Private Equity Health Care Acquisitions – November 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 during November 2024. We will continue to track acquisitions on a monthly basis.

See October 2024 acquisitions here.

In November 2024, we tracked 10 buyouts, 43 add-on acquisitions, and 14 growth/expansion investments.

Dental care sees a frenzy of private equity dealmaking

In November, dental care accounted for 34% of healthcare deals identified, with 23 deals in total.

• Bardo Capital and Mellon Stud Ventures made a growth investment in Enable Dental.[1]
• Warburg Pincus recapitalized MB2 dental through a $525 million growth investment MB2’s existing private equity owner, Charlesbank Capital Partners, will remain as a co-owner.[2]
• MB2 Dental added thirteen practices, via nine add-on acquisitions.[3]
• Latticework Capital Management[4] and Resolute Capital Partners[5] acquired Peak OMS and Dental Implant Center through their platform company, SALT Dental Partners.[6]
• Regal Healthcare Partners, The Cambria Group, and The Jordan Company sponsored two acquisitions made by platform company Dental365:[7] a dental practice in New York and one in Connecticut.[8] Dental365 has been majority-owned by The Jordan Company since 2021.[9]
• Specialized Dental Partners, owned by Quad-C Management,[10] added two practices.[11]
• MAX Surgical Specialty Management, owned by MedEquity Capital, RF Investment Partners and Kian Capital, added three oral surgery practices.[12]
• S. Oral Surgery Management (Oak Hill Management)[13] added four oral surgery practices.[14]

A recent research study from August 2024 found that the percentage of dentists and dental practices affiliated with private equity nearly doubled from 6.6 to 12.8% between 2015 and 2021.[15] Dental care has continued to a be an attractive site for private equity investment, even amidst a high interest rate environment.

Dental care accounted for the second highest number (146) of private equity-backed healthcare deals that PESP tracked in 2023. These were primarily driven by 5 very active platform companies which collectively made 71 acquisitions, including Specialized Dental Partners’ 31 add-on acquisitions, U.S. Oral Surgery Management’s 11 add-ons, and Dental 365’s eight add-on acquisitions.[16]

This November, KFF and CBS published an exposé detailing a growing trend of dentists pulling out “healthy” teeth in order to profit from implants.[17] At dental practices around the country, patients have been reportedly encouraged to get dental implants, which can cost tens of thousands of dollars, instead of keeping their teeth and getting treatments like root canals. The article highlighted how multiple private equity-owned dental care chains may be contributing to this trend. One company, ClearChoice, which is owned by Ares Management, American Securities and Leonard Green & Partners, allegedly used salespersons, or “patient education consultants” to meet with patients about options like dental implants before the patient had even seen a dentist according to a lawsuit filed against the company.[18]

A 2021 report from PESP documented extensive issues at private equity-owned dental care providers. For more information, see: “Deceptive Marketing, Medicaid Fraud, and Unnecessary Root Canals on Babies: Private Equity Drills into the Dental Care Industry

Towerbrook Capital Partners and CD&R take R1 RCM private

On November 19, 2024, private equity firms Towerbrook Capital Partners and Clayton Dubilier & Rice completed their buyout of R1 RCM. The $8.9 million take-private deal was first announced in August 2024,[19] and was the highest value U.S. private equity buyout in November of those in which deal sizes were disclosed.[20]

R1 RCM is a revenue cycle management company (RCM) that offers various forms of administrative support and billing services to providers.[21] In recent years, private equity investment in revenue cycle management companies has been elevated despite a downturn in private equity investment more generally.[22]

See PESP’s September 2024 report: “Private Equity’s Revenue Cycle: Creating and Collecting U.S. Medical Debt.”

R1 RCM’s website states it has served more than thirty thousand providers, and lists partnerships with various large health systems, including Ascension Health, Sutter Health, Intermountain Healthcare, Rush University System for Health, and private equity-owned Lifepoint Health.[23]

Prior to the take-private deal, Ascension Health, a nonprofit Catholic health system, was R1’s largest client and as well as its largest shareholder through an investment fund with private equity firm Towerbrook Capital Partners.[24] According to reporting from STAT, Ascension worked alongside other large nonprofit health systems who were also R1’s clients to steer the company to the take-private deal being led by private equity firms.[25]STAT’s Bob Herman noted: “That Ascension and other big hospital systems were so involved in the buyout of a publicly traded company reinforces how hospitals in the U.S. are, first and foremost, businesses. They are not charities, even if they have a ‘nonprofit’ tag.”[26]

The participation of nonprofit health systems in R1’s take private deal is one of a growing number of examples where such systems are increasingly partnering with private equity investors. In September 2024, nonprofit OhioHealth entered a partnership with Compassus Health in which Compassus now owns three hospice and four home health locations, which will be operated under a new brand, OhioHealth at Home.[27]

