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Private Equity Health Care Acquisitions – October 2020

November 12, 2020

As the COVID-19 pandemic wears on, private equity investment in health care continues to outpace the broader industry, and analysts expect that trend to continue. The sector has remained resilient to the pandemic and private equity deal activity is steadily rising. In addition, asset managers are sitting on billions of dollars of cash earmarked for health care acquisitions; as of 2019, private equity firms had $29.2 billion in dry power—capital waiting to be invested—for the health care space.[i]

In light of the growing investor interest in health care and the risks associated with private equity ownership of health care companies, the Private Equity Stakeholder Project will be tracking private equity-backed health care acquisitions. Below is a list of private equity health care buyouts and add-on acquisitions completed during October 2020, with several noteworthy deals described in detail. We will continue to track acquisitions on a monthly basis.

Benevis – New Mountain Capital

New Mountain Capital has acquired Benevis, a dental support organization (DSO) operating approximately 200 dental clinics in 16 states. Benevis filed for Chapter 11 bankruptcy in August, citing declining revenue exacerbated by the COVID-19 pandemic. New Mountain was the company’s primary lender and stalking-horse bidder in the bankruptcy auction. When no other qualified bidders came forward, New Mountain became Benevis’ owner.[ii]

Benevis has a checkered history with private equity ownership. It was previously owned by private equity firm Friedman, Fleischer & Lowe (FFL), which first invested in 2004.[iii]

Under FFL’s ownership, Benevis was sued by the US Department of Justice for violations of the False Claims Act and in January 2018 paid a $24 million settlement. The DOJ alleged that Benevis knowingly submitted false claims to state Medicaid programs for medically unnecessary pediatric procedures and pressured and incentivized dentists to meet production goals. In the DOJ statement, the US Attorney wrote: “The allegations in these cases are particularly egregious because they involved medically unnecessary dental services performed on children… exploiting needy children for financial gain is inexcusable.”[iv]

Two months after settling the federal lawsuit, FFL sold Benevis to private equity firms Littlejohn & Co and Tailwind Capital.[v] Littlejohn and Tailwind held on to Benevis for less than 2.5 years before taking the company into bankruptcy in August 2020.[vi]

Benevis’ new owner New Mountain Capital is no stranger to the dental services industry; the firm also owns Western Dental, a California-based DSO with 175 dental offices in California, Arizona, Nevada and Texas. New Mountain acquired Western Dental in 2012 and has tried to sell the company at least twice—in 2018 and 2019—but was unsuccessful.[vii]

In June, credit ratings agency Moody’s Investor Service downgraded Western Dental’s credit rating to junk status, citing high leverage at above 6.5x. In its analysis, Moody’s also noted that a substantial portion of Western Dental patients financing to pay for dental services:

“Further, we understand that many of Western Dental’s patients are financed at very high interest rates, also raising longer-term social risk, given the growing focus on the affordability of healthcare. We view aggressive collection of patient healthcare bills as a growing social risk to the healthcare industry.

From a governance perspective, Moody’s expects Western Dental’s financial policies to remain aggressive due to its private equity ownership.”[viii]

Given New Mountain’s experience with Western Dental and Benevis’ history with private equity owners, it is worth monitoring how New Mountain and Benevis will weather the anticipated market headwinds in the dental services sector.

St. Croix Hospice – H.I.G

H.I.G. Capital has acquired St. Croix Hospice from the Vistria Group for an undisclosed amount.

Headquartered in Minnesota, St. Croix is a leading provider of hospice services, with 35 branches in six Midwestern states.[ix]

H.I.G.’s troubling past with its other health care companies give cause for a close watch on St. Croix.

A prolific prison services investor, H.I.G. owns Wellpath, one of the largest healthcare companies serving jails, prisons, detention facilities, and state psychiatric hospitals. Wellpath’s subsidiaries have been sued over a thousand times over the last decade and come under investigation and scrutiny by the Department of Homeland Security, Department of Justice, and members of Congress. The allegations include understaffing and inadequate staff training that lead to negligence and untimely care.[x]

See our reports on H.I.G.-owned Wellpath:

H.I.G. also owns Community Intervention Services (CIS), a platform company that acquires and operates regional behavioral health companies. H.I.G. and South Bay Community Services, its CIS subsidiary operating mental health clinics in Massachusetts, were sued by Massachusetts Attorney General Maura Healey for violating the False Claims Act by fraudulently billing Medicaid for mental health care services provided to patients by unlicensed, unqualified, and unsupervised staff members. South Bay Community Services agreed to pay $4 million settlement in 2018, but litigation against H.I.G remains ongoing.

See our report covering H.I.G’s behavioral health investments: Understaffed, Unlicensed, and Untrained: Behavioral Health Under Private Equity.

