The mid-market healthcare deal community once again converged on San Francisco for JP Morgan\u2019s annual Healthcare Conference in early January. This year\u2019s gathering felt like a return to form \u2014the optimism necessitated by our business tempered by the cautious reality of the current economic climate. Speaking of climate, with mild temperatures and no bomb cyclones or atmospheric rivers in sight, attendees finally had cooperative weather while navigating hilly terrain.<\/p>\n\n\n\n
A Sense of Higher Attendance. <\/strong>Investors, bankers, and executives who skipped JPM last year \u2013 opting for sunny Miami HPE instead \u2013 rejoined the party in 2025. Perhaps they\u2019ve realized, as many do at these seminal events, that time waits for no one, and avoiding the fray risks getting left behind. That sense of FOMO \u2014 or, more generously, a desire to seize new deal opportunities \u2014 likely fueled an attendance surge.<\/p>\n\n\n\n Fewer New Platforms. The Year of the Add-On. <\/strong>Increased attendance hints at a broader trend: 2024 wasn\u2019t a stellar year for healthcare private equity platforms. New platform investment activity was notably underwhelming last year, while add-on volume remained high. In many ways, the reduction in new platforms was emblematic of a more prominent theme: PE firms, forced to adapt to the slower pace of exits, took time to focus on organic business building complemented by accretive tuck-ins to create higher long-term value.<\/p>\n\n\n\n The Limited-to-No Liquidity Merger<\/strong>. As exit activity remained muted, a quiet evolution in the market was the cash-less, or limited liquidity, merger between portfolio companies of two private equity firms. These creative, structured transactions can be a way to scale, optimize resources, generate synergies, and ultimately unlock the door to a more lucrative exit down the line. Last year saw a number of these types of deals, and that trend may very well continue in 2025.<\/p>\n\n\n\n Will 2025 Be the Year the Floodgates Open?<\/strong> Deal professional optimism was palpable though cautious. While confidence wasn\u2019t overflowing, there was a sense that positive momentum was on the horizon. Investment banks remain bullish on their pipelines, touting strong prospects, but, as seen in years gone by, deal launch timing is the devil in the details. More \u201cfireside chats\u201d \u2013 or investor meetings with acquisition targets that are (or may) be coming to market \u2013 occurred this year since pre-COVID. Yet, many investors left those meetings questioning which deals were imminently actionable. Most deal professionals expect activity to pick up in Q2 or Q3, but doesn\u2019t that timeline echo the last two JPMs?<\/p>\n\n\n\n The Soup du Jour of 2025.<\/strong> Nary a meeting was held in which pharma services, healthcare technology (HCIT), and tech-enabled services were absent from investors\u2019 2025 shopping lists. The excitement around these areas felt reminiscent of Tulip-mania, where soaring demand could lead to inflated prices and disappointed bridesmaids. Meanwhile, provider services, especially in post-acute and alternative care settings (e.g., skilled nursing facilities, home care, outpatient clinics, schools, and assisted living facilities), gained increasing attention in 2024 and are expected to continue.<\/p>\n\n\n\n Investor appetite tends to ebb and flow like the tide. 2024 saw a dramatic resurgence in autism care, reversing a multi-year period of \u201ccarnage,\u201d as described by more than one PE sponsor. Dental services, too, regained momentum in late 2024 after a long stretch of enumerable failed processes; investor interest in appropriately priced dental deals should remain high in 2025. Physician practice management (PPM) \u2013 perhaps the most out-of-favor sector in 2024, began to draw interest again, especially for deals in the lower end of the middle market, as some investors sought to differentiate themselves with contrarian strategies. Meanwhile, a new investment theme emerged in the longevity space, building on the MedSpa boom but focusing on functional, regenerative, and personalized medicines \u2013 covering areas like weight loss, hormone optimization, peptides, stem cells, and comprehensive lab testing \u2013 targeting both men\u2019s and women\u2019s health. More deal professionals are seeking ways to invest alongside the healthy lifestyle trends popularized in books by Peter Attia and David Sinclair and Netflix documentaries on Blue Zones and Brian Johnson\u2019s Blueprint.<\/p>\n\n\n\n Whether 2025 will be the year banker pipelines convert to actionable opportunities and PE firms finally open the floodgates for long-dated portfolio companies remains to be seen. Investors will most assuredly be clamoring for deals in sectors like pharma services, HCIT, and provider services in the months ahead. The tried-and-true areas of the last decade, such as dental and PPM, should not be counted out. Cheers to a safe and healthy 2025!<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":3,"featured_media":57978,"template":"","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2754],"tags":[],"sector":[],"service":[],"class_list":["post-58208","insights","type-insights","status-publish","has-post-thumbnail","hentry","category-thought-leadership"],"acf":[],"yoast_head":"\n