Compassus is jointly owned by Towerbrook Capital Partners and Ascension Health, which purchased it in a $1 billion deal from Formation Capital and Audax Private Equity in 2019.[28] According to Moody’s Investors Service, Compassus and Ascension have an agreement in which Compassus is Ascension’s exclusive preferred provider of hospice services.[29]

Ascension has 118 hospitals across 17 states and the District of Columbia, and “through strategic partnerships,” holds an ownership interest in 16 other hospitals, according to its website.[30] As a tax-exempt health system, Ascension’s partnerships with for-profit private equity-backed companies, some of which it has also partially owned, merits further scrutiny.

Private equity firms are increasingly using joint ventures with nonprofit health systems as a growth strategy that can provide them with trusted brands and access to geographic markets they might otherwise not readily access. Joint venture partnerships may also help both parties evade antitrust scrutiny versus if they were engaging in traditional merger and acquisition growth strategies.[31]

Resources

[1] “PitchBook Profile – Enable Dental.” Accessed December 3, 2024. https://my.pitchbook.com/profile/416554-57/company/profile#deal-history.

[2] https://mb2dental.com/. “MB2 Dental Announces Recapitalization Event | MB2 Dental,” November 13, 2024. https://mb2dental.com/mb2-dental-announces-recapitalization-event-with-new-investor-warburg-pincus-solidifying-company-growth-milestone/.

[3] GroupDentistryNow. “DSO Deal Roundup – November 2024 – Group Dentistry Now,” December 1, 2024. https://www.groupdentistrynow.com/dso-group-blog/dso-dental-acquisitions/.

[4] latticeworkcapital.com. “Portfolio Company Update: SALT Dental Partners | Latticework Capital Management,” April 10, 2024. https://latticeworkcapital.com/portfolio-company-update-salt-dental-partners/.

[5] Resolute Capital Partners. “Salt Dental Collective.” Accessed December 3, 2024. https://resolutecap.com/project/salt-dental-collective/.

[6] “SALT Dental Partners | LinkedIn.” Accessed December 3, 2024. https://www.linkedin.com/posts/salt-dental-partners_saltdentalpartners-partnership-oralsurgery-activity-7265114807572262912-QlVr?utm_source=share&utm_medium=member_desktop.

[7] “PitchBook Profile – Dr. Joe Pantaleo Dental & Facial Aesthetics.” Accessed December 9, 2024. https://my.pitchbook.com/profile/718181-92/company/deals#deal-278851-78T; “PitchBook Profile – Brush & Floss Dental Center.” Accessed December 9, 2024. https://my.pitchbook.com/profile/386151-22/company/deals#deal-278863-39T.

[8] GroupDentistryNow. “DSO Deal Roundup – November 2024 – Group Dentistry Now,” December 1, 2024. https://www.groupdentistrynow.com/dso-group-blog/dso-dental-acquisitions/.

[9] Partners, Regal Healthcare Capital. “Dental365 To Be Acquired by The Jordan Company, L.P. – Regal Healthcare Capital Partners.” Regal HCP (blog), July 26, 2021. https://www.regalhcp.com/2021/07/26/dental365-to-be-acquired-by-the-jordan-company-l-p.

[10] “Quad-C | Private Equity Partner | Portfolio.” Accessed December 3, 2024. https://www.quadcmanagement.com/portfolio-info/specialized-dental.

[11] GroupDentistryNow. “DSO Deal Roundup – November 2024 – Group Dentistry Now,” December 1, 2024. https://www.groupdentistrynow.com/dso-group-blog/dso-dental-acquisitions/.

[12] Jackson, Rashawn. “MAX Surgical Specialty Management Accelerates Growth, Expanding Across Five Northeastern States | MAX.” MAX Surgical Specialty Management (blog), November 14, 2024. https://max-ssm.com/max-surgical-specialty-management-accelerates-growth-expanding-across-five-northeastern-states/; GroupDentistryNow. “DSO Deal Roundup – November 2024 – Group Dentistry Now,” December 1, 2024. https://www.groupdentistrynow.com/dso-group-blog/dso-dental-acquisitions/.

[13] Pringle, Sarah. “Oak Hill Completes US Oral Surgery Management Acquisition at $700m-plus Valuation.” Content. PE Hub (blog), November 11, 2021. https://www.pehub.com/oak-hills-acquisition-of-us-oral-surgery-management/.

[14] GroupDentistryNow. “DSO Deal Roundup – November 2024 – Group Dentistry Now,” December 1, 2024. https://www.groupdentistrynow.com/dso-group-blog/dso-dental-acquisitions/.

