Healthcare deals among private equity firms hit the ground running in the first quarter of this year.
Despite the common notion that the healthcare industry lags a decade or more behind other sectors in terms of financial services and digital capabilities, the landscape for many healthcare IT products remains extremely competitive, according to our latest US PE Breakdown.
Q1 2022 was headlined by the $17 billion buyout of Athenahealth by Hellman & Friedman, Bain Capital and other investors, as well as Clearlake's rollover of Symplr, a healthcare governance, risk and compliance company.
PE firms homed in on investments in value-based care (VBC)—including both providers and technology solutions—in Q1. Companies combating kidney disease attracted significant attention from VBC investors.
In March, PE-backed Cricket Health agreed to a three-way combination with InterWell Health and Fresenius Health Partners. The combined company, worth a reported $2.4 billion, will leverage both Cricket's technology and InterWell and Fresenius' kidney care practitioners and dialysis centers to treat patients, beginning with early-stage interventions and extending through chronic care management.
PitchBook analysts expect more money to flow into the kidney disease pipeline. Just in February, concierge kidney care provider Somatus—backed by the venture arms of Anthem, Optum and Blue Cross Blue Shield—closed its Series E at a more than $2.5 billion valuation.
Another VBC highlight came in February, with Kinderhook Industries closing its $500 million buyout of Physician Partners, a Florida-based VBC primary care physician group focused on Medicare Advantage contracts.
Analysts say it will be interesting to watch whether firms such as Kinderhook can scale their portfolio companies quickly enough to secure an attractive return, likely by exiting to the industry's largest insurers.
Further, analysts believe that General Electric's planned spinout of its healthtech business, GE Healthcare—expected later this year—may provide opportunities for a firm such as Francisco Partners, which has a history of buying and turning around healthcare IT divisions from large conglomerates, to carve out part of the business.
Related read: US PE Breakdown
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This article originally appeared on PitchBook News