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GE Capital Grows U.S. Healthcare Financing 20% in 2014, Retains Top Lead Arranger Position

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GE Capital’s Healthcare Financial Services (HFS) business provided more than $10.5 billion in financing to customers across more than 240 transactions in 2014, an increase of 20% percent from the prior year. For the third consecutive year, GE Capital was the No. 1 lead arranger for healthcare financings up to $1 billion in size, according to Thompson Reuters.

HFS is active across 45 healthcare segments – including senior housing, outpatient services, pharmaceuticals, medical devices, hospitals and medical offices, and life sciences – financing acquisitions, refinancing existing debt, supporting working capital needs and funding early-stage commercialization efforts.

“While many segments in the healthcare industry are experiencing major changes and consolidation, others are part of a remarkable technology-driven expansion phase,” said Darren Alcus, president and CEO of GE Capital, Healthcare Financial Services. “Across all these sectors, we expect to see a high level of ongoing demand for debt financing in 2015.”

HFS supports healthcare companies in three broad areas: corporate finance, real estate finance and venture debt for life sciences companies. Below are details on each segment and examples of noteworthy 2014 transactions.

Corporate Finance

“Although the leveraged loan market was significantly altered in 2014 by a transformed regulatory environment, we had one of our most active years,” noted Al Aria, senior managing director for GE Capital, Healthcare Financial Services’ corporate finance team.

“We supported our customers in 2014 by deploying nearly $7 billion in commitments despite the choppiness in the leveraged loan and high yield markets. Deals in certain healthcare sectors with appropriate structures experienced very strong demand at historically low yields. Tougher deals with more aggressive structures required higher pricing and changes to their structures,” he added. “We also saw record M&A activity in 2014 – the highest level since 2007 – driven primarily by corporate-to-corporate deals.”

Noteworthy transaction: In May 2014, HFS served as administrative agent on a $207 million senior secured credit facility to finance Harvest Partners’ acquisition of Athletico Physical Therapy, an Oak Brook, IL-based provider of outsourced rehabilitation services with a focus on sports injuries and therapies. In December 2014, HFS served as administrative agent on a $465 million senior secured credit facility to refinance Athletico’s existing debt and to finance the acquisition of Accelerated Rehabilitation Centers, which has a network of more than 300 outpatient rehabilitation centers throughout the Midwest and Arizona.

Real Estate

In 2014, the HFS real estate segment was a leading capital provider to the healthcare industry, closing more than 110 transactions that primarily financed real estate in the long-term care / seniors housing and medical properties sectors.

“Demand for real estate accelerated last year, driven by capitalization rate compression across all our markets,” said James Seymour, senior managing director of GE Capital, Healthcare Financial Services’ real estate financing team. “This positive environment continued to attract sophisticated capital to healthcare real estate, resulting in higher property values and record transaction volumes.”

“In 2015, with interest rates so low, we expect ample liquidity to be available to real estate investors. The prospect of rates beginning to rise this year may prompt operators to consider additional consolidation or acquisition financing opportunities,” he noted.

Noteworthy transaction: HFS was administrative agent on a $500 million credit facility for Brookdale Senior Living Inc. The funds may be used for acquisitions, working capital and capital expenditures as well as general corporate purposes. Based in Brentwood, TN, Brookdale is the leading operator of senior living communities throughout the U.S.

Life Sciences

The life sciences segment of HFS realized 25% year-over-year growth in total venture loan deal volume between 2014 and 2013. The team focuses on customers in the pharmaceutical, biotechnology, healthcare IT and medical device sectors with an emphasis on personalized medicine and molecular diagnosis.

“Last year was a strong one in both the public and private equity markets,” said Brett Haring, senior managing director of GE Capital, Healthcare Financial Services, life science finance business. “We accelerated our growth along with that of our many customers and we plan to continue to support existing and new customers in 2015.”

Noteworthy transaction: In May, HFS served as administrative agent on a $25 million credit facility for Assurex Health, a pioneer in pharmacogenomics based in Mason, OH. Assurex was planning to use the funds to help develop the emerging personalized neuropsychiatric medicine market.

About GE Capital, Healthcare Financial Services

GE Capital’s Healthcare Financial Services (HFS) business is one of the most active capital providers in the U.S. healthcare market. With in-depth industry knowledge and expertise, the HFS team of professionals creates financial solutions tailored to meet the individual needs of its customers. For more information, visit www.gecapital.com/healthcare or follow company news via Twitter (http://twitter.com/GELendLease).

GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit www.gecapital.com or follow company news via Twitter (http://twitter.com/GECapital).

GE (NYSE:GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company’s website at www.ge.com.

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