3 unrelated business deals worth a collective $11B turn heads in healthcare

This week has seen a cluster of healthcare-related business moves valued in the billions with a B.

Two are in the works and one is developing, as follows:

1. Health-plan administrator HealthComp (Fresno, Calif.) and digital wellness platformer Virgin Pulse (Providence, R.I.) are merging in a transaction valued at $3 billion, the Wall Street Journal estimates.

Both companies are owned by private equity firms—New Mountain Capital and Marlin Equity Partners, respectively.

In a joint announcement posted Sept. 27, HealthComp and Virgin Pulse state their coming together will yield a platform-as-a service organization.

Led by New Mountain Capital as majority owner and Virgin Pulse head Chris Michalak as CEO, the new entity will serve more than 20 million members working for more than 1,000 self-insured employers.

In announcing the merger, company leaders say they will integrate plan design and management, care path navigation, preventative care, digital therapeutics and “payment integrity” in a user-centric platform called “Homebase for Health.”

Michalak says the two companies are taking on a problem that has “plagued the industry for years—a misaligned, complex benefit structure that results in unmet needs and escalating costs.”

HealthComp CEO Chad Harris adds:

“Self-insured employers pay for almost half of the nation’s healthcare expenditures and now require more innovative and affordable solutions. … This transaction creates an end-to-end platform that will radically lower costs and improve member outcomes.”

If the deal meets regulatory requirements and satisfies closing conditions agreed upon by both companies, it should be completed by the end of the year.

Full announcement here.

2. Healthcare-minded Amazon (Seattle) is investing up to $4 billion in AI startup Anthropic (San Francisco), which has a hand of its own in healthcare.

Amazon signaled its unflagging interest in consumer healthcare this summer. In July, its heavily promoted “Prime Day” offers included a one-year subscription to community primary-care service One Medical for $149 (regular price: $199).

Next, in August, Amazon unveiled plans to go national with One Medical—which it bought with a few locations for $3.9 billion last February—and to aggressively grow its virtual-care business, Amazon Clinic.

The investment in Anthropic includes gaining a minority ownership position in the San Fran-based company. Amazon’s $4B outlay is part of an expansion of the two companies’ existing collaboration, a key goal of which is to innovate with generative AI.

This latest news comes as Amazon begins facing a major antitrust lawsuit filed by the FTC—the fourth and largest such action filed against Amazon this year. (News everywhere, Amazon’s initial response here.)

In this week’s announcement, Amazon says Anthropic’s large-language model, called Claude, offers a 100,000-token context window that can

“securely process extensive amounts of information across all industries, from manufacturing and aerospace to agriculture and consumer goods, as well as technical, domain-specific documents for industries such as finance, legal and healthcare.”

Find details on the deal here.

3. Two years after the passing of its founder, family-owned Zeus Company—a manufacturer of components used in medical devices—is considering selling off its assets and debts for $4 billion or more.

Reuters reports the company has called on Goldman Sachs to help it figure out if such a sale would make good financial sense. If not, the present owners may change their mind and hold onto what they have.

On the purchasing side, “strategic buyers” as well as private equity players are likely to take a look, sources tell the news service. Zeus did not immediately respond to requests for comment and Goldman Sachs declined to speak on the matter, Reuters notes.

Zeus’s website shows it employs more than 1,500 people across nine facilities in the U.S., Europe and Asia. The company launched in 1966 as a maker of medical tubing under founder Frank Tourville, who died in 2021.

Reuters points out that, if the company hits the market, it would follow several transactions in 2023 involving suppliers of research and manufacturing serving the life sciences industry:

“In March, Sartorius acquired French lab technology company Polyplus for 2.4 billion euros ($2.54 billion) from private investors. In May, an investor consortium comprising Elliott Investment Management, Patient Square Capital and Veritas Capital acquired clinical research provider Syneos Health for more than $7 billion, including debt.”

Read the rest from Reuters.