Healthcare services investing by private equity sponsors trended downward quarter over quarter in 2023, according to PitchBook's "Healthcare Services Report."
The report, published Feb. 8, analyzes private equity trends during the fourth quarter of 2023 as well as previous years.
Here are 10 facts about the private equity market to know:
1. Private equity sponsors announced or closed 788 deals last year, making 2023 the third strongest year on record for healthcare services investing.
2. Healthcare services investing trended downward quarter over quarter.
3. PitchBook reported that operating margins for most healthcare provider organizations are unlikely to return to pre-pandemic levels.
4. Liquidity constraints led platform deals to hit a seven-year low, with most of the deals being new platform creations. Large deals remain extremely difficult to finance, PitchBook stated.
5. U.S.-headquartered private equity managers have an estimated $100 billion in dry powder set aside for the healthcare services market.
6. PitchBook said 2023 was the strongest fundraising year on record for healthcare specialist managers, but the company expects fundraising activity to decline during the second half of this year.
7. Larger platform trades are predicted to pick back up during the second half of 2023, driven by interest rate cuts by the Federal Reserve.
8. Private equity sponsors may be more cautious this year about entering provider categories that primarily serve vulnerable populations, including home-based care, high-acuity behavioral health and care for individuals with intellectual and developmental disabilities.
9. The top private equity investors in healthcare services since 2020 include Shore Capital Partners, Webster Equity Partners and BPEA Private Equity.
10. Four DSOs were ranked among the most acquisitive private equity-backed healthcare services platforms since 2020: Smile Doctors, Specialized Dental Partners, Southern Orthodontic Partners and U.S. Oral Surgery Management.