Infusion Therapy: Industry Primer

OCTOBER 2024

Infusion Therapy Market is Poised for Continued Growth

The infusion therapy market continues to grow rapidly, supported by numerous tailwinds that are creating a compelling opportunity for investors.

Infusion Therapy Market Growth

Infusion Therapy Market Size
($'s in billion)

Spend Breakdown by Site

Hospital
~ 55%
of spend
Physician Office
~ 30%
of spend
Home
~ 10%
of spend
Ambulatory Infusion Center (AIC)
~ 5%
of spend

Key Market Drivers

  • Increasing incidence of chronic conditions
  • Robust infusible specialty drug pipeline
  • Highly fragmented market with ample white-space for expansion of alternative sites
  • List price scrutiny and biosimilar adoption
  • Labor shortages and wage inflation impacting key clinical roles
  • White bagging and growth of self-administered specialty formulations

Site of Care Shifts Focus on High-Quality Cost-Effective Care

Ambulatory infusion and home infusion centers are the leading strategy as shifting consumer preferences, heightened physician awareness and health plans steer volume to align networks with high-quality, low-cost sites of care.

Growth in Specialty Claim Volumes by Site of Care
(2020 to 2021)

Key Drivers

  • Patient convenience
  • Awareness from referral sources
  • Health plan preferences / steerage
  • Cost effectiveness
  • Demonstrable quality / adherence
  • Increasing investments in alternative sites
  • Accessibility of new therapies

Lower Cost Sites Will Continue to Win as Payors Prioritize Value

Payors are increasingly utilizing site of care programs to steer volume to lower cost AICs and home infusion sites as they seek avenues to bend the high-cost specialty drug curve - 56% of payors are considering expanding site of care programs.

Drug Administration Reimbursement by Channel
(2023)

Buy-and-bill Reimbursement Rates by Channel
(2023)

Sources: Publicly Available Information

Robust Pipeline of Specialty Infused Drugs and Biosimilars

Strong Pipeline: the infusion market is expected to continue expanding rapidly as waves of new specialty drugs are approved, there is typically a multi-year lag from approval to widespread downstream adoption

Site Considerations: as patented drugs lose exclusivity, alternative sites are expected to be more economically viable and be more feasible outside of HOPD; AIC providers are hedging any therapy migration through diversifying into home settings

Pharmacy Distribution: across the pipeline fewer special requirements (transport, storage, admin), expansion of self-administered and subcutaneous formulations may shift new patient therapy starts from the medical to pharmacy insurance benefit

Biosimilar Adoption: the next five years are expected to see an uptake of biosimilars as new molecules enter market and payors slowly adopt approved biosimilars, this is expected to pressure ASP and margins of infusion providers depending on GPO/supplier contracting efforts

Novel Infused Drugs Approved by the FDA

Estimated Savings From Biosimilars at Invoice Prices ($ billions)

Sources: Publicly Available Information

Overview of Payor Policy and Cost Containment Measures

Payors remain laser-focused on bending the specialty pharmacy cost curve through stringent management measures — utilizing strategies that shift drug administration to the pharmacy insurance benefit (clear/white bagging) and expanding use of prior authorizations / step therapy.

Payors Focused on Optimizing Pharmacy Distribution

Drug sourcing by Practice Type and Source

Key Takeaways:

  • Plan sponsors continue to implement strategies to maximize rebates and optimize U/M through shifting drug administration to the pharmacy insurance benefit
  • This is being done primarily through white/clear bagging policies, which are more prevalent in HOPD infusion settings
  • Select operators have utilized clear bagging as an alternative to retain distribution but payors continue to prefer in-house specialty pharmacies

Rising Prevalence of Prior Authorizations

Number of Medical Drugs Requiring PA by Payor Type

Key Takeaways:

  • PA and step therapy remain the number one U/M tool employed by payors to combat rising specialty drug costs
  • 93% of payors require a PA for new to market unclassified codes with 30% requiring a 1- to 6-month moratorium
  • Implementing rigid hands-on intake processes is essential, as any delays in care and denials greatly impact margin

Sources: Publicly Available Information

Infusion Therapy M&A Environment

Despite healthcare services headwinds there has been consistent and elevated investor interest in the infusion therapy sector.

Infusion Therapy M&A Activity

The recent surge in deals across alternative site infusion providers highlights a robust market backed by compelling unit economics, various strategic growth levers, and numerous pathways for investment realization underpinned by support from key healthcare stakeholders.

