Today, PE sponsors have close to $1.5 trillion in dry powder looking to be deployed; healthcare delivery is an attractive target because most provider-sectors enjoy ‘pricing power’ which investors see as a hedge against market volatility, according to the latest Keckley report.
PE activity through Q3 2021 across all industry sectors in the US is estimated at $787 billion (including pending deals), which is greater than all capital invested in FY 2020 ($698 billion). As a % of total capital invested, healthcare has ranged in the high single digits for the past 5 years relative to all industry sectors. But through Q3 2021, that % is roughly 14% (of course things could shake out in Q4). The notable story there is fairly obvious- lots of health tech investments as an add on or platform play. That’s not to say recent investing trends in areas like the provider space will stop, such as the hot space Behavioral Health (which loosely defined can encompass a lot of different operators, from folks like Pathways to Community Psychiatry). Difference being is how these existing assets will incorporate digital health and/or analytic platforms (if they haven’t already); and as a result if this will make historically siloed services attractive targets in the future. Read more.
