Private equity (PE) activity in healthcare is back under the microscope.
Last fall, California Governor Gavin Newsom vetoed Assembly Bill 3129, which would have required the state’s Attorney General to be notified and to review healthcare transactions involving PE groups and hedge funds.
But in February, Senator Christopher Cabaldon introduced Senate Bill 351, resuscitating pieces of AB 3129 that address how PE firms and hedge funds can transact with physician and dental practices.
SB 351 has a long way to go before potentially being signed into law. However, even if it fails, it’s a symptom of a growing shift. New York passed a law in 2023 asserting that the state Department of Health must be notified of “material transactions” involving healthcare entities at least 30 days before the deal closes. Massachusetts, Texas, and Illinois have introduced new legislation this year targeting PE investments and corporate structures in the healthcare space.
With larger deals likely to come under scrutiny in the near future, PE investors should focus on smaller deals and improving the industry.
In this PE Playbook, the Grata team has put together the need-to-know trends for investors considering making moves in the healthcare practices market, including:
- How the space is fragmented
- Which segments are seeing the most growth
- Where investors are making acquisitions
The market map above is not intended to be an exhaustive representation of companies in the space.
Companies that provide services that fall into multiple segments are categorized in this report by their primary offering.
M&A Trends
Transactions
Source: Grata
As more states propose and enact new regulations for M&A in the healthcare space, overall activity has taken a dip.
With investors approaching healthcare practices with more caution, expect to see fewer mega-deals in the industry — at least for the near-term.
Most Active Sponsors
Source: Grata
KKR & Co leads the top financial sponsors in the healthcare practices space with 121 transactions. Its most recent acquisitions include surgical centers and reproductive health clinics.
Grata users can see the entire list of top financial sponsors in the industry — and access more details about each sponsor — here.
Most Active Strategic Acquirers
Source: Grata
Ensign Group is the most active strategic acquirer in the healthcare practices space. The firm has made 109 acquisitions in the industry, which include rehabilitation and senior living facilities.
Grata users can see the entire list of strategic acquirers in the industry — and access more information about each one — here.
Industry Overview
Market Distribution
Geography
Source: Grata
The US is home to the most healthcare practices in the world, but there’s no shortage of international opportunities. Over 33k healthcare facilities are headquartered in the UK, for example. Australia and Canada follow with 24.5k and 19k healthcare practices, respectively.
Grata users can see the entire geographical breakdown here.
Source: Grata. Red text indicates the state has either enacted or is considering legislation to regulate private equity transactions in the healthcare space.
Massachusetts, Indiana, and New York have all signed legislation creating rules for how PE firms can transact in the healthcare industry and how those transactions are reported. Washington, California, Texas, Minnesota, Vermont, and Connecticut are considering proposals for similar regulations.
While these nine are among the states with the most healthcare practices, US-focused dealmakers still have plenty of opportunities. There are a plethora of states with no current regulations and well over 1,000 potential targets.
Ownership
Source: Grata
There are currently over 117,000 privately owned healthcare practice companies that are ripe for acquisition. Private equity dealmakers looking to make moves in the space will need to take extra care to stay up to date on transaction disclosure laws as they move through state legislatures.
PE investors targeting pharmacies may have an added challenge in going up against leading corporations like Walgreens and CVS. However, the high-growth, high-revenue space could offer high returns. We dig into this more in the comps sections.
Segment Distribution
Source: Grata
This report focuses on the following segments of the healthcare practices industry. Grata users can see curated lists of some of the companies used to create each segment by clicking the links below.
Public Comparables
Source: Grata
In the public sphere, elder care facilities and mental health specialists see the highest average revenue growth rate compared to the other segments analyzed in this report. With a growing aging population and consistently rising demand for mental healthcare services, both markets are poised to continue growing for the foreseeable future.
Pharmacies see the most average by far; however, dealmakers should be aware that competition is likely more intense in this space. Pharmacies comprise the smallest segment analyzed here, and that segment has the lowest percentage of private companies with just 38%, compared to 68% of elder care facilities, 57% of family practices, etc.
Private Comparables
Source: Grata
In the private realm, pharmacies and hospitals see the most average revenue by far.
