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Provident Healthcare Partners Provident Healthcare Partners

Q3 2023 Healthcare Services Private Equity Update

Provident Healthcare Partners
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Q3 2023 Healthcare Services Private Equity Update

Healthcare PE activity continued to display resiliency in Q3-23, but investor sentiment was mixed as Q1-23 saw the aftermath of the first bank failures in years and with heightened geopolitical tensions across the globe. Macroeconomic pessimism remains considerable, and investors expect conditions to weaken further through the remainder of 2023. Investors are also coming to the realization that interest rates in the U.S. will remain elevated (above 4%) well into 2024, if not beyond that. Despite these headwinds, many investors expect to increase their dealmaking as funds still have elevated amounts of capital that must be deployed.

Valuations have also softened compared to the highs seen in 2021, but many investors have taken the attitude that this is more of a reset back to historical valuations prior to the COVID-19 pandemic. Broadly speaking, 60% of investors expect to offer valuations consistent with H1-23. PE exits have also continued to decline off 2021 highs and even 2022, owing part to fruitful and eager IPO markets, and competition from SPACs. Rather than exit platforms in 2023, PE firms and its portfolio companies are gearing up for 2024 and 2025 exits and Provident anticipates heightened exit volume over the next 12-24 months. Platforms that are focusing on both clinical and operational excellence will be rewarded in the future as the appetite for high quality assets remains elevated, and the supply and demand imbalance for quality assets becomes greater.

To print and download the full Healthcare Services Private Equity Update report, please click below…

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