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

See August 2024 acquisitions here.

In September 2024, we tracked 12 buyouts, 44 add-on acquisitions, and 19 growth/expansion investments.

High activity around health technology

Private equity was particularly active around Health IT in September with at least 17 acquisitions, including eight add-on deals, five growth investments, and four buyouts.

Healthcare technology service investments are expected to be strong in the coming year. According to PE Hub, recently at HPE NYC 2024 – which is part of “[t]he premier conference series for healthcare dealmakers”[1] – audience members for one panel discussion were surveyed and more than 60 percent indicated that in 2025 they would see the most deal activity in healthcare technology services, followed by over 20 percent in biopharma.[2]

This comes following a period of decline for private equity investment in healthcare technology, which fell from more than $50 billion in 2021 – representing 859 deals – to less than $15 billion in dealmaking for each of the two following years. In 2023, private equity investment in healthcare technology approached a 5-year low according to S&P Global, with $9.18 billion across 370 healthcare technology deals as of November.[3]

Notably, investment in the healthcare technology sector has outpaced healthcare services – with $9.26 billion invested in healthcare technology companies in 2023, compared with $7.26 billion invested in healthcare services companies.[4]

Health IT remains attractive for investment despite the recent decline, according to a January 2024 report from Bain, which outlined healthcare IT’s various uses: “Providers use IT to focus on revenue cycle management, clinical workflow optimization, and patient engagement; biopharma on clinical trial digitalization, analytics, and real-world evidence; and payers on member engagement and value-based care.”[5]

In September, Bain published survey results from 150 U.S. providers and payers which found that they placed a premium on technology, with about 75% of respondents reporting increased healthcare IT investments over the past year. Bain expected that the trend would continue.[6]

Debt funded growth for Help at Home

In early September, Chicago-based home care and disability services company Help at Home announced three add-on acquisitions expanding the company’s operations in the state of Georgia.[7]

Help at Home’s president recently told Home Health Care News about the company’s emphasis on growth: “Growth continues to be really strong in what we do, both organic growth and M&A activity.”[8]

Last month a PESP blog post reported that Help at Home had paid its private equity owners a $262.6 million debt-funded dividend, just one year after the company shuttered operations in the neighboring state of Alabama due to purported cost concerns.[9]

The company’s owners – which include Centerbridge Partners, Vistria Group, and Wellspring Capital Partners – added $1.5 billion in debt to the company’s balance sheet, which will be used to repay existing debt, to fund a dividend payment to Help at Home’s owners, and to cover related fees and expenses.[10]

In a previous blog post discussing the Alabama departure, PESP noted that Centerbridge and Vistria partially funded the acquisition of Help at Home by placing $745 million in debt onto the company’s balance sheet, and the company later took on more debt to fund its acquisition-based growth.[11]

Help at Home faces continued risk due to how its owners use the company to take on debt. Moody’s noted that “Help at Home’s high financial leverage and propensity for acquisitions and shareholder distributions leave it exposed to governance risks.”[12]

S&P Global gave moderately negative consideration to the company’s governance – and commented on private equity ownership in general – stating that Help at Home’s high debt levels reflect “corporate decision-making that prioritizes the interests of controlling owners, in line with our view of most rated entities owned by private-equity sponsors.”[13]

Resources

[1] McDermott Will & Emery. “HPE NYC 2024,” October 17, 2024. https://www.mwe.com/events/hpe-nyc-2024/.

[2] John R. Fischer. “PE Firms Driving around for Parking; Healthcare Tech Services to Come out on Top in 2025.” Content. PE Hub, October 18, 2024. https://www.pehub.com/pe-firms-driving-around-for-parking-healthcare-tech-services-to-come-out-on-top-in-2025/.

[3] Maira Imtiaz and Annie Sabater. “Private Equity Investment in Healthcare Technology Sector Heading for 5-Year Low.” S&P Global Market Intelligence, December 4, 2023. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-investment-in-healthcare-technology-sector-heading-for-5-year-low-79419070.

[4] Maira Imtiaz and Annie Sabater. “Private Equity Investment in Healthcare Services Falls 59% in 2023.” S&P Global Market Intelligence, June 18, 2024. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-investment-in-healthcare-services-falls-59-in-2023-82009523.

[5] Caitlin Dowling, Nirad Jain, Kara Murphy, Dmitry Podpolny, Franz-Robert Klingan, Vikram Kapur, and Alex Boulton. “Healthcare IT Hits a Speed Bump.” Bain, January 3, 2024. https://www.bain.com/insights/healthcare-it-global-healthcare-private-equity-report-2024/.

[6] Eric Berger, Caitlin Dowling, Aaron Feinberg, and Rebecca Hammond. “Healthcare IT Spending: Innovation, Integration, and AI.” Bain, September 17, 2024. https://www.bain.com/insights/healthcare-it-spending-innovation-integration-ai/.

[7] Andrew Donlan. “Help at Home Announces Three Acquisitions, Expands In Key State.” Help at Home, September 4, 2024. https://www.helpathome.com/news-archive/help-at-home-announces-three-acquisitions-expands-in-key-state/.

[8] Joyce Famakinwa. “Help at Home Plans To Double Down On Home Care, Expand Service Area In Near-Term Future.” Home Health Care News, September 3, 2024. https://homehealthcarenews.com/2024/09/help-at-home-plans-to-double-down-on-home-care-expand-service-area-in-near-term-future/.

[9] Michael Fenne. “Debt-Funded Dividend Paid to Help at Home Owners One Year after State Closure.” Private Equity Stakeholder Project PESP, September 24, 2024. https://pestakeholder.org/news/debt-funded-dividend-paid-to-help-at-home-owners-one-year-after-state-closure/.

[10] Moody’s Investors Service. “Moody’s Ratings Affirms HAH Group Holding’s B2 CFR, Assigns B2 Ratings to Proposed Senior Secured Debts; Outlook Stable,” September 10, 2024. https://www.moodys.com/research/Moodys-Ratings-affirms-HAH-Group-Holdings-B2-CFR-assigns-B2-Rating-Action–PR_492715.

[11] Michael Fenne. “PE-Owned Home Health Company Terminates Operations in Alabama.” Private Equity Stakeholder Project PESP, September 21, 2023. https://pestakeholder.org/news/pe-owned-home-health-company-terminates-operations-in-alabama/.

[12] Moody’s Investors Service. “Moody’s Ratings Affirms HAH Group Holding’s B2 CFR, Assigns B2 Ratings to Proposed Senior Secured Debts; Outlook Stable,” September 10, 2024. https://www.moodys.com/research/Moodys-Ratings-affirms-HAH-Group-Holdings-B2-CFR-assigns-B2-Rating-Action–PR_492715.

[13] S&P Global Ratings. “HAH Group Holding Co. LLC ‘B-’ Rating Affirmed On Refinancing And Sponsor Dividend; Outlook Stable; New Debt Rated,” September 10, 2024. https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3247866.