H2C INDUSTRY INSIGHTS: CAPITAL MARKETS

Trends, Mergers, and Industry News 

Week of November 21, 2022

Trends & Mergers: Healthcare

Healthcare System M&A Newly Announced Deals

Chart 1.png

Market Trends: Walmart continues its rapid expansion in healthcare:

  • Walmart Health announced plans to open 16 new health care centers in Florida by 2023. This is in addition to nearly 32 centers that already exist across Arkansas, Florida, Georgia, Illinois, and Texas.

  • Services offered at Walmart Health’s clinics vary by location, but typically include primary care, labs, X-ray and EKG, behavioral health, dental and community health.

  • ​Additional recent moves by Walmart Health:​

    • ​Partnered with Optum for analytics and decision support tools, boosting its value-based care efforts, especially for Medicare beneficiaries.

    • Partnered with fertility startup Kindbody to offer benefits under its insurance plan that will help its workers expand their families. 

    • Launched the Walmart Healthcare Research Institute which will focus on inclusion in clinical studies on treatments for chronic conditions and treatments.

M&A News Updates

  • Sanford Health (SD) and Fairview Health (MN) signed a nonbinding letter of intent to merge – nearly a decade after their first attempt fell apart. If approved, the combined system would manage 78,000 employees and more than 50 hospitals.

  • The Illinois Health Facilities and Services Review Board unanimously approved a plan to change ownership for 10 Advocate Aurora facilities in connection with the closely watched proposed multi-state mega-merger deal with Atrium Health (NC). The transaction will still need to pass state and federal antitrust review.

  • ProMedica (OH) plans to transfer the real estate and management of its 147 skilled nursing facilities (SNFs) with Welltower to the real estate investment company and Integra Healthcare, effective Dec. 19. ProMedica will continue to operate 10 SNFs that are not part of the Welltower transaction, as well as its 58 Arden Courts memory care communities within its joint venture with Welltower.

  • Amazon is expanding its healthcare presence with a new virtual offering called Amazon Clinic. The service will allow patients in 32 states to message clinicians through a secure portal to seek personalized treatments and prescriptions for common conditions.

  • Cleveland Clinic will begin to bill insurance companies for Epic MyChart messages requiring a provider's clinical time and expertise beginning Nov. 17. The system plans to bill for interactions taking five or more minutes for providers to respond.

  • Privia Health (VA) has formed a joint venture with Novant Health (NC), to launch Privia Medical Group – North Carolina. 

  • Google Health and Meditech will pilot their clinical search tool at DCH Health System (AL) and Mile Bluff Medical Center (WI). The tool embeds Google Health's search and summarization capabilities to create a longitudinal view of a patient's health history directly within the clinical workflow of Meditech's EHR system.

  • Youturn Health, a virtual behavioral health support program, has teamed up with Sure Med Compliance, a digital healthcare company for pain management risk mitigation, for a new behavioral health and substance misuse education platform.

  • The COVID-19 public health emergency will remain in effect until at least mid-January. The emergency powers help the government put vaccines on a fast track, loosen health care regulations, and expand the amount of Medicaid funds going to states. 

Sources: Pitchbook, Becker’s Hospital Review

Trends & Mergers: Higher Education

Not-for-Profit Higher Education Trend: International Enrollment Rebounds

  • Overview. As higher education institutions continue to grapple with enrollment pressures, one positive trend is emerging as international student enrollment is rebounding, following steep declines contributed to the COVID-19 pandemic. 

  • Rebound. While not completely recovered to pre-pandemic levels, international student enrollment was up nearly 4% for the 2021-22 academic calendar year, with new international enrollment surging 80% according to the Institute of International Education.

- The trend has continued into the current fall term, colleges have reported a 9% increase in total international students and 7% increase in new international students. 

- Graduate student enrollment has driven the rebound, increasing 17% year-over-year, while undergraduate enrollment declined 4.2% year-over-year.

  • Origin. Despite an 8.6% decrease year-over-year, China remains the top place of origin of international students coming to the U.S, accounting for 30.6% of total  international student enrollment. The decrease in students from China was offset by a 18.9% surge in international students coming from India compared to the prior year. Rounding out the top five were South Korea, Canada, and Vietnam. 

- The 8.6.% decrease in students from China in 2021-22 follows a 15% decrease in the 2020-21 academic calendar year. The declines can be contributed to COVID-related restrictions, which continue to drag down the recruitment of students.  

