Private Equity Health Care Acquisitions – March 2023

In light of the growing 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 March 2023. We will continue to track acquisitions on a monthly basis.

See February 2023 acquisitions here.

See all our 2022 acquisitions updates here.

We tracked 40 add-on acquisitions, 7 buyouts, and 17 growth/expansion investments in March, for a total of 64 private equity deals.

Deal activity in outpatient care remains steady

The outpatient care sector saw 17 deals in March, including two growth investments and two add-on acquisitions in the dental care industry. Other subsectors with deal activity included pain management, dermatology, orthopedics, eye care, and physical therapy.

Iron Path Capital made 5 add-on acquisitions to its platform company, Capitol Pain Institute, expanding its reach to four states in total: Texas, Kentucky, Ohio, and Colorado.[1] Three of these add-ons were of pain management providers in Colorado, and two involved surgery centers.[2] Its acquisition of plastic surgery center Gregory J. Liebscher, MD, FACS was not announced in a press release, but was reported in PitchBook.[3]

United Digestive, a gastroenterology physician practice management firm with 200 providers across 80 locations in the southeastern U.S., was acquired by private equity firm Kohlberg and Company, ending its affiliation with Frazier Healthcare Partners.[4] Frazier Healthcare helped create United Digestive as a platform company in 2018.[5]

Gastroenterology is a relatively new specialty that private equity has set its sights on, with acquisitions accelerating after 2017. Despite its newness as an investment target, Physician Growth Partners reported that by Fall 2021, nearly 10% of gastroenterologist were partners or employed by a private equity platform.[6]

An aging population and more expansive screening guidelines (which means more people are getting colonoscopies to screen for colorectal cancer),[7] a shortage of gastroenterology providers, and industry fragmentation are all drivers of increased private equity investment.[8]

Recent research has found that private equity-acquired gastroenterology physician practices were associated with increased health spending and utilization.[9]

PE continues its incursion into autism services

In autism services, Invo Healthcare Associates, owned by Golden Gate Capital, acquired autism service provider ABA2Today Behavior Services.[10]

ABS Kids received growth capital from an undisclosed investor, according to PitchBook. Since 2019, it has been owned by Petra Capital Partners, Altos Health Management and MMC Health Services.[11]

Applied behavioral analysis (ABA), which is a type of therapy provided to people with autism, is particularly attractive for investors; according to STAT, “the ABA industry charges tens of thousands of dollars per client per year for services insurers are legally obligated to cover. Not only that, autism diagnoses are growing more and more common, now estimated at 1 in 44 kids.”[12]

Because of private equity’s typical playbook that aims to make outsized profits over short time horizons, private equity investment in autism services has recently come under scrutiny. Tara Bannow, writing for STAT, explains: “Families and clinicians who once believed fully in the promise of ABA say the financial investors’ fixation on profit has degraded the quality of services kids receive, turning it into the equivalent of fast food therapy.”[13]

Struggling dialysis company receives growth investment

U.S. Renal Care received a $1.42 million growth investment from undisclosed investors. This is the third growth investment from undisclosed investors that U.S. Renal Care has received since it was bought by in 2019 by a private equity investment group consisting of Bain Capital, Summit Partners, Revelstoke Partners, along with other investors and management.[14]

In December 2022, Becker’s Hospital Review published Moody’s list of 34 healthcare companies “at risk of default going into 2023 amid excessive debt levels and weak operating performance.”[15] U.S. Renal Care made the list, with a Moody’s rating of Caa1-PD Caa1.[16] According to Bloomberg, the “company has been squeezed by the pandemic, which increased death rates among patients and intensified staffing shortages.”[17] Its $1.6 billion term loan due in 2026 was trading at 66.7 cents on the dollar as of April 24, 2023, down from 91.6 cents a year ago.[18]

U.S. Renal Care is one of the largest dialysis providers in the U.S.[19] According to its website, the company “serves more than 26,000 patients across 32 states in more than 400 facilities providing in-center and home dialysis.”[20]

It has been backed by various private equity firms since 2005, which have collectively saddled the company with hundreds of millions in debt.[21]

Excessive leverage is not unique to U.S. Renal Care. Various other healthcare companies are increasingly at risk for default: PESP found that of the 34 healthcare companies listed in Moody’s December report, nearly 90% are owned by private equity firms.[22]

Arthur Wong, a healthcare analyst at S&P Global Ratings, told Bloomberg in February that “Healthcare has been traditionally seen as one of the safest and more recession-proof industries, and had good growth prospects, so private equity firms entered the sector and levered the companies up.”[23]

March 2023 Buyouts

March 2023 Add-on Acquisitions

March 2023 Growth/Expansion Investments

[1] Capitol Pain Institute. “Capitol Pain Institute.” Accessed April 20, 2023. https://capitolpain.com/; “Capitol Pain Institute Acquires 3 Interventional Pain Management Practices and an Ambulatory Surgical Center in Colorado,” March 30, 2023. https://www.businesswire.com/news/home/20230330005548/en/Capitol-Pain-Institute-Acquires-3-Interventional-Pain-Management-Practices-and-an-Ambulatory-Surgical-Center-in-Colorado.

[2] “Capitol Pain Institute Acquires 3 Interventional Pain Management Practices and an Ambulatory Surgical Center in Colorado,” March 30, 2023. https://www.businesswire.com/news/home/20230330005548/en/Capitol-Pain-Institute-Acquires-3-Interventional-Pain-Management-Practices-and-an-Ambulatory-Surgical-Center-in-Colorado.

[3] PitchBook. “PitchBook Profile – Gregory J. Liebscher, MD, FACS.” Accessed April 20, 2023. https://my.pitchbook.com/profile/351865-72/company/profile#deal-history/219602-44T.