[15] Nasseh, Kamyar, Anthony T. LoSasso, and Marko Vujicic. “Percentage Of Dentists And Dental Practices Affiliated With Private Equity Nearly Doubled, 2015–21.” Health Affairs 43, no. 8 (August 2024): 1082–89. https://doi.org/10.1377/hlthaff.2023.00574.

[16] 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/.

[17] Kelman, Brett, and Anna Werner. “Dentists Are Pulling ‘Healthy’ and Treatable Teeth To Profit From Implants, Experts Warn.” KFF Health News, November 1, 2024. https://kffhealthnews.org/news/article/dental-implants-investigation-failures-unnecessary-healthy-teeth/.

[18] 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/.

[19] ir.r1rcm.com. “TowerBrook and CD&R Complete Acquisition of R1 RCM,” November 19, 2024. https://ir.r1rcm.com/news/news-details/2024/TowerBrook-and-CDR-Complete-Acquisition-of-R1-RCM/default.aspx.

[20] PitchBook Deals Search for Nov. 1, 2024 through Nov. 30, 2024 of healthcare buyouts, add-on acquisitions, and growth investments.

[21] R1 RCM. “What We Do.” Accessed December 3, 2024. https://www.r1rcm.com/what-we-do/.

[22] See pg. 2 of Fenne, Michael. “Private Equity’s Revenue Cycle: Creating and Collecting U.S. Medical Debt.” Private Equity Stakeholder Project, September 2024. https://pestakeholder.org/wp-content/uploads/2024/09/PESP_Report_PE-Revenue-Cycle_2024-compressed.pdf.

[23] R1 RCM. “About Us.” Accessed December 3, 2024. https://www.r1rcm.com/about-us/.

[24] Herman, Bob. “Ascension, Other Hospitals Played Active Roles to Take Medical Billing Company R1 RCM Private.” STAT (blog), September 6, 2024. https://www.statnews.com/2024/09/06/r1-rcm-proxy-ascension-hospitals-role-take-private/.

[25] Herman, Bob. “Ascension, Other Hospitals Played Active Roles to Take Medical Billing Company R1 RCM Private.” STAT (blog), September 6, 2024. https://www.statnews.com/2024/09/06/r1-rcm-proxy-ascension-hospitals-role-take-private/.

[26] Herman, Bob. “How Powerful Hospitals Helped Take R1 RCM Private.” STAT (blog), September 9, 2024. https://www.statnews.com/2024/09/09/healthcare-news-r1-rcm-deal-hospitals/.

[27] OhioHealth and Compassus Finalize Partnership for Home Health and Hospice. “OhioHealth and Compassus Finalize Partnership for Home Health and Hospice,” September 11, 2024. https://newsroom.ohiohealth.com/ohiohealth-and-compassus-finalize-partnership-for-home-health-and-hospice/; Vossel, Holly. “Compassus Finalizes Partnership to Form OhioHealth at Home.” Hospice News, September 4, 2024. https://hospicenews.com/2024/09/04/compassus-finalizes-partnership-to-form-ohiohealth-at-home/.

[28] Sammut, Dylan. “TowerBrook & Ascension Acquire Hospice Compassus in $1 Billion Deal.” Levin Associates (blog), October 7, 2019. https://healthcare.levinassociates.com/2019/10/07/towerbrook-ascension-team-up-for-1-billion-hospice-compassus-deal/.

[29] “Moody’s Affirms FC Compassus’ B2 CFR; Downgrades First Lien Ratings to B2; Outlook Stable | Rating Action | Moody’s,” February 5, 2021. https://www.moodys.com/research/Moodys-affirms-FC-Compassus-B2-CFR-downgrades-first-lien-ratings-Rating-Action–PR_440012.

[30] ascension.org. “About Us.” Accessed December 3, 2024. https://about.ascension.org/about-us.

[31] Browder, Brian, Bill Katz, and Alexander Dudley. “Avoiding Antitrust Enforcement in Health Care Joint Ventures.” Holland & Knight, June 13, 2023. https://www.hklaw.com/-/media/files/insights/publications/2023/06/avoiding-antitrust-enforcement-in-health-care-joint-ventures.pdf?la=en&rev=dbf428c005b24ac3b16322d2084e2f47; “Recent Trends & Developments in Health Care Joint Ventures: Nonprofit/For-Profit Joint Ventures | Insights | Ropes & Gray LLP.” Accessed December 3, 2024. https://www.ropesgray.com/en/insights/podcasts/2023/10/recent-trends-and-developments-in-health-care-joint-ventures-nonprofit-for-profit-joint-ventures.