Private Equity Health Care Acquisitions – February 2024

In light of continued investor interest in healthcare and the risks associated with private equity ownership of healthcare companies, the Private Equity Stakeholder Project is tracking private equity-backed healthcare acquisitions. Below is a list of private equity healthcare buyouts, growth investments, and add-on acquisitions completed or announced during February 2024. We will continue to track acquisitions on a monthly basis.

See January 2024 acquisitions here.

Using a combination of PitchBook and news searches/alerts, PESP identified 71 completed or announced private equity-backed healthcare deals for February 2024, consisting of 9 buyouts, 47 add-on acquisitions, and 15 growth/expansion investments. Note that these numbers are likely undercounts, as some companies may have yet to report major deals in February.

Clinical research
The clinical research space, which encompasses clinical trials facilities, contract research organizations, IRBs, and other companies involved in drug and medical device development, saw 5 deals in February.

Commercial IRBs
One such deal was QHP Capital’s acquisition of Raleigh, NC-based Principal IRB, which it has rebranded to Univo IRB.[1]

An IRB, or institutional review board, approves and oversees research involving human subjects in order to ensure their welfare. All privately funded and federally funded clinical trials involving human subjects must obtain approval from a government-registered IRB prior to beginning research, as well as be monitored and report back to the IRB throughout. The Food and Drug Administration (FDA) regulates privately funded studies, and the Office for Human Research Protections (OHRP) regulates federally funded research.[2] Together the two oversee approximately 2,300 IRBs in the US, the majority of which are affiliated with a university (56 percent) or hospital or healthcare organization (24 percent).[3]

Independent IRBs, which are not affiliated with organizations that conduct or sponsor research and can include both non-profit and for-profit entities, accounted for approximately 2 percent of IRBs in the US as of April 2021. Despite this, independent IRBs oversaw 48 percent of investigational drug research as of 2021, up from 25 percent in 2012,[4] according to a 2023 report from the Government Accountability Office (GAO). The report explains that even as their share of drug research oversight has increased, the number of independent IRBs has decreased, largely as a result of consolidation being driven, in part, by private equity investment.[5]

The GAO report stemmed from a letter in June 2020 from Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), and Bernie Sanders (I-VT) requesting that GAO investigate commercial IRBs. The legislators expressed concern about how the “private, for-profit model creates an inherent conflict of interest for IRBs, which may incentivize them to approve as many studies as they can as rapidly as possible.”[6]

A 2016 policy change from the National Institute of Health (NIH) that went into effect in January 2018 requires that multi-site clinical trials funded by NIH need to use a single IRB for ethical review.[7] Health and Human Services (HHS) implemented a similar rule in 2020 for HHS-supported research. Now, research institutions with under-resourced in-house IRBs may be more likely to choose to contract with a commercial IRB to oversee multi-site trials. GAO’s report cites this a potential driver of the increase in the percentage of research overseen by independent IRBs.[8]

Within this new regulatory context, it makes sense that private equity firms have taken a keen interest in commercial IRBs. Two private equity-owned commercial IRBs appear to have cornered the market: According to GAO, Advarra and WCG Clinical were responsible for 92 percent of all new investigational drug research reviews involving regulated drugs and biologics conducted by independent IRBs in 2021.[9] Since 2022, Advarra has been majority-owned by Blackstone and Canada Pension Plan Investment Board,[10] which purchased their stake in an estimated $5 billion deal.[11] It was previously majority-owned by Linden Capital Partners and Genstar Capital.[12] WCG is owned by Leonard Green, Arsenal Partners, and Novo Holdings. Leonard Green and Novo Holdings joined as investors with Arsenal Capital Partners in 2019 in a $3.18 billion recapitalization deal.[13]^{, [14]}

The 2023 GAO report used interviews with experts and stakeholders to explore concerns around private equity-ownership of IRBs. While some interviewees “indirectly attributed private equity investment in independent IRBs with a greater emphasis on IRB efficiency and speed across the industry,” other interviewees expressed concern about the possibility that “emphasis on profit or faster IRB protocol review” could contribute to “independent IRBs with private equity investment being less focused on potential harms of research to human subjects.”[15]

In an article published in the Annals of Internal Medicine, bioethicist Holly Fernandez Lynch and Dr. Stephen Rosenfeld argue that “although all IRBs face pressure to speed reviews and none are entirely free of conflicts of interest, the private equity model is particularly susceptible to approaches that could undercut the ethical mission of IRBs to protect and promote the rights and welfare of research participants.”[16]

Clinical trials
Private equity firms acquired two clinical trials sites in February, as well as two companies involved in recruiting and/or facilitating patient access to clinical trials.

