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No big announcements.  Lots of smaller developments.  That’s how most industry observers would characterize the state of the on-demand healthcare market in the first half of 2017.  And that applies to virtually all subsegments of the market, including urgent care, retail clinics and telehealth.

Not that there aren’t rumblings of big transactions on the horizon, or even rumors of major players going through significant restructuring.  But despite those “interruptions,” and uncertainty around the Affordable Care Act, it would appear that this market is reaching a state of maturity that will bring with it a certain level of predictability.  


The urgent care market is certainly not seeing the boom times of five years ago when valuations seemed to be climbing without limits.  But the market certainly hasn’t slowed to a crawl either.

“There definitely is lot going on,” says Mark Padgett, managing partner at Estill Advisory Group, referring to interest from private equity groups and strategic investors looking to acquire multi-site urgent care operators.  “We’re seeing continued consolidation and on the private equity side we’re seeing those already involved in the market looking to expand as well as a number of new players looking to get into the market.”

At our symposium in January, Michael Pisani, managing director at Houlihan Lokey’s healthcare group, predicted we would start to see urgent care valuations start to tighten, based primarily on the sheer number of operators in larger markets, creating high saturation and competition for the best real estate.  That appears to be playing out, although Padgett says it depends a great deal on the quality of the operator.

“This is not like 2010 or 2011 when many of the financial investors didn’t know much,” he says.  “We’re seeing much deeper dives during due diligence.  Over time people have really learned how to do due diligence on urgent care platforms, on what they should be looking for.  And so investors are becoming much pickier.”

Padgett says a good example of operators that don’t cut it anymore are chains that have been around for a long time that picked locations many years back that are no longer relevant.   
“Whether its trade zones that have moved or they were the only game in town, you’ll see chains who don’t have good locations having issues,” he says.  “More sophisticated operators come into town and take a more visible hard corner.  Since it is such a relatively young industry there will be a lot of mistakes bubbling up and I think the valuations can be affected, especially in a geography where there may be too much competition.”

Despite that, Padgett sees valuations hold up among higher-quality platforms.
“Overall I’m seeing multiples holding strong,” he says. “Even smaller platforms, those are trading pretty high multiples as well if they are a good quality operator.”    


During the first quarter of 2017 growth appeared to slow dramatically.  But it appears that was nothing more than a breather after a fairly robust 2016.  During the second quarter of the year growth picked up significantly.

Among the top operators during the first six months, MedExpress and AFC each added 19 new centers.  NextCare added three new centers, while GoHealth, CityMD and Physicians Immediate Care each added five new centers.  MedSpring added eight new centers.  Behind the scenes most of these operators have plans to open a similar number of new centers over the next six month.

“We’ll see a lot of growth and a lot of deal activity in the next six months,” says Padgett.


Despite what appears to be good news on the growth front, there are strong rumors that FastMed is in talks with banks, potential investors or potential new parent companies.   Kyle Bohannan is out as CEO and is no longer listed on the company’s website.  Some industry insiders have FastMed in talks with NextCare about a merger, although that would create significant overlap with existing centers on both sides.  And those rumors have been around for two or three years.

“They’ve hired a bank and are talking to folks either about selling operations or raising money,” says one industry insider who asked not to be identified.  “Any and all options are on the table.”

NextCare, with 140 centers, is the third largest pure-play urgent care operator and is overdue for a sale. Although we predicted this last year, we do expect an announcement on NextCare by the end of the year.


The first half of 2017 saw very little growth in the retail clinic market.  MinuteClinic ended the first six months unchanged at 1,105 clinics.  Walgreens added two clinics in the first half, while The Little Clinic added five and RediClinic added eight.  This clearly shows a slowdown in retail clinic expansion.  Last year at this time MinuteClinic had added 83 clinics, not including their acquisition of Target Clinics.  

Walgreens continues to pursue hospital systems to take over their clinics, especially in larger markets.  In February, Walgreens and Piedmont Healthcare announced that Piedmont will take over operations of Walgreens retail health clinics stores across the Atlanta area.  

Another major development during the first half  of 2017 is that MinuteClinic has joined the Alere eScreen Occupational Health Network (EOHN).  This means that all 1,105 MinuteClinic locations now become occupational medicine sites for services commonly required by employers, such as biometric screenings, vaccinations, Department of Transportation (DOT) physicals and drug testing. Employees in need of these services would visit the Alere eScreen’s website and choose the location they would like to visit for testing.  Once the employee selects a location and enters some required demographic data, the patient then prints out an “e-passport” and presents this to the provider.  This could become significant competition to other urgent care centers offering occupational medicine services.


For those targeting acute episodic illnesses with their telehealth platforms, there still seems to be slow growth and lots of disappointment.  We believe there are simply too many operators in the urgent care, retail clinic, worksite clinic and telehealth space chasing a limited available market of these visits.  Those who are happy with their telehealth programs tend to be those who have used the technology in a diverse set of service lines and haven’t sunk a lot of money into the acute episodic space.  We expect to see more shakeout in the telehealth space before it settles down.


Despite some bumps in the road for certain operators, we see this market entering a new phase where more sophisticated financial analytics, consumer analytics, location analytics and team development start to take hold.  We often compare the market to what the restaurant industry has gone through over the last four or five decades.  Even when we see selective closures of centers, that shows an operator has grown confident enough to make the tough decisions on pruning poor performing locations.  In the long run, that is a positive sign and probably a good thing for the on-demand industry as a whole and for consumers.

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