2018's private equity deals in the healthcare sector topped $100 billion.
As 2018 was a banner year for venture capital funding in the healthcare sector, it was also a record for private equity deals. 715 private equity deals had closed as of mid-December for a combined value of $103.72 billion, according to PitchBook. In 2017 there were 709 deals worth $88.87 billion, and 651 deals worth $70.5 billion in 2016. That’s up from 413 deals worth $31.52 billion in 2013.
The Healthcare Research Institute of Pricewaterhousecoopers expects the trend to continue in 2019, as private equity investments have increased across the economy and the healthcare sector is in a phase of management teams looking to sell parts of a company that aren’t deemed essential to its main business. “We’ve seen a high level of divestitures, offloading a lot of non-core assets, and private equity has been there to be great partner,” says Karen Young, PwC’s U.S. pharma and life sciences leader. But the growth is from firms that have been in and around the industry making more bets, not from new players getting involved, she thinks. “They’re looking to become more of a collaborator in the industry versus just a banker, and I think that’s what’s driving a better relationship, as well as better outcomes on those transactions with higher values,” Young says.
2018’s biggest private equity deals in healthcare include such collaborations as health insurer Humana’s $4.1 billion partnership with firms TPG Capital and Welsh, Carson, Anderson & Stowe to buy Kindred Healthcare, which provides home health services and operates facilities for long-term acute care and rehabilitation. But it also includes more traditional deals such as controversial emergency room outsourcing company Envision Healthcare’s going private.
Here’s the rundown of the top ten, according to PitchBook:
- Envision Healthcare; $9.9 billion; Kohlberg Kravis Roberts
- Athenahealth; $5.7 billion; Veritas Capital, Evergreen Coast Capital
- LifePoint Health; $5.6 billion; Apollo Global Management, ATP Private Equity Partners, RCCH HealthCare Partners
- Kindred Healthcare; $4.1 billion; Welsh, Carson, Anderson & Stowe, TPG Capital, Humana
- American Medical Response; $2.4 billion; Air Medical Group Holdings, Kohlberg Kravis Roberts, Ardian, Koch Equity Development
- Sound Physicians; $2.15 billion; Revelstoke Capital Partners, Athyrium Capital Management, Summit Partners, Silversmith Capital Partners
- Lifescan; $2.1 billion; Platinum Equity
- Curo Health Services; $1.4 billion; TPG Capital, Welsh, Carson, Anderson & Stowe, Humana
- Juice Plus; $1.235 billion; Altamont Capital Partners
- Analogic; $1.1 billion; Altaris Capital Partners
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