Home infusion market refuses to stand still

YARMOUTH, Maine - When it comes to mergers and acquisitions in the home infusion space, analysts report seeing a “blurring of the lines” among its different segments.

“Just like our HME channels are blurring lines between providers and insurers, the same thing is happening with home infusion,” said Jonathan Sadock, managing partner with Paragon Ventures. “It's becoming where it is not unusual to find an infusion provider and a specialty pharmacy all rolled together.”

Other channels that are showing interest in home infusion include long-term care pharmacy, retail pharmacy and hospitals.

Hospitals have been interested for some time, say analysts.

“There's consolidation in the hospital space and as they become larger and larger they are under pressure to keep patients out of the hospital,” said Reg Blackburn, a managing director with The Braff Group. “One way to do that is to control home health, a component of which is home infusion. It's just continued interest on their part.”

As has been the story for the past few years, despite high demand, inventory remains low, say analysts. They also say the mega-mergers of the recent past—including CVS Caremark's 2013 acquisition of Coram for $2.1 billion and Madison Dearborn Partners' 2015 acquisition of 51% of Walgreens Infusion Services (since rebranded as Option Care)—are a thing of the past. Instead, buyers are setting their sights on the lower end of the market.

“Buyers prefer companies with at least $10 million in revenues or larger, but there aren't that many companies that are much bigger than $10 million or $20 million,” said Justin Ishbia, founder and managing partner of Shore Capital Partners, a private equity firm that used to own a home infusion company. “But, it's also been my experience that once a business is more than $5 million in revenues, that's an area where people start paying attention.”

And where are the big players in all this? After taking time to digest their respective acquisitions, both CVS Caremark and Option Care will likely be on the hunt for acquisitions.

“CVS is definitely on the acquisition trail from what we are hearing,” said Bruce Burns, president of Affinity Ventures. “Option Care has been silent, but sooner rather later, they'll start buying. Madison Dearborn didn't buy it to stand still.”