The Bass, Berry & Sims Healthcare Private Equity Team kicked off the new year with another successful visit to San Francisco for the annual J.P. Morgan Healthcare Conference. This action-packed week drives many conversations and connections between private and public healthcare companies, investors and advisors across the country.
For the fourth year in a row, we hosted BBS Connect, a forum to connect healthcare dealmakers. We are thankful for our clients and friends of the firm for joining us this week and wish them all the best for 2020!
Below are key takeaways from our conversations with executives from private equity firms and healthcare companies:
- 2020 seems to be the year for a number of platform exits, expect multiples to remain high and deal flow to continue at a healthy pace.
- 2020 will remain a sellers’ market. The ongoing challenge remains acquiring quality assets in a disciplined manner. Managers will continue to need to use creative strategies to create platform combinations and growth necessary to overcome high entry points.
- Activity remains strong in the physician practice sector, particularly with add-ons to build out platforms. That said, interest in new platforms from private equity firms that have several physician practice platforms in their existing funds may be slowing.
- There is increased interest in platforms that are ancillary to the healthcare services space – revenue cycle management, practice management tools and outsourcing solutions, and other payor and provider software solutions all are on the radars of private equity firms.
- Companies that have the ability to bend the cost curve are at their peak in terms of investor interest. Examples include behavioral health, chronic disease management and other providers with unique patient care delivery models.
- An interest in digital health is on the rise as consumers increasingly look to their phones and apps for healthcare solutions.
- By all predictions, transactions in the home health space will continue to trend up in 2020 as home health providers move to the patient-driven groupings model (PGDM) for reimbursement.
- Interest in the contract research organization (CRO) and clinical research management drug discovery and pharmacy distribution space remains robust, with new distribution and partnership models continuing to evolve and create new investment and strategic opportunities.