Webster Equity Partners has secured a hefty exit from a specialty-care medical practice, finding a strategic buyer and offering a glimmer of hope for investors that have struggled in recent years to offload healthcare-provider assets.
In the deal unveiled on Wednesday, drug distributor Cencora said it would acquire Retina Consultants of America, or RCA, from Webster for $4.6 billion, plus up to $500 million of incentive payments.
Formerly known as AmerisourceBergen, Cencora said it would own about 85% of RCA, with the remainder retained by affiliated physicians and management.
Acquiring RCA, a high-margin specialty physician-management practice, is a kind of verticalization play that would position Cencora as both the supplier of drugs used in retina procedures and the provider of those treatments, said Rebecca Springer, the lead healthcare analyst at PitchBook.
“There also may be synergies between Cencora’s biopharma services business and RCA’s active involvement in clinical trials,” she added.
A recent series of PPM exits through strategic sales could be encouraging for private equity firms seeking to realize their investments in a sector hampered by regulatory concerns, a decline in valuations and a shortage of willing buyers. Webster Equity Partners had led a $350 million investment in the formation of RCA in March 2020.
Many large-scale PE firms that historically were the primary buyers of those assets have shied away from healthcare provider deals, in part because of heightened regulatory scrutiny. The IPO market has been closed to such companies, leaving strategic sales the main exit option.
There have been other strategic acquisitions for PPM assets in recent years, mostly in the oncology field. In September, Cardinal Health said it would buy Integrated Oncology Network for $1.12 billion. McKesson in August said it will acquire Core Ventures, a unit of Florida Cancer Specialists & Research Institute, for $2.49 billion. Last April, Cencora teamed up with TPG to buy OneOncology for $2.1 billion.
“When you have strategic exits coming through, that should give some encouragement to the market,” Springer said.
And with the US presidential election completed, she said, there is a greater chance for PE firms to offload their PPM assets to strategic buyers. A future Republican administration is expected to be somewhat more lenient on antitrust policy, which would help PE firms to divest their PPM portfolio companies to strategic buyers.
Featured image by Jacob Wackerhausen/Getty Images
