The urgent care industry is a rapidly growing healthcare sector that provides cost-effective, convenient medical services for low- to mid-acuity illness or injury. Growth of the urgent care industry has garnered strong buyer and investor interest. Strategic buyers, such as payors and large provider organizations, view urgent care as a key cost containment mechanism and have been active in the urgent care space in recent years. For example WellPoint, a health benefits company, and LLR Partners, an investment group, acquired Physicians Immediate Care LLC, a management services provider to 20 independent urgent care centers, in July 2012.

Other players in the healthcare industry, who have traditionally resided in other sectors, have also identified urgent care as a rapidly developing and profitable market and have aligned with urgent care accordingly. For example, in May 2013, Quest Diagnostics Inc. acquired Concentra’s toxicology and clinical laboratory business. Concentra is a large urgent care center operator owned by Humana Inc. Quest CEO Steve Rusckowski states that the transaction is “consistent with Quest’s disciplined capital deployment strategy, which includes generating one to two percent in growth per year through strategically aligned fold-in acquisitions.”

In addition to strategic buyers, the urgent care market has been of particular interest to financial buyers, namely, private equity firms. Private equity urgent care transactions in 2012 included:

  • Ridgemont Equity Partners acquired a majority stake in Hometown Urgent Care on June 12, 2012. The Columbus, Ohio-based Hometown operates 25 urgent care clinics.
  • In April 2012 Brockway Moran & Partners, a private equity group, invested growth capital in MD Now Medical Centers of West Palm Beach.

The number of private equity urgent care transactions in 2012 was consistent with 2011. However, most of the 2012 activity was in middle-market transactions — a shift from the much larger transactions typifying 2011. This shift can be at least partially attributed to the fact that approximately 80% of urgent care companies have three or fewer centers. Due to the lack of large-scale platforms, many of the larger urgent care companies have been the subject of an acquisition in the recent past. Therefore, the trend toward middle-market urgent care transactions will likely continue in the foreseeable future.

In first five months of 2013 we have continued to see activity across the urgent care market by both strategic and financial buyers, including through merger and acquisition, as well as organic growth. Examples include:

  • In April 2013 the joint venture between CareSpot and HCA Holdings’ TriStar Health has acquired Nashville-based NeighborMD. The joint venture, formed to develop urgent care centers in Middle Tennessee, will acquire five NeighborMD urgent care centers and open five additional centers by the end of 2013.
  • Capital Group Holdings (CGHC) (Arizona) reported in mid-April that its board has determined that material expansion opportunities exist that will increase the number of OneHealth Urgent Care (OHUC) clinics. OHUC is a wholly owned subsidiary of CGHC.
  • CareWell Urgent Care, which is backed by $11 million in venture capital money, plans to open six new urgent care centers in Boston during the summer of 2013. According to CareWell’s CEO Renee Lohman, their goal is to open 35 to 42 additional centers in the region in the next five years.