Deal Flow: Which Physician Services Verticals Were Most Active for PE Last Year?

As many news outlets have documented and analyses have commented on, private equity-backed transactions in the healthcare industry dropped last year for a variety of reasons, linked primarily to macroeconomic conditions and potentially also to regulatory pressure. But with that said, deals are still getting done, and this year we’ve tracked a range of roughly 40-70 PE-backed physician services partnerships each month. This begs the question: in which verticals have PE firms and their portfolio companies been the most active?

To find out, we dug into our PE in Physician Services Deals Database, an Excel file containing all publicly-announced PE-backed deals in 15 physician services specialties dating back to mid-2022. The Excel spreadsheet includes metadata such as acquirer’s PE sponsor, target’s location, and number of physicians and locations of the target practice. The subscription product (updated monthly) can be accessed here.

For the purposes of this article, we limited our analysis to transactions that were publicly announced last year (in 2023) and to the 15 popular physician services verticals that we make available to subscribers in the database.

A quick note on methodology: We define a PE platform transaction as one that results in the creation of a new portfolio company or one that is executed by a PE firm as opposed to by its portfolio company. This definition therefore excludes secondary transactions where an existing platform company is acquired by another, unless this results in the creation of a new platform company listed as a portfolio company on the private equity sponsor’s website. In cases where a platform was created via the combination of multiple practices, this was listed as a single platform deal as opposed to multiple separate transactions. Separately, a considerable number of Plastic Surgery transactions were made by Medical Aesthetics platforms. However, we define a target as a Plastic Surgery practice if its name refers to “Plastic Surgery” and/or it employs plastic surgeons, rather than only medical aestheticians.

Here’s what we found:


Eye Care Is in Focus

Easily the most active vertical in terms of PE-backed transactions last year was Eye Care, with 42, working out to an average of 3-4 announced deals per month. However – and not too surprisingly given its maturity (and the way we define platforms as mentioned above) – all of these were tuck-in deals, rather than involving any new platform creation.

Within the Eye Care vertical, certain platforms were quite active. Ascend Vision Partners, backed by Chicago Pacific Founders, partnered with 8 practices, while ReFocus Eye Health, backed by Zenyth Partners, partnered with 7. Unifeye Vision Partners, backed by Waud Capital Partners, partnered with 6 practices, as did OCLI Vision, backed by Blue Sea Capital. Together, these 4 platforms accounted for almost two-thirds of all PE-backed Eye Care deals we tracked last year.

Primary Care Deals in Prime Position

With 33 deals last year, amounting to almost 3 per month, Primary Care practices were also relatively highly in demand last year. Unlike Eye Care, though, there were 3 new Primary Care platforms created, led by the partnership between Ascend Partners and Allied Physicians Group. (Note that while the press release described Allied Physicians Group as a Pediatrics provider, its website notes its work in Adult Medicine, such that we’ve classified it as a Primary Care provider as opposed to strictly being Pediatrics.)

Consensus Health, backed by Ascend Capital Partners, was particularly busy last year with 10 tuck-ins, or almost one each month. Ascend Partners also sponsors Medical Specialists of the Palm Beaches, which completed 4 tuck-ins.

Other active acquirers last year included MyTown Health Partners (backed by Wester Equity Partners) and Palm Medical Centers (backed by MBF Healthcare Partners), each with 5 publicly-announced tuck-ins.

Medical Aesthetics: PE’s Latest Facelift

Healthcare M&A stakeholders are well aware of the trend towards PE investment in medical aesthetics – and the data bears that out. We tracked 31 deals in this vertical last year, including the creation of 4 platforms, second only to Plastic Surgery in platform creation. What’s more, a considerable amount of Plastic Surgery deals were executed by Medical Aesthetics platforms last year, so the 31 figure could be deemed an undercount depending on how one classifies a target practice. For the purposes of this analysis, we’ve defined a target as a Plastic Surgery practice if its name refers to “Plastic Surgery” and/or it employs plastic surgeons as opposed to only medical aestheticians.

The largest platform deal we tracked last year was Levine Leichtman Capital Partners’ investment in SEV, a manager or operator of 27 med spas across 7 states.

In terms of tuck-in count, the most active platforms were Leon Capital Partners’ Advanced Medaesthetic Partners, with 8 tuck-ins, Thurston Group’s Alpha Aesthetics Partners, with 5, and Persistence Capital Partners’ MedSpa Partners, also with 5.

We also note that – despite its maturity – Dermatology remained active last year with 29 deals (all tuck-ins), and that Plastic Surgery, while having fewer deals, had the highest platform creation count. As such, the combination of these three verticals shows that PE sponsors were heavily involved in cosmetic and reconstructive medical practices.

Not Kidney-ing Around: A Steady – but Concentrated – Flow of Kidney Care Deals

Kidney Care may not be trumpeted as much as some other verticals such as Cardiovascular, Medical Aesthetics, and Orthopedics, but it’s certainly up there in deal count. There were 23 publicly announced PE-backed kidney care tuck-ins last year, or roughly 2 per month.

What’s different about Kidney Care than other verticals is the extent to which those transactions were concentrated among a small subset of PE-backed platforms. Whereas the Cardiovascular vertical’s 19 tuck-ins were executed by 7 platforms, the 23 Kidney Care platforms were concentrated among just 4, with virtually all (20) being the domain of just 2 platforms.

The most active of those was Interwell Health, which is backed by WCAS’ Valtruis and Oak HC/FT (and also by Cigna Ventures and Blue Shield of California). Interwell completed an impressive 15 partnerships last year across 11 states. By comparison, the next-most active platform, Audax Private Equity’s Panoramic Health, partnered with 5 practices, but limited those expansion activities to Texas.

Other Highlights:

  • The Cardiovascular vertical was relatively active last year with 22 transactions, inclusive of 3 platforms created. Our analysis of deal activity in this platform – showing how tuck-ins have slowed to a crawl in recent months – can be found here.
  • Orthopedics was the only other vertical with more than 20 deals last year, all of which were add-ons. These were fairly spread out across platforms, led by Varsity Healthcare Partners’ Orthopedic Care Partners, with 5.
  • Otolaryngology’s 18 tuck-in deals were also fairly evenly distributed among various platforms. Audax Private Equity’s Elevate ENT Partners led the way with 5 partnerships, followed by Shore Capital Partners’ SENTA Partners and Trinity Hunt Partners’ Parallel ENT & Allergy, each with 4.
  • While Urology had the fewest amount of deals (on par with Pain Management) – at just 8 – deals in this vertical tend to be larger than in others, according to our analysis of the size (number of physicians) of partnered practices in tuck-ins across verticals.

To generate these and many more insights for yourself, subscribe to our PE in Physician Services Deals Database (in Excel format) here.

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