Private equity healthcare deals were down in 2022 but still had their second-biggest year on record, a Jan. 10 report from Bain & Co. shows.
Here are six things to know from the preview of the 12th annual Global Healthcare Private Equity and M&A Report.
1. The number of healthcare private equity deals is expected to have fallen by about 20 percent to 30 percent last year, from a record 515 in 2021 to about 400, which aligns with 2020 levels.
2. Bain attributed the decline to tighter monetary policy as central banks aimed to tame inflation and geopolitical troubles brought about by Russia's invasion of Ukraine.
3. Interest in both health IT and life sciences rose in 2022. In health IT, investors focused on businesses working to optimize operations amid economic pressures. Life sciences accounted for six of the top 10 deals of the year. Health IT, biopharma and life sciences are expected to lead the way again in 2023.
4. There were 35 exits valued at more than $500 million by the end of the third quarter. A notable exit was Warburg Pincus' $8.9 billion sale of Summit Health to VillageMD.
5. Other notable deals include:
— TPG Capital's $2.2 billion acquisition of Change Healthcare claims-editing subsidiary, ClaimsXten.
— Bain Capital's purchase of cloud software firm LeanTaaS for an undisclosed amount.
— A $300 million series D investment in virtual care company Biofourmis led by General Atlantic and CVS.
— Veritas Capital's merger of revenue cycle management firms Coronis Health and MiraMed Global Services.
— Thomas H. Lee Partners' acquisition of a majority stake in clinical data platform Intelligent Medical Objects.
— Private equity-backed life sciences firm Norstella's merger with tech platform Citeline (formerly Pharma Intelligence) to create a $5 billion company.
6. The analysis predicts that investors will continue to endure higher interest rates in 2023 but expects positive trends like plenty of "dry powder" for investment and strong returns from healthcare, as well as negative ones like lower profitability and lower deal multiples that could limit activity, though this could also boost public-to-private deals and carve-outs.