Q2-2020 Rehabilitation Update
While interest in the rehabilitation sector remains strong, deal closings undoubtedly slowed in the second quarter of 2020. Private equity investors have delayed pursuing new platform transactions until there is further insight on the long-term disruption from COVID-19. Existing platforms have remained focused on their current operations and expanding strategic initiatives such as digital health solutions to minimize disruption from the crisis. The acquisition of Physera, a virtual physical therapy startup, reinforced the trend of strategic and investor interest in companies with remote healthcare capabilities.
As COVID-19 patients return home from the Intensive Care Unit, many will require physical therapy services in order to return to normal life. Post Intensive Care Syndrome (PICS), a term used to describe the illness people experience after a stay in the ICU, can manifest as problems with physical and cognitive function. PICS cases are expected to increase as a result of the COVID-19 pandemic, resulting in an increased demand for rehabilitation services. Coupled with a pent-up demand from those who paused treatment due to COVID-19, the physical therapy sector looks poised for a sharp rebound throughout the remainder of 2020. Provident expects a return to normalcy for bolt-on and platform M&A activity as we gain a better understanding of the near and long-term effects of the pandemic.
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