Capital One has been named the No. 1 lead arranger for healthcare leveraged loans up to $1 billion in size, according to Thomson Reuters. With the recent acquisition of GE Capital’s Healthcare Financial Services lending business, which has held the top spot for the past three years, the newly combined Capital One Healthcare organization leads the industry with over $11 billion in total outstanding balances. The team supports companies in three broad areas, including corporate finance, real estate finance and venture debt for life sciences companies, and together closed more than 200 transactions in 2015.
Capital One Healthcare is active across 45 healthcare sub-sectors—including long term care, pharmaceuticals, medical devices, hospitals and outpatient services, healthcare IT, medical properties and life sciences—financing acquisitions, recapitalizations, working capital needs and funding early-stage commercialization efforts.
“2015 was truly a landmark year as we united two exceptional teams,” said Darren Alcus, President, Capital One Healthcare. “We’re excited about the opportunities this will create as we bring together a best-in-class group of domain experts and continue to deliver critical financial solutions for our clients.”
“Throughout 2015 we saw sustained growth in the healthcare marketplace despite a dynamic environment,” he added. “Entering 2016 we look forward to ample opportunities across the industry. We expect many high-profile consolidations and additional investments in technology as companies seek new ways to provide quality outcomes for consumers. Our team is well positioned to provide clients with flexible solutions, backed by the resources of a top 10 U.S. bank.”
Below are details on each segment and examples of noteworthy 2015 transactions.
Corporate Finance
“Although we continued to see market volatility as companies adjusted to the regulatory environment, demand in the leveraged loan and high yield markets remained consistent in 2015,” said Al Aria, Senior Managing Director of Capital One Healthcare’s corporate finance team. “As expected, the tremendous liquidity in the market led to the completion of some of the largest institutional transactions ever done. As the industry continues to consolidate, it’s critical to work with a financial partner with in-depth expertise and knowledge of the environment,” said Aria.
The Corporate Finance segment provides private equity and corporate customers with deep industry expertise in all aspects of healthcare financing, including acquisition, refinance, and working capital.
Noteworthy transaction: Capital One closed senior secured credit facilities in excess of $400 million in mid-December to support Argon Medical Devices in refinancing debt and acquiring assets. Argon manufactures and supplies specialty single-use vascular interventional and pressure monitoring devices, biopsy devices, drainage catheters and interventional radiology devices to hospitals and clinics worldwide.
Real Estate
James Seymour, Senior Managing Director of Capital One Healthcare’s real estate financing team, noted that 2015 may have been the beginning of a transition period for some healthcare real estate markets. “We saw continued investor demand in 2015 as valuations remained high and interest rates low,” he said. “As we move into 2016, continued consolidation in post-acute care and the need for modernization will drive loan demand.”
“Development of medical office buildings and other facilities is moving away from hospital campuses and into local communities. And, while long-term fundamentals are strong for seniors housing, some of our operator customers are expressing anxiety about short-term growth. This is driven primarily by overbuilding in select markets, as well as mild labor cost pressure and uncertain macroeconomic conditions. We are poised to use our healthcare expertise and strong balance sheet to help our customers navigate these market conditions with capital to support their growth.”
The Real Estate Finance team provides customized healthcare real estate financing solutions to the medical properties and seniors housing and care sectors. Products include first mortgages, interim financing and acquisition financing for healthcare investors, operators, and developers.
Noteworthy transaction: In December, the team provided a senior credit facility including a five-year, $68.1 million secured term loan and a five-year $30 million revolver, to support Formation Capital’s acquisition of RHA Health Services, LLC and its affiliates. RHA Health Services is a provider of residential and community-based mental health, substance abuse and intellectual and developmental disabilities services.
Life Sciences
“Our Life Sciences group had a strong year, as our pioneering clients continued to rely on our unique financial solutions. We look forward to supporting their innovation and sustained growth in the year to come,” said Brett Haring, Senior Managing Director of Capital One Healthcare’s life science finance business.
The team serves customers in the pharmaceutical, biotechnology, healthcare IT and medical device sectors with an emphasis on personalized medicine and molecular diagnosis.
Noteworthy transaction: The team closed a $4 million additional term loan financing for Cianna Medical, Inc., bringing their total venture loan facility to $12 million. Cianna Medical is a device company focused on the treatment of early-stage breast cancer. These funds supported the commercialization Cianna’s new SAVI SCOUT® surgical guidance system.
Capital One Healthcare is a leading provider of financial services to the industry. Customers across healthcare sectors—including long term care, pharmaceuticals, medical devices, hospitals and outpatient services, healthcare IT, medical properties and life sciences—rely on Capital One Healthcare to finance acquisitions, refinance existing debt, support working capital needs and fund growth initiatives. With in-depth expertise, our team of professionals creates solutions tailored to meet the needs of our customers.
Capital One Healthcare is a part of Capital One Commercial Banking, which leverages a relationship-based banking model that seamlessly delivers an array of products and services including loans and deposit accounts, treasury management services, merchant services, investment banking, international services and correspondent banking.