly fragmented industry.

Revenue multiples in the public markets are currently tracking at a median of 1.2x, while EBITDA multiples have a median of 13.7x.

Transaction multiples are tracking in a higher range, with median revenue multiples of 2.0x and median EBITDA multiples of 19.8x over the past two years.

Brocair’s index of healthcare staffing companies has outperformed the S&P 500 index since 2011. In the last 6 months, the index reached a 10-year high. Share prices have been pushed higher due to increased M&A activity in the space, with two large companies having received takeover offers in the last 3 months.

M&A activity in the space has been robust as a result of the consolidation among larger players in the healthcare staffing industry. Market leaders have also been active in consolidating the highly fragmented industry that consists mainly of small businesses servicing local healthcare facilities.

Dental Services Industry Perspective – October 2015

Dental practices are seeking consolidation to manage costs, expand their service offerings, and spur higher growth rates.

Arriving at a global market size of the dental services industry is hazardous, but information for certain countries is available, and the U.S. is the largest single market world-wide.

Brazil has over 250,000 dentists, representing the greatest number of dentists per capita of any large economy.¹ By comparison, the U.S. has around 186,000 and Japan has over 97,000.^2,3

Dental services consist of all procedures and treatments, both medical and cosmetic, related to the oral cavity and the teeth, and business management solutions targeted towards dental service operations.

The largest segment of the industry is general dentistry, representing over 50% of the global market. This sector includes restorative services, such as dental fillings to restore structure to teeth, dental crowns to protect damaged or decaying teeth, and procedures treating damaged teeth and gums. It also comprises preventive services, from routine dental exams and cleanings, to fluoride and sealant applications, and more commonly, cavity treatments, especially among children. Finally, it includes diagnostics, such as digital radiography and x-rays.