Date Seller Buyer Type   Model
August 2024 Vital Care Berkshire, LGP, Linden Platform AIC / Franchise
July 2024 Infusicare Dynamic Infusion Add-on Home
July 2024 Infusion Associates Management Vivo Infusion Add-on AIC
July 2024 Big Sky IV Care Access Infusion Care Add-on Home
June 2024 Apex Infusion Pharmacy FFL Partners Platform AIC / Home
May 2024 Coastal Infusion Services PromptCare Add-on Home
April 2024 SI Therapeutics IVX Health Add-on AIC
January 2024 Paragon Healthcare Elevance Health Add-on Diversified
January 2024 Access Infusion Care New Harbor Capital Platform AIC / Home

Key Drivers of Investor Interest:

Favorable unit economics characterized by low incremental initial capital, accelerated ramp-up periods and once established, secure, hard to dislodge referral relationships

Multiple levers to drive inorganic success – rate arbitrage, supplier / GPO negotiations, local staffing density, referral program professionalization, centralized corporate functions

Diverse pathways for investment realization with strong underlying support from key healthcare stakeholders (e.g. payors, pharma, health systems)

Strong secular tailwinds with ample untapped white space and market opportunities

Sources: Publicly Available Information

Important Disclosures

This document is being provided in connection with an actual or potential mandate or engagement and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with the Allen, Mooney & Barnes companies. This document is intended solely for the use of the party to whom it was provided to and is not to be disclosed (in whole or in part), summarized, reprinted, sold, redistributed or otherwise referred to without the prior written consent of the AMB companies.

Allen Mooney & Barnes Brokerage Services is a broker/dealer member of FINRA and SIPC. Allen Mooney & Barnes Investment Advisors, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.

Information presented in this document is for informational, educational and illustrative purposes only. While the information in this document is from sources believed to be reliable, the AMB companies make no representations or warranties, express or implied, as to whether the information is accurate or complete and assume no responsibility for independent verification of such information. In addition, the analyses in this document are narrowly focused and are not intended to provide a complete analysis of any matter.

Past performance is not necessarily indicative of future performance. Estimates, projections or indications of future performance can be identified by certain statements, such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "plans," "estimates" or "anticipates" or the negative of those words or other comparable terminology, as well as by statements concerning projections, future performance, developments, events, revenues, expenses, earnings, run rates and any other guidance on present or future periods. Any such statements are forward-looking in nature and involve risks and uncertainties. Any statements of future performance are based on assumptions that might not be realized and a number of factors, including without limitation, the volatility of the securities markets, the overall environment for interest rates, risks associated with private equity investments, the demand for public offerings, activity in the secondary securities markets, competition among financial services firms for business and personnel, the effect of demand for public offerings, available technologies, the effect of government regulation and of general economic conditions on our own business and on the business in the industry areas on which we focus and the availability of capital to us. We are under no obligation to update the information presented in this document or to inform you if any such information turns out to be inaccurate or misleading.

The information in this document is not, and is not to be construed as, an offer or a solicitation to buy or sell any securities or any other financial instruments or a recommendation or endorsement to engage in or effect any particular investment or transaction. Moreover, under no circumstances should the information in this document be considered legal, tax or accounting advice or relied upon, therefore. The recipient is advised to rely on the advice of its own professionals and advisors for such matters and should make an independent analysis and decision regarding any transaction based upon such advice.

The information in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or for any distribution or use that would subject the AMB companies to any registration requirement within such jurisdiction or country.

677 King Street, Suite 410 | Charleston, SC 29403

AMB Investment Banking Snapshot and Deal Team

AMB focuses on lower middle-market healthcare niches where consumerism and fragmentation meet to disrupt traditional healthcare channels. We typically advise companies with EBITDA of $5M to $20M and an average enterprise value of $100M, but will move up and down the spectrum. AMB’s research-oriented approach to business development has resulted in a vast network of strategic and financial sponsor relationships that yield industry leading intelligence and optimal outcomes for our clients.

Mikel Parker

Managing Director
843-501-2183 Direct
mikel.parker@ambadvisors.com

Ryan Loehr, CPA

Managing Director
843-405-1108 Direct
ryan.loehr@ambadvisors.com

Johnny Cross

Vice President
843-371-8596 Direct
johnny.cross@ambadvisors.com

Kevin Williams

Senior Associate
843-473-7981 Direct
kevin.williams@ambadvisors.com

Sully Hagood

Associate
843-576-4709 Direct
sully.hagood@ambadvisors.com

Josh Hall

Analyst
843-405-1112 Direct
josh.hall@ambadvisors.com

Asha Hamaker

Analyst
405-343-1643 Direct
asha.hamaker@ambadvisors.com

Brayden Sarathy

Analyst
843-271-5652 Direct
brayden.sarathy@ambadvisors.com