Community Intervention Services (H.I.G) & Pathways Healthcare (Atar Capital)

This month, H.I.G.’s Community Intervention Services (CIS) sold three of its behavioral health companies to Pathways Healthcare: Access Family Services (AFS), Family Behavioral Resources (FBR) and Autism Education and Research Institute (AERI). Pathways is owned by Private equity firm Atar Capital.[xi]

The three behavioral health companies comprise almost all of CIS’ platform, leaving South Bay Community Services as its last remaining company.[xii] CIS’ disposition of the bulk of its operations suggest that H.I.G. may be winding down the behavioral health platform. It is unclear if the move was related to the ongoing lawsuit against H.I.G. for its alleged role in South Bay Community Services’ alleged Medicaid fraud scheme.


CompanyPE FirmType
3Disc Dental ConnectGaliena CapitalMedical devices & supplies
Anne Arundel DermatologyRidgemont Equity PartnersDermatology
BenevisNew Mountain CapitalDental services
Jaffe Sports MedicineShore Capital PartnersPhysical therapy
MedeAnalyticsJLL PartnersHealth tech
Podiatry Group PartnersVSS Capital PartnersPodiatry
ProPharma GroupOdyssey Investment PartnersPractice Management
St. Croix HospiceH.I.G. CapitalHospice
Surgical Information SystemsAccel-KKRHealth tech
Surgical Information SystemsAccel-KKRHealth tech
The Women’s Health GroupShore Capital PartnersMedical group
ThermoTek USAHavencrest Capital ManagementMedical devices & supplies
Vital Care Home Infusion ServicesLinden Capital PartnersHome health
WellskyTPG and Leonard Green & PartnersHealth tech

Add-On Acquisitions

Add-on Company Acquiring CompanyPE OwnerType
Access Family ServicesPathways Health and Community SupportAtar CapitalBehavioral health
AMAG PharmaceuticalsCovis GroupApollo Global ManagementPharmaceuticals
Ardor School SolutionsArdor Health SolutionsStepping Stones GroupHealth Care Staffing
Beahm DesignsMachine SolutionsBW Forsyth PartnersHealth devices
Benz Research and DevelopmentBVI MedicalTPG and Prettybrook PartnersHealth devices
Binary FountainPress Ganey AssociatesAres Private Equity Group, British Columbia Investment Management, Government of Singapore Investment Corporation (GIC), Leonard Green & Partners and The Abu Dhabi Investment AuthorityHealth tech
CarePort HealthWellSkyTPG Capital, Leonard Green & PartnersHealth tech
Center for Treatment and RecoveryBehavioral Health GroupHCSC Ventures, The Cambria Group and The Vistria GroupBehavioral health
Dermatology Associates of MontgomeryAdvanced Dermatology & Cosmetic SurgeryHarvest PartnersDermatology
Doctor.comPress Ganey AssociatesAres Private Equity Group, British Columbia Investment Management, Government of Singapore Investment Corporation (GIC), Leonard Green & Partners and The Abu Dhabi Investment AuthorityHealth tech
Family Behavioral ResourcesPathways Health and Community SupportAtar CapitalBehavioral health
Ferguson Dental AssociatesFoundation Dental PartnersKeystone CapitalDental services
HealthUnlockedCorronaAudax Group and Ardan Equity PartnersHealth tech
Huntsville RecoveryBehavioral Health GroupThe Vistria Group, The Cambria Group and HCSC VenturesBehavioral Health
Micro-Select InstrumentsKatena ProductsGolub Capital BDC and Audax GroupHealth devices
Momentum Autism Therapy ServicesBlue Sprig PediatricsKKRBehavioral Health
NATURELO Premium SupplementsArcadia Consumer HealthcareAvista Capital PartnersPharmaceuticals
Northside Medical AssociatesComplete HealthPharos Capital GroupMedical group
OdoroClearwave CorporationFrontier GrowthHealth tech
Omni Vision (San Antonio)AEG VisionJ.P. Morgan, Riata Capital Group, ACE & CompanyEye care
Performance Sport and Spine Physical TherapyGolden Bear Physical Therapy & SportsShore Capital PartnersPhysical therapy
Phoenix Home Care & Hospice, Heartwood Home Health & HospiceCharter Health Care GroupPharos Capital GroupHome health
Precision HealthcareIVX HealtLinden Capital PartnersInfusion
Reflections Dental CentreSmile BrandsGryphon Investors, PineBridge Investments, GMB Mezzanine Capital, and Triangle CapitalDental services
Rosewood Centers for Eating DisordersMonte Nido & AffiliatesLevine Leichtman Capital PartnersBehavioral health
Stryker Performance SolutionsHOPcoAudax Group, Mitchell Family Office, and Linden Capital PartnersHealth tech
TellusNetsmart TechnologiesGI Partners and TA Associates ManagementHealth tech
TractManagerSymplrkyKnight Capital, Clearlake Capital Group and New Mountain CapitalHealth tech
Travis MedicalNational Seating & MobilityCinvenMedical devices & supplies
Verge HealthRLDatixTA Associates Management, Five Arrows Capital Partners, Susquehanna Growth EquityHealth tech

[i] “The Healthcare PE Investment Landscape,” Pitchbook Q3 2020 healthcare analyst report, September 2020.












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