M&A in Fertility Outpatient Care Centers Remains Strong

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Within the women’s healthcare industry, mergers & acquisitions (M&A) activity over the last couple of years has been prevalent and increasing within the fertility service space. Medical groups including fertility centers have been flooded by private equity capital, boosting valuations and deal activity. In addition, large strategic players have been highly acquisitive looking to expand their geographic footprint, establish critical mass in regional markets and leverage resources and capabilities. Although medical group fertility practices have grown in size, there are still many smaller practices that could benefit from sector consolidation. With many favorable dynamics in place, the fertility sector is poised for heightened M&A activity throughout 2019.

Industry Trends

The U.S. infertility services market is estimated to reach nearly $6 billion this year, up 21% from 2016. Allied Market Research forecasts 7.0% average annual growth in revenues through 2023, to nearly $8 billion. There are about 500 U.S. fertility clinics, 100+ sperm banks, an unknown number of egg donors, and 1,700 reproductive endocrinologists competing for the business. The market is fragmented, served by mostly small regional clinics. The vast majority of clinics are located in urban areas where there is also greater access to other medical specialists, particularly urology and obstetrics and gynecology practitioners. The global fertility services market is expected to grow by approximately 9.3% annually out to 2023.

Today, as many as one-third of couples fail trying to conceive through sex, and according to the March of Dimes, as many as 15% of all pregnancies end in miscarriage, with the rate increasing as a woman ages. The World Health Organization ranks infertility as the third most serious disease worldwide, after cancer and cardiovascular disease. This trend is dominated by people over the age of 35, who—due to career, financial pressures, not finding the right partner or other factors—are now struggling to conceive. Those who do conceive at a later age have offspring that face significant health risks: 80% of embryos from women over 40 years old carry chromosomal abnormalities, and 5% of newborns are affected by genetic conditions.

Market Dynamics

Acquisition interest for fertility clinics has continued to rise over the past few years supported by several key industry trends:

  • Macroeconomics: Strong economic conditions and rising per capita disposable income;
  • Starting Families Later: The trend for couples to marry later in life and to delay starting a family in pursuit of professional careers and financial security is also boosting demand for fertility services and accelerating industry growth;
  • Insurance: Historically, fertility services have not been covered in most insurance plans, however, that trend is shifting to where more employer-sponsored insurance plans are offering fertility coverage. Additionally, a rising number of insured individuals in the US supports an increased addressable patient market; and
  • Technological Advancement: Innovations surrounding egg preservation procedures and infertility diagnostics have resulted in greater treatment success and lower costs for patients.

Fertility Service Clinic Valuations

According to Pitchbook data, business sale valuations of fertility service clinics range from 8.0x to 11.2x Adjusted EBITDA (Earnings). Valuations within this range are influenced by revenue size, competitive environment, growth rate, reimbursement mix, the strength of the management team, and buyer motivations. The revenue multiple valuation approach is relevant as well, however, market data indicates it is a less informative valuation measure with a significantly wider range.

Revenue and EBITDA Multiple for Fertility Service Clinics

Source: Pitchbook

Selected Transactions Past Four Years

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Source: Pitchbook

Illustrative Transactions Demonstrating Consolidation for Growth

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In February 2017, IntegraMed Fertility, the largest network of fertility providers in North America, and the physicians of Fertility Centers of Illinois (FCI), the largest fertility practice in Illinois and the second largest in the IntegraMed network, entered into an equity partnership. IntegraMed is a provider of outpatient healthcare services. The company also provides treatment financing programs for patients of these treatment facilities whose insurance does not cover the particular procedure. The company also supports its provider networks with clinical and business information systems, marketing and sales, facilities and operations management, finance and accounting, human resources, legal, risk management, quality assurance and fertility treatment financing programs. With 28 partner practices, the IntegraMed Network accounts for over 40,000 IVF cycles annually. IntegraMed Fertility employs over 2,000 fertility professionals in the U.S. and Canada. Through the partnership with FCI, the physicians of FCI and their patients will now have more access to the new and updated professional services IntegraMed offers, while IntegraMed will be a strategic resource, helping FCI continue its upward trajectory as a thriving industry leader. For more information about IntegraMed, visit https://www.integramed.com.

In October 2016, Lee Equity Partners, a New York–based private equity firm that partners with strong management teams to build companies with high growth potential, partnered with serial entrepreneur Martín Varsavsky, Reproductive Biology Associates (RBA), and My Egg Bank North America (MEB) to launch Prelude, a comprehensive fertility company focused on providing proactive fertility care to improve people’s chances of having healthy babies when they’re ready. Lee Equity Partners joined forces with the others, committing up to $200 million in equity to support the fertility industry and positively impact the lives of many future parents.

