Centerbridge, CDPQ jointly buy TPG Growth’s MedSol for around $2.2bn

As a persistent nurse shortage problem fuels increasing demand for MedSol’s services, the ability to use technology to help systems manage their own labor force is another growth driver for the healthcare staffing provider. 

As demand for clinical workforce continues to outstrip supply at health systems nationwide, Centerbridge Partners and CDPQ have teamed up to buy healthcare staffing firm Medical Solutions for an enterprise value of approximately $2.2 billion, according to people familiar with the deal terms. 

The acquisition provides an exit for TPG Growth, coming several months after PE Hub reported the growth-capital arm of TPG had engaged advisers to explore a sale of the business. Goldman Sachs, Evercore and UBS Investment Bank provided financial advice to MedSol on the transaction. 

New York’s Centerbridge and Canadian pension fund CDPQ are set to own equal stakes in MedSol upon completion of the transaction, sources told PE Hub. The deal is poised to close in Q4.

Like many other healthcare processes over the last several months, the pandemic added complexity in valuing MedSol.

MedSol marketed $240 million of 2021 EBITDA in the sale process, and sources said the Omaha, Nebraska-headquartered business is likely to exceed that number. That said, the buyer underwrote a more normalized EBITDA of around $200 million, the people said, accounting for the high rates and high volumes the nursing industry is witnessing today. Financing was also done using this lower figure, they added. 

MedSol came to market earlier this year as the broader sector, buoyed by the covid pandemic, experienced a boost. When hospital utilization is booming that lends to growing demand for temporary nurse staffing, while also leading to inflation in day rates for nurses. 

Nonetheless, the supply-demand imbalance in nursing isn’t a new phenomenon, but one that has long preceded covid. The pandemic has only added to that labor crunch, accelerating trends around nurse retirement resulting from long hours and burnout. 

Case in point: According to a Wall Street Journal report citing data from Vivian Health, average pay for a travel nurse jumped to more than $3,500 a week as of December 2020, up from gross weekly wages of around $1,600 a year earlier. Wages retreated following that December peak. However they are rising again reaching a $2,587 average in early August as the Delta variant rattled states that have lower vaccination rates, the report said.

As the industry’s persistent staffing shortage problem fuels an increase in demand for MedSol’s services, the ability to use technology to help systems manage their own labor force is yet another growth driver for the large healthcare staffing provider. 

Launched in 2001, MedSol places highly skilled, quality travel nurses, allied healthcare professionals, interim clinical leaders and non-clinical professionals, in contingent as well as permanent positions. It places healthcare talent in hospitals, clinics and long-term care facilities, deploying clinicians to more than 4,500 healthcare facilities across all states in 2020.

For TPG Growth, MedSol looks poised to produce a handsome return on investment.

The firm’s June 2017 investment in the company was valued in the high $400 million range just shy of $500 million, sources told PE Hub. That implies the business has grown its value by more than 4x in just over four years. According to an August 2020 company press release, MedSol’s compound annual growth rate was 20 percent over the prior five years.

Sources noted the company has improved its positioning in recent years through diversification into areas including allied health which refers to specialty professions ranging from occupational therapists and physical therapists to respiratory therapists and speech language pathologists. Meanwhile, both technology and M&A present continued opportunities to penetrate new segments.  

M&A has already been a critical component of the growth playbook. In 2018, MedSol acquired PPR Talent Management Group, followed by its 2019 purchase of C&A Industries, parent company to workforce solution firms Aureus Medical Group, Aureus Group, AurStaff, Celebrity Staff and FocusOne Solutions. 

MedSol also operates as a managed service provider (MSP), helping to streamline and simplify workforce operations by exclusively managing a hospital’s entire contingent labor staffing process. Importantly, MSP agreements operated by larger staffing groups like MedSol help to reduce risk related to potential market volatility, sources noted. 

In relevant activity, PE Hub wrote in May that Vistria Group was mulling a sale of Supplemental Health Care, which staffs healthcare providers in settings ranging from the classroom and home to clinics and correctional facilities. A narrow process, in which Evercore was advising, has yet to produce a deal.

For Centerbridge’s healthcare franchise, MedSol follows a busy 2020 for the firm. That included its late 2020 deal for Help at Home alongside Vistria, which valued the provider of in-home care for seniors and persons with disabilities at approximately $1.4 billion, PE Hub wrote. (The pair of firms previously partnered in a $1.4 billion deal for Civitas.) Other 2020 platform investments include Community Psychiatry Management and DentaQuest.

Centerbridge, CDPQ, TPG, Goldman and Evercore declined to comment.