M and A: Home infusion is 'alive and well'

YARMOUTH, Maine - The appetite for home infusion companies remained strong in 2011, tempered only by a lack of companies on the market, say industry analysts.

"There's still very strong demand from both the strategic and the private equity-backed (buyers)," said Mike Patton, managing director for Boston-based Provident Healthcare Partners. "I think the biggest issue at this point is the availability of sizable add-on acquisitions due to consolidation over the last five years."

There were a healthy 12 deals during the first two quarters of 2011, followed by only one deal in the third quarter, says Dexter Braff, president of Pittsburgh-based The Braff Group.

That doesn't necessarily mean the market is on a downward trend, he said.

"We've already eclipsed last year's total and equaled that of 2009," said Braff. "The reality is, home infusion is alive and well."

Alive and well, but on a much smaller scale than in the past, say analysts.

"We have certainly seen a number of small acquisitions over the past 12 months," said Greg Wappett, senior analyst for Provident Healthcare Partners. "But anything sizable, anything over $10 million, has been lacking in the market over the last couple of years."

One company that's been making strategic buys: Cincinnati-based CarePoint Partners, which acquired six companies in 2011, most recently, in December, its acquisition of the home infusion and enteral division of Tampa, Fla.-based Pediatric Health Choice.

Still, that's a far cry from the deals of a few years ago, when Walgreens acquired OptionCare for $850 million and Apria acquired Coram for $350 million.

"There was a little bit of a frenzy during that period and it fueled a mini-bubble in valuations," said Braff. "Now, they have come slightly down."

Analysts say they expect home infusion to remain an attractive buy. Unlike with home medical equipment or home health, there isn't as much reliance on government reimbursement. The push, under healthcare reform, to less costly care only underscores the value of home infusion, say analysts

"It gets people out of the institutions, and there's a push toward incentivizing providers to get that service out there," said Wappett. "That's always going to be of interest to the healthcare system in general, whatever it may be after reform."