• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer

  • Opinion
  • Health IT
    • Behavioral Health
    • Care Coordination
    • EMR/EHR
    • Interoperability
    • Patient Engagement
    • Population Health Management
    • Revenue Cycle Management
    • Social Determinants of Health
  • Digital Health
    • AI
    • Blockchain
    • Precision Medicine
    • Telehealth
    • Wearables