In March 2018, Prelude Fertility acquired Advanced Fertility Center, via its financial sponsor Lee Equity Partners, through an LBO on March 6, 2018 for an undisclosed sum. In December 2017, Prelude Fertility also acquired Vivere Health via Lee Equity Partners, through an LBO for an undisclosed sum. The deal included Houston Fertility Institute and the company’s network of de novo and recently acquired clinics, which serve eight important growth markets. The addition of the many new locations to the Prelude Network creates a tremendous opportunity for Prelude to extend its message about fertility preservation and greatly improves patient access to top quality fertility care around the country. For more information about Prelude, visit www.preludefertility.com.

In August 2015, TA Associates, a leading global growth private equity firm completed a growth equity investment in CCRM, a leading provider network of fertility treatment services with locations in Colorado, California, Minnesota, Texas and Toronto, Canada. Financial terms of the transaction were not disclosed. With a reputation for world-class physicians, facilities and laboratories, CCRM operates a network of fertility clinics providing a wide variety of treatments from basic infertility care to advanced in vitro fertilization (IVF). With TA’s support, CCRM will continue to broaden their network of leading fertility laboratories. In addition, the highly fragmented U.S. IVF market, with approximately 500 clinics, presents possible future M&A opportunities for CCRM. For more information on CCRM, visit www.ccrmivf.com.

In November 2010, Next Phase Capital acquired Women’s Integrated Network (WIN) a leading specialty benefit management company and provides comprehensive fertility management to healthcare insurers and other payors for fertility services. Originally founded as an independent women’s health management company, WINFertility has been the national leader in managed fertility benefits for over two decades. More than 20 years of experience and data driven protocols have allowed them to help over 100,000 patients achieve parenthood. NexPhase Capital is an operationally focused private equity firm targeting entrepreneur-owned, lower middle market companies. For more information on WINFertility, visit https://www.winfertility.com.

Final Thoughts

There are several trends that are propelling the fertility services industry to become a significant and meaningful, multi-billion dollar industry we see forming now. Arguably the most meaningful factor being that people are waiting until later in life to have children. Both men and women seem to be concentrating on developing a professional career, or cultivating financial security early in life causing couples to marry later and delay starting a family. Those families are most likely more financially stable than similar younger couples, as well as in need of fertility services to aid in having children due to the complications that come with pregnancy later in life. Activities surrounding infertility services, facilities, R&D, etc. grew to meet the demands of the market and along with it M&A activity within the space increased as well.

Strategic and financial investors searching for new ways to make strong financial returns in medicine have hit upon the problem of infertility. The global fertility services sector is seeing an emergence of serial acquirers and an increased pace of consolidation. Fertility clinics are just the latest in a long list of medical practices that have caught the eye of financial sponsors such as private equity firms. They’ve already been buying up primary care practices, ophthalmology clinics and dermatology practices. In some cases, doctors nearing retirement jump at the chance to sell stakes in their clinics, with an eye toward bolstering their own financial security and tapping into the business expertise of the new investors. Sensing a lucrative market, private equity firms are pouring money into building national chains of fertility clinics. Some are spending on splashy advertising and a deliberate strategy of reaching out to young women who are not yet trying to conceive. Nonetheless, investors clearly see an opportunity. They’re transforming an industry that has long been dominated by standalone clinics.

Fertility experts also see real benefits of the consolidating activity for patients. Decisions about clinical practice towards patients are being left for the trained physicians. Financial sponsors are focusing on their core competencies- that is, running a business and exploring synergies. Clinics united into national chains have been sharing best practices, introducing newer technologies, and offering more flexible payment plans for customers for those who are looking for viable options.

If you are trying to explore a sale of your fertility service business or are interested in exploring opportunities for growth, our Life Sciences & Healthcare Practice Group is happy to assist you with your goals. Contact me at (858) 461-9490 or reply directly to [email protected].



Objective Capital Partners is a leading investment banking advisory firm whose Principals have collectively engaged in more than 500 successful transactions serving the transaction needs of growth stage and mid-size companies. The executive team has a unique combination of investment banking, private equity, and business ownership experience that enables Objective Capital Partners to provide large enterprise caliber investment banking services to companies with annual revenues up to $500MM. Services include sale transactions, partnering/ licensing, equity and debt capital raises, valuation and comprehensive advisory services. The firm uses a proprietary process to work to achieve maximum company valuation, premium pricing, and high client satisfaction rates post-sale. The firm’s industry expertise is focused on 5 verticals including healthcare, life sciences, business services, technology, and consumer products. Additional information on Objective Capital Partners is available at www.objectiveibv.com.

This article is for informational purposes only and does not constitute an offer, invitation or recommendation to buy, sell, subscribe for or issue any securities. While the information provided herein is believed to be accurate and reliable, Objective Capital Partners and BA Securities, LLC make no representations or warranties, expressed or implied, as to the accuracy or completeness of such information. All information contained herein is preliminary, limited and subject to completion, correction or amendment. It should not be construed as investment, legal, or tax advice and may not be reproduced or distributed to any person. Securities and investment banking services are offered through BA Securities, LLC Member FINRA, SIPC. Principals of Objective Capital are Registered Representatives of BA Securities. Objective Capital Partners and BA Securities are separate and unaffiliated entities.

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