Health Tech: Palmetto shelved


Happy Tuesday, Health Tech readers.

Situational awareness: Walgreens Boots Alliance pays approximately $1.37 billion for the remaining 30% stake in Shields Health Solutions, a hospital-facing private pharmacy company, providing a full outlet for Welsh, Carson, Anderson & Stowe.

  • Walgreens increased its Shield stake to 70% a year ago at a valuation of approximately $2.5 billion, sources previously told Axios.

1 big thing: Sale of palmetto racks

Image: Aïda Amer/Axios

Circulating capital Suspended the sales process for Palmetto Infusion Services, multiple sources tell Sarah.

Why is it important: While investors are willing to build networks of ambulatory infusion centers to disrupt a market that has historically been dominated by hospitals, this Southeast-based player is pushing sales plans forward.

Detail: Sources say that as often happens, a mismatch in buyer and seller value expectations contributed to the shelving process.

  • Pawleys Island, SC-based Palmetto, some people, didn’t get full credit for its EBITDA adjustments to account for the recent expansion outside of South Carolina, where clinics haven’t fully increased.
  • South Carolina has an attractive payback environment, but sources say investors have questions about how repeatable Palmetto’s model is in other geographies.
  • While we’ve seen low- and mid-market deals succeed in regulating finance, the volatile debt markets probably haven’t helped.

Quickly catch: Three years after its investment, Carousel hired Raymond James earlier this year to explore options for Palmetto.

  • Nearly $40 million of adjusted EBITDA was marketed for the company, which provides ambulatory and home infusion services for chronically ill patients.

Be smart: The growing enthusiasm of investors around AIC organizations reflects the huge innovation opportunity that is a huge and growing market.

  • As an aging population demands a better experience and greater comfort, payers are demanding more affordable and quality infusion care options outside of the traditional hospital setting.
  • This has led investors to create platforms in more cost-effective settings (outpatient clinics and homes) that are arguably more attractive given their labor efficiency.
  • As the FDA approves more specialized treatments, there is a huge opportunity for these businesses to diversify further as drugs come out of the pipeline.

What do they say: While some AICs prioritize the high-end patient experience that comes with luxury private rooms or smaller, intimate sites, Palmetto tends to have larger clinics—which may better position it for potential payback cuts in the future, says one investor.

  • Even if payback pressure is inevitable, the “long-term volume story” [of infusible therapies] overwhelmingly positive,” says the source.

👀 What else are we watching: KabaFusion, an intravenous immunoglobulin (IVIG)-focused in-home infusion platform, that we’ve heard the deal is around the corner.

Carousel, Palmetto, and Raymond James did not immediately return requests for comment.

Claire Rychlewski contributed to the reporting.

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