Published May 27, 2024
It’s no secret that the cardiovascular vertical has experienced an increase in transaction activity involving private equity (PE) firms, which have been attracted to this space by a variety of factors, including a supply and demand imbalance, the shift of procedures to ASCs, and the presence of various ancillary offerings. As such, a number of PE-backed cardiovascular platforms have sprung up in recent years, with a couple of secondary transactions already having taken place. Nonetheless, PE investment in cardiology remains in the “early innings,” according to Lee Equity’s John Eppler in an interview with PE Hub.
It’s also true that cardiovascular transactions have slowed to a crawl in recent months. After a strong period of activity from October 2022 through September 2023 that saw a total of 29 publicly-announced transactions (including 3 platform deals), the 7-month period since (from October 2023 through April 2024) has yielded just 5 tuck-ins and no platform acquisitions.
(Note that we’re excluding WindRose Health Investors’ acquisition of Redesign Health’s CardioOne in March 2024, as CardioOne’s business model is not to acquire practices.)
This data comes from a review of Healthcare Dealflow’s recently-launched PE in Physician Services Deals Database, an Excel file containing all publicly-announced deals in 15 physician services specialties dating back to mid-2022, and that includes metadata such as PE sponsor, target location, and number of physicians and locations of the target practice. The subscription product (updated monthly) can be accessed here.
This slowdown in transaction activity comes amid a broader drop-off in healthcare dealflow, of which M&A stakeholders are well aware. With persistent rumors of “green shoots” in the market and the possibility of a rebound in dealflow later this year and into the next (which could be fueled by potential rate cuts), it’s likely that the number of cardiovascular deals will climb again in the coming year. We’re also aware that these deals can remain private and not publicly announced, so it’s worth remembering that these figures reflect publicly announced transactions.
Taking a closer look at the data contained in our Excel spreadsheet, we can highlight a few transactions and providers:
- The largest tuck-in in terms of target location count was the April 2023 partnership between US Heart and Vascular (backed by Ares Management) and Texas-based HeartPlace, which had 40 locations at the time of the announcement.
- Cardiovascular Associates of America (CAA; backed by Webster Equity Partners) has been the most active platform in terms of tuck-in acquisitions, announcing an impressive 16 during the July 2022-April 2024 period of analysis. That includes CAA’s April 2023 merger with Deerfield Management’s Novocardia. Fun fact: Healthcare Dealflow founder JC Lupis worked as part of the advisory team to Deerfield Management on their formation and launch of Novocardia.
- The largest number of physicians involved in a publicly announced PE-backed cardiovascular acquisition during the period of analysis occurred in February 2023, when Lee Equity Partners launched its Cardiovascular Logistics platform by partnering with Cardiovascular Institute of the South and its 63 physicians.
- Limiting the analysis to only tuck-in transactions, the largest areas of activity by location count have been Florida and Texas, trailed distantly by Georgia, Rhode Island, New Jersey, and Colorado. In terms of the number of physicians involved in these transactions, Florida leads by a good distance over Texas.
- Examining the number of locations acquired in tuck-in transactions, the most active sponsors have been Webster Equity Partners (84 locations acquired through tuck-ins) and Ares Management (51), followed by Assured Healthcare Partners (26).
To generate these and many more insights for yourself, subscribe to our PE in Physician Services Deals Database (in Excel format) here.