See below for more information about February’s clinical trials’ related deals:

• KKR-owned Headlands Research acquired Maryland-based Pharmasite Research, a clinical trials site.[17] KKR created Headlands in 2019 with plans for aggressive growth through acquisitions of smaller research sites.[18] As of March 2024, Headlands had 18 sites in the U.S. and Canada.[19]
• Investment management firm AHP announced the creation of platform company Prolerity Clinical Research, a clinical research site management network. To kick off this new company, AHP acquired Tandem Clinical Research, LLC and its 11 research sites across Louisiana, Florida, New Jersey, and New York.[20]
• Private equity firm Knox Lane announced its portfolio company Spectrum Science’s acquisition of Continuum Clinical. Continuum Clinical is a global clinical trial recruitment and engagement solutions provider.[21]
• Greenphire, a platform company owned by Thoma Bravo that specializes in software solutions to streamline clinical trials, announced the acquisition of Clincierge. According to Greenphire’s press release, Clincierge is “a premier provider of concierge travel and logistics support for patients participating in clinical trials.”[22] Thoma Bravo acquired Greenphire from The Riverside Company in June 2021.[23]

PESP recently highlighted private equity deal activity in the clinical research space in its latest report: “Private Equity in U.S. Healthcare: Trends in 2023 Deal Activity.” In 2023, clinical research saw 38 deals, consisting of 6 buyouts, 10 growth/expansion investments, and 22 add-on acquisitions. This was the eleventh highest number of deals out of the 56 categories in healthcare tracked by PESP.[24]

Private equity firms have become increasingly drawn to clinical drug trials due to the large profits that can be gained through efficiencies, such as getting a drug to market sooner or for lower cost.[25]

In addition, the clinical research industry is fragmented, with opportunity for consolidation, and because unlike investment in pharmaceutical companies themselves, revenues in clinical research companies will not depend on whether a drug makes it to market or not.[26]

Beacon Behavioral’s expansion to AK, MS, and TX
February saw 11 private equity-backed behavioral health deals, 9 of which were add-on acquisitions to Beacon Behavioral Partners, a physician practice management company owned by Latticework Capital Management. Beacon Behavioral Partners’ 9 acquisitions of psychiatric practices have expanded the platform company’s reach beyond Louisiana into the southeastern states of Arkansas, Mississippi and Texas. [27]

Latticework Capital Management announced its acquisition of Beacon Behavioral in January 2021.[28] Its February 2023 add-on acquisitions mark its first major expansion of the company. Since December 2022, Resolute Capital Partners has also been invested in the company.[29] According to PitchBook, Resolute helped finance the February 2024 acquisitions.

Private equity firms have shown a growing interest in the behavioral health space, including outpatient providers, substance use disorder treatment, methadone clinics, and more. Despite macroeconomic headwinds that slowed private equity dealmaking in behavioral health in 2023, there is still substantial investor interest in behavioral health driven by increasing demand for behavioral health services and opportunities for consolidation amidst fragmented markets.[30] The US behavioral health market is projected to increase from $83.70 billion in 2023 to $115.21 billion by 2030, according to Fortune Business Insights.[31]

In 2020, PESP published a report on private equity’s incursion into the behavioral health industry that discussed how private equity investment carries substantial risk for behavioral health services, including the potential for inadequate staffing or reliance on untrained and unlicensed staff, pressure on physicians to provide unnecessary and costly services, or abuse of federal funding programs at the expense of patient care.

February 2024 Buyouts

February 2024 Add-on Acquisitions

February 2024 Growth/Expansion Investments

[1] QHP Capital. “Principal IRB Becomes Univo IRB With Support From QHP Capital,” February 21, 2024. https://www.qhpcapital.com/update/principal-irb-becomes-univo-irb-with-support-from-qhp-capital.

[2] Babb, Sarah. “The Privatization of Human Research Ethics: An American Story.” European Journal for the History of Medicine and Health 78, no. 2 (August 13, 2021): 392–411. https://doi.org/10.1163/26667711-bja10005.

[3] See Figure 3 on pg. 18 of: “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.

[4] See pg. 2 of the pdf document, “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.”

[5] See pg. 2 of the pdf document, “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.”

[6] Warren, Elizabeth, Sherrod Brown, and Bernard Sanders. “Letter to GAO,” June 16, 2020. https://www.warren.senate.gov/imo/media/doc/2020.06.16%20Letter%20to%20GAO%20request%20on%20for-profit%20IRBs%20.pdf.

[7] National Institute of Health. “NOT-OD-16-094: Final NIH Policy on the Use of a Single Institutional Review Board for Multi-Site Research,” June 21, 2016. https://grants.nih.gov/grants/guide/notice-files/NOT-OD-16-094.html.

[8] Pg. 3 of “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.

[9] Pg. 26-27 of “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.

[10] Wansboro, David. “Blackstone and CPPIB to Make Majority Investment in Advarra.” Content. PE Hub (blog), June 13, 2022. https://www.pehub.com/blackstone-and-cppib-to-make-majority-investment-in-advarra/.

[11] Davis, Michael F. “Blackstone Nears About $5 Billion Deal for Advarra.” Bloomberg.Com, May 31, 2022. https://www.bloomberg.com/news/articles/2022-05-31/blackstone-said-to-near-about-5-billion-deal-for-advarra.

