Healthcare group McKesson and private equity firm Clayton Dubilier & Rice are teaming up to buy the largest independent provider of medical infusion services in the US, valuing the business at $5.8bn including debt.
Option Care Health will be taken private in a deal valuing the business at $32.05 a share, McKesson and CD&R said in separate statements on Tuesday, confirming an earlier FT report. The deal values Option Care’s equity at almost $4.8bn, a 37 per cent premium to its closing price on Monday.
Option Care last year served more than 315,000 patients nationwide who needed speciality medicines to treat illnesses such as cancer, autoimmune diseases and serious infections, via its at-home infusion services and at its 184 care centres.
The transaction is the latest in a series of buyouts of healthcare services companies trading below historic valuation multiples, including mid-market private equity group Kinderhook Industries’ $1.1bn recent takeover of home care and hospice group Enhabit.
The high costs of delivering medicines in hospitals and drugmakers’ push towards complex biologic medicines, which can only be administered via infusion, have provided a significant boost to Option Care’s business.
Shares in Option Care surged by about one-third in Tuesday morning trading after the deal was announced. The move wiped out nearly all of the stock’s declines so far this year and gave the company a market capitalisation of about $4.7bn.
CD&R said it would own a 51 per cent stake in Option Care. McKesson, the minority stakeholder, would have the right to purchase the buyout firm’s share in the future.
CD&R, which has a reputation as a complex carve-out specialist, has a history of collaborating with major healthcare companies including its purchase of a 50 per cent stake in Sanofi’s consumer health business Opella and its partnership with Elevance Health to combine some of their primary care businesses. CD&R also owns hospice provider Gentiva Health Services alongside Humana.
For McKesson, Option Care’s collection of at-home, oncology-focused and speciality infusion centres will complement its core business as the biggest US drug distributor. McKesson operates an extensive network of chemotherapy and cancer care clinics — one of the fastest-growing divisions of the $403bn-a-year revenue company.
Shares in McKesson are up 11.5 per cent since the start of the year as of Monday, giving it a market capitalisation of about $107bn. Last month, the group struck a roughly $2.2bn deal to buy privately held Precision Medicine Group, a provider of clinical research and commercialisation services to drugmakers as part of the company’s push to expand its fastest-growing divisions.
“This investment represents an important opportunity that aligns with McKesson’s long-term strategy to expand access and affordability to innovative therapies across the care continuum,” said Brian Tyler, the healthcare group’s chief executive.
Meanwhile, CD&R is seeking $26bn for its latest flagship fund, which would rank among the biggest raised in the buyout industry. The group has also sealed several successful exits this year, including offloading Indicor’s instrumentation business to industrials group Ametek for $5bn.