[4] Hatton, Riz. “Why United Digestive Swapped Private Equity Partners and What’s Next.” Becker’s GI & Endoscopy, April 4, 2023. https://www.beckersasc.com/gastroenterology-and-endoscopy/why-united-digestive-swapped-private-equity-partners-and-whats-next.html.

[5] Hatton, Riz. “Why United Digestive Swapped Private Equity Partners and What’s Next.” Becker’s GI & Endoscopy, April 4, 2023. https://www.beckersasc.com/gastroenterology-and-endoscopy/why-united-digestive-swapped-private-equity-partners-and-whats-next.html.

[6] Physician Growth Partners. “Gastroenterology Private Equity | White Paper Fall 2021 | PGP,” Fall 2021. https://www.physiciangrowthpartners.com/white-paper/gastroenterology-private-equity-fall-2021/.

[7] Kincaid, Ginny. “45 Is the New 50 for Colorectal Cancer Screening | Blogs | CDC,” June 8, 2021. https://blogs.cdc.gov/cancer/2021/06/08/45-is-the-new-50-for-colorectal-cancer-screening/.

[8] Pg. 5, “National and Regional Projections of Supply and Demand for Internal Medicine Subspeciality Practitioners: 2013-2025.” U.S. Department of Health and Human Services, Health Resources and Services Administration, Bureau of Health Workforce, National Center for Health Workforce Analysis, December 2016. https://bhw.hrsa.gov/sites/default/files/bureau-health-workforce/data-research/internal-medicine-subspecialty-report.pdf.

[9] Bugbee, Mary. “New Research Finds That Private Equity-Acquired Physician Practices Are Associated with Increased Health Spending and Utilization.” Private Equity Stakeholder Project PESP (blog), October 3, 2022. https://pestakeholder.org/news/new-research-finds-that-private-equity-acquired-physician-practices-are-associated-with-increased-health-spending-and-utilization/.

[10] PitchBook. “PitchBook Profile – ABA2DAY Behavior Services.” Accessed April 20, 2023. https://my.pitchbook.com/profile/501199-66/company/profile#deal-history/218772-64T.

[11] Pg. 24; O’Grady, Eileen. “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth.” Private Equity Stakeholder Project, February 2022. https://pestakeholder.org/wp-content/uploads/2022/02/PESP_Youth_BH_Report_2022.pdf.

[12] Bannow, Tara. “The Private Equity Firms, like Blackstone and KKR, behind 8 of the Biggest Names in Autism Therapy.” STAT, August 15, 2022. https://www.statnews.com/2022/08/15/private-equity-autism-therapy-major-names/.

[13] Bannow, Tara. “Parents and Clinicians Say Private Equity’s Profit Fixation Is Short-Changing Kids with Autism.” STAT, August 15, 2022. https://www.statnews.com/2022/08/15/private-equity-autism-aba-therapy/.

[14] PitchBook. “PitchBook Profile – U.S. Renal Care – Deal History.” Accessed April 20, 2023. https://my.pitchbook.com/profile/10286-83/company/profile#deal-history/116411-32T; U.S. Renal Care®. “U.S. Renal Care,” March 13, 2019. https://www.usrenalcare.com/media/press-release/investor-group.html;

[15] Thomas, Nick. “34 Healthcare Companies at Risk of Default as Debt Rises amid Weak Operating Performance: Moody’s.” Becker’s Hospital Review, December 13, 2022. https://www.beckershospitalreview.com/finance/34-healthcare-companies-at-risk-of-default-as-debt-rises-amid-weak-operating-performance-moodys.html.

[16] Thomas, Nick. “34 Healthcare Companies at Risk of Default as Debt Rises amid Weak Operating Performance: Moody’s.” Becker’s Hospital Review, December 13, 2022. https://www.beckershospitalreview.com/finance/34-healthcare-companies-at-risk-of-default-as-debt-rises-amid-weak-operating-performance-moodys.html.

[17] Butt, Rachel, and Carmen Arroyo. “Health-Care Debt Gets Harder Look as Distress Builds.” Bloomberg.Com, February 8, 2023. https://www.bloomberg.com/news/articles/2023-02-08/healthcare-debt-gets-harder-look-as-distress-builds-prices-drop.

[18] Bloomberg, historical pricing data for US Renal Care term loan due July 2026, BL3003243. Accessed April 24, 2023.

[19] “Top 6 Companies Leading the Global Dialysis Market,” November 25, 2022. https://www.expertmarketresearch.com/articles/top-dialysis-companies; Pringle, Sarah. “U.S. Renal, Backed by Leonard Green, Frazier Healthcare, Explores Sale.” Content. PE Hub (blog), December 18, 2018. https://www.pehub.com/u-s-renal-backed-by-leonard-green-frazier-healthcare-explores-sale/.

[20] U.S. Renal Care®. “About.” Accessed April 20, 2023. https://www.usrenalcare.com/about/index.html.

[21] Sergie, Mohammed Aly. “Leonard Green to Buy Majority Stake in Dialysis Center Operator U.S. Renal Care.” Wall Street Journal, June 22, 2012, sec. Pro Venture Capital. http://www.wsj.com/articles/DJFVW00020120621e86lprwj5.

[22] O’Grady, Eileen. “Almost 90% of Most Distressed Healthcare Companies Are Owned by PE Firms.” Private Equity Stakeholder Project (blog), January 3, 2023. https://pestakeholder.org/news/almost-90-of-most-distressed-healthcare-companies-are-owned-by-pe-firms/.

[23] Butt, Rachel, and Carmen Arroyo. “Health-Care Debt Gets Harder Look as Distress Builds.” Bloomberg.Com, February 8, 2023. https://www.bloomberg.com/news/articles/2023-02-08/healthcare-debt-gets-harder-look-as-distress-builds-prices-drop.