  • Importance. The enrollment of international students is important for both the expanded academic perspectives these students bring to campus as well as the additional tuition revenue and economic impact they generate.

- A recent report found international students studying at U.S. higher education institutions contributed $33.8 billion to the U.S. economy and supported 335,423 jobs during the 2021-22 academic year.

Higher Ed Not-for-Profit Headlines

  • Strike. An estimated 48,000 academic workers at the University of California System began strike the week of November 14th demanding better wages and benefits after failing for more than a year to negotiate a deal.

  • Preliminary Injunction. The Court of Appeals for the Eighth Circuit issued a nationwide injunction temporarily barring the Biden administration’s student loan debt relief program. The ruling came after several states argued in a lawsuit that the loan relief program threatens their future tax revenues, and that plan circumvents congressional authority. The ruling is the latest in a series of legal challenges against the program.

  • Merger. Montclair State University is set to acquire Bloomfield College by the end of June 2023. Their respective boards formalized the merger plan that had been in the works for months. Bloomfield – a small liberal arts college with 1,300 students, is New Jersey’s only four-year private college serving predominantly Black and Hispanic students.

  • Insurance. Harvard University did not properly inform an insurer it had been sued over its race-conscious admissions policies, and therefore forfeited the right to use a $15 million policy to pay for legal expenses, a federal judge ruled this month. The ruling illuminates the high costs of legal fights and underscores that colleges should closely scrutinize policy claims.

  • FAFSA Simplification. The DOE is moving forward in carrying out parts of the FAFSA Simplification Act before unveiling a simplified FAFSA next fall. For colleges and universities, that means updating how the total cost of attendance is calculated, a key measure used to add up financial aid offers. Guidance released this month provides institutions with details on how to calculate the figure based upon updated definitions and added requirements.

  • Endowment Transparency. Colleges and University could be required to report how much of their endowment is managed by women or minority-owned firms under a new bill, the Endowment Transparency Act of 2022, introduced by U.S. Rep. Emanuel Cleaver II (D-MO). 

Key Rate Updates

Graph 1.png
Graph 3.png
Graph 2.png
Graph 4.png

Source: U.S. Department of the Treasury, Bond Buyer, Investment Company Institute, Bloomberg and Refinitiv/TM3. Data as of November 18, 2022.​


(1)  Weekly SIFMA and SIFMA/1M-LIBOR rates as of November 16, 2022.​

The information presented herein was obtained from resources believed to be reliable and accurate, but H2C Securities Inc. does not guarantee the accuracy or completeness or assume a responsibility for any loss which may result from the action by any person upon such information. Such information is subject to change without notice and is not intended as a recommendation, offer, or solicitation with the respect to the purchase or sale of any security.

About H2C Securities Inc. ("H2C")

H2C is a strategic advisory and investment banking firm committed to providing superior advice to healthcare organizations, higher education institutions, and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare and higher education mergers and acquisitions, capital markets, and real estate transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value.

Securities and services offered through H2C Securities Inc., member FINRA/SIPC, a registered broker-dealer and an indirect subsidiary of Fifth Third Bank, National Association. All rights reserved. Securities and services offered through H2C Securities Inc.: Are Not FDIC Insured; Offer No Bank Guarantee; May Lose Value; Are Not Insured by any Federal Government Agency; Are Not a Deposit.

H2C Capital Markets Team

Michael Hammond

Managing Director

212.257.4550

mhammond@h2c.com

Richard Bayman

Managing Director 404.937.1340

rbayman@h2c.com

William B. Hanlon III

Managing Director

858.242.4801

bhanlon@h2c.com

Emily Abrantes

Managing Director

212.257.4500

eabrantes@h2c.com

Victoria Poindexter

Managing Director

312.508.4201

vpoindexter@h2c.com

Mike McCullough

Senior Associate

212.257.4511

mmccullough@h2c.com

Andy An

Associate

312.508.4208

yan@h2c.com

Greg Zuber

Analyst

312.508.4202

gzuber@h2c.com

Anirudh Vemulapalli

Analyst

212.257.4534

avemulapalli@h2c.com

Shawn Sinel

Director

212.301.2700

ssinel@h2c.com

Catherine Gao

Vice President

212.257.4508

cgao@h2c.com

Luke Vaughn

Analyst

312.508.4206

lvaughn@h2c.com

Calvin Zhu

Analyst

847.654.1508

czhu@h2c.com

Carlos Aro

Director

615.618.5349

caro@h2c.com