Welsh Carson’s Deal to Sell Concentra Caps Busy Month

Welsh Carson Anderson & Stowe’s exit from Concentra caps a busy month in the healthcare space for the New York PE firm.

Yesterday, Humana announced it agreed to buy Concentra for about $790 million cash. The sale follows a 12-year hold for Welsh Carson, which acquired the Addison, Texas-based Concentra in 1998 for about $772 million, plus $328 million in debt.

New York-based Welsh Carson, a PE firm, hired Barclays earlier this year to shop Concentra, which is a national provider of occupational health services. Concentra has 300 medical centers in 40 states that offer occupational medicine, urgent care, physical therapy, and wellness services, according to its web site. Recently, the company has been trying to morph itself into a provider of primary care clinics.

Concentra was expected to draw interest from mainly financial sponsors and not strategics. However, I’m being told by two sources that Walgreens looked at Concentra. Many sponsors were interested in Concentra’s assets because of the company’s urgent care business. However, the PE shops didn’t want to go head-to-head with Walgreens and Humana, a banker says.

One PE exec was surprised by the sale. “Humana paid a full price, clearly more than the sponsors would have paid,” the source says.

For Humana, the Concentra buy provides a way for the supplemental benefits company to diversify into new areas as well as gain a source of unregulated cash flows, according to A.M. Best Co. “Also, the Concentra medical centers will provide access to care for Humana medical members in certain geographic areas,” A.M. Best said. “The transaction also provides Humana with the opportunity to enhance its wellness programs.”

The Concentra sale is the latest for Welsh Carson, which focuses on two sectors: healthcare and information/business services. Earlier in November, the PE firm announced plans to sell US Oncology to McKesson Corp. for $2.16 billion, including debt. Welsh Carson also announced plans this month to buy a majority stake in Smile Brands, a provider of dental support services, from Freeman Spogli & Co. And, the PE firm acquired a majority stake in Springstone, a hospital administrator, and committed $100 million to the company.

Officials for Welsh Carson and Concentra couldn’t be reached for comment.