With the impressive financials and nearly 8,500 privately owned facilities in the space, hospitals might seem like a no-brainer for PE investors. However, criticism of PE firms buying hospitals has grown louder over the last few years. Many say that the business model hinders hospitals’ ability to provide quality care. A recent JAMA study showed that hospitals owned by PE firms reported higher rates of patient complications than other facilities. This issue has contributed to more states considering new disclosure laws around PE/healthcare transactions.
Meanwhile, specialized care practices are dominating the space in terms of average annual growth. The growing number of older adults with chronic conditions is a key demand-driver for these services. Other contributing factors include advances in technology leading to medical specialties, and more frequent collaboration between primary care doctors and specialists to improve overall care.
Family practices could also offer investors opportunities to establish leadership, as the space has not raised any funding, offers a high percentage of privately owned facilities, and boasts one of the highest growth rates of the segments analyzed in this report. However, to reiterate, investors must thoroughly research the status of states’ disclosure requirements around PE transactions in healthcare.
Recent Acquisitions
Source: Grata
Vitura Health Acquires Candor
In February, Australia-based Vitura Health announced its acquisition of Candor Medical for $3.7M. Candor, which is headquartered in Sydney, provides online health consultations and prescriptions for a range of health issues, including sexual health, skincare, and quitting smoking. It also offers prescriptions for medical cannabis, which will expand Vitura Health’s established medicinal cannabis clinic services.
If you’re an investor interested in companies similar to Candor, try these:
Learn more about this acquisition — or any of the others listed below — anytime, anywhere using the latest version of the Grata Go mobile app. Get all of the ownership and investment data you need right in the palm of your hand.
Fortis Healthcare Buys Shrimann Superspecialty Hospital
India-based Fortis Healthcare signed a definitive agreement to acquire Shrimann Superspecialty Hospital for $53.2M in February. The deal includes the hospital building, land, and an adjunct parcel of property for future expansion.
The acquisition furthers Fortis’ growth plan, bolsters its Punjab presence, and expands its patient care services in Jalandhar, per the Economic Times.
If you’re an investor interested in companies similar to Shrimann Superspecialty Hospital, try these:
Ambea Purchases Validia
Ambea, a leading care provider in the Nordic region, announced in March that it had entered into an agreement to acquire Finland-based Validia for $137.5M. Validia provides disability including personal assistance, housing, and rehabilitation for individuals with disabilities and impairments.
If you’re an investor interested in companies similar to Validia, try these:
Spire Healthcare Group Acquires Acorn Occupational Health
In April, Spire Healthcare Group purchased Acorn Occupational Health for $3.6M. Both companies are based in the UK. Acorn provides occupational healthcare services — including health screening, health surveillance, management referrals, new start medicals, ergonomic services, and mobile health surveillance units — to corporate clients.
If you’re an investor interested in companies similar to Acorn Occupational Health, try these:
Optima Health Buys Cognate Health
Optima Health announced its agreement to purchase Cognate Health, an Ireland-based occupational healthcare services provider, for $10.2M last month. Optima says the deal will expand its geographical footprint with around 30 clinics across the Republic of Ireland.
If you’re an investor interested in companies similar to Cognate Health, try these:
Vivos Therapeutics Acquires Sleep Center of Nevada
Colorado-based Vivos Therapeutics announced in April that it intends to acquire the Sleep Center of Nevada for $9M. The Sleep Center of Nevada is reportedly the largest sleep center in the state. The deal will make Vivos Therapeutics’ non-invasive obstructive sleep apnea (OSA) treatments available to thousands more patients living in the Las Vegas metro area.
If you’re an investor interested in companies similar to Sleep Center of Nevada, try these:
Live Deals
Hundreds of live deals and active mandates are being showcased on the Grata Deal Network. Here are some examples of mandates related to the healthcare practices industry:
- A New York-based healthcare and pharmaceuticals home delivery company with $25M in revenue and a $1.3M EBITDA
- A business offering adult day care, home healthcare, and transportation services with $11.3M in revenue and a $3.7M EBITDA
- A neighborhood pharmacy based in Alabama with $3.6M in revenue and an expected valuation of $1.4M
If you’re interested in these deals and you want to see more, register to learn more here.
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Get the Most Out of the Playbook
If you’re an investor interested in making moves in the healthcare practices space, Grata can help you put the insights in this article into action.
From in-depth market research to sourcing to pipeline management and relationship nurturing, Grata’s end-to-end dealmaking platform streamlines your workflows so that you can close more deals.
Schedule a demo today to get started.