[12] Wansboro, David. “Blackstone and CPPIB to Make Majority Investment in Advarra.” Content. PE Hub (blog), June 13, 2022. https://www.pehub.com/blackstone-and-cppib-to-make-majority-investment-in-advarra/.

[13] “PitchBook Profile – WIRB-Copernicus Group.” Accessed March 11, 2024. https://my.pitchbook.com/profile/61049-26/company/deals#deal-122002-30T.

[14] Spalding, Rebecca. “Leonard Green to Invest in U.S. Clinical Trial Services Firm WCG.” Reuters, November 14, 2019, sec. Business. https://www.reuters.com/article/idUSKBN1XO1I1/.

[15] Pg. 29 of “Institutional Review Boards – Actions Needed to Improve Federal Oversight and Examine Effectiveness.” Government Accountability Office, January 2023. https://www.gao.gov/assets/gao-23-104721.pdf.

[16] Lynch, Holly Fernandez, and Stephen Rosenfeld. “Institutional Review Board Quality, Private Equity, and Promoting Ethical Human Subjects Research.” Annals of Internal Medicine 173, no. 7 (October 6, 2020): 558–62. https://doi.org/10.7326/M20-1674.

[17] Headlands Research. “Headlands Research Acquires Clinical Trial Site Pharmasite Research, Enhancing Therapeutic Expertise in Key Competencies,” February 29, 2024. https://headlandsresearch.com/news/headlands-research-acquires-clinical-trial-site-pharmasite-research-enhancing-therapeutic-expertise-in-key-competencies/.

[18] Ron Leuty. “KKR-Backed Startup Headlands Research on Hunt to Buy Clinical Trial Sites.” San Francisco Business Times, November 13, 2019. https://headlandsresearch.com/wp-content/uploads/SFBT-11.13.19.pdf.

[19] Headlands Research. “Headlands Sites.” Accessed March 11, 2024. https://headlandsresearch.com/headlands-sites/.

[20] AHP. “AHP Announces Formation of Prolerity Clinical Research and Investment in Tandem Clinical Research,” February 20, 2024. https://www.ahpartners.com/ahp-announces-formation-of-prolerity-clinical-research-and-investment-in-tandem-clinical-research/.

[21] Knox Lane. “Spectrum Science Acquires Continuum Clinical, Amplifying Patient Recruitment Capabilities | News,” February 2024. https://www.knoxlane.com/news/spectrum-science-acquires-continuum.

[22] greenphire.com. “Greenphire Announces Acquisition of Clincierge to Enhance Clinical Trial Support Services,” February 1, 2024. https://greenphire.com/news/greenphire-announces-acquisition-of-clincierge-to-enhance-clinical-trial-support-services/.

[23] Adams, Ben. “Greenphire Snapped up by Private Equity Firm Thoma Bravo | Fierce Biotech.” FierceBiotech, June 2, 2021. https://www.fiercebiotech.com/cro/greenphire-snapped-up-by-private-equity-firm-thoma-bravo.

[24] Bugbee, Mary, Eileen O’Grady, and Michael Fenne. “Private Equity in U.S. Healthcare: Trends in 2023 Deal Activity.” Private Equity Stakeholder Project, March 6, 2024. https://pestakeholder.org/private-equity-healthcare-2023-trends/.

[25] Rachana Pradhan. “The Business of Clinical Trials Is Booming. Private Equity Has Taken Notice.” Fortune, December 2, 2022. https://fortune.com/2022/12/02/clinical-trials-private-equity-headlands-research/.

[26]Michael Patton and Dan O’Brien, “Consolidation in Clinical Research Sites and COVID’s Impact” (Provident Healthcare Partners, n.d.), https://www.providenthp.com/wp-content/uploads/2022/03/Consolidation-in-Clinical-Research-Sites-and-COVIDs-Impact-vF.pdf.

[27] Beacon Behavioral Partners. “Beacon Behavioral Partners Celebrates Expansion Across the Southeast United States.” GlobeNewswire News Room, February 15, 2024. https://www.globenewswire.com/news-release/2024/02/15/2830341/0/en/Beacon-Behavioral-Partners-Celebrates-Expansion-Across-the-Southeast-United-States.html.

[28] “Latticework Capital Management Announces Investment in Beacon Behavioral Hospital, a Leading Provider of Mental Health Treatment Programs | Latticework Capital Management,” January 12, 2021. https://latticeworkcapital.com/latticework-capital-management-announces-investment-in-beacon-behavioral-hospital-a-leading-provider-of-mental-health-treatment-programs/.

[29] Resolute Capital Partners. “Beacon Behavioral Partners.” Accessed March 11, 2024. https://resolutecap.com/project/beacon-behavioral-partners/.

[30] Physician Growth Partners. “Behavioral Health Private Equity – Market Update,” Fall 2023. https://www.physiciangrowthpartners.com/market-update/behavioral-health-fall-2023/.

[31] “U.S. Behavioral Health Market Size, Share & Growth [2030],” October 2023. https://www.fortunebusinessinsights.com/u-s-behavioral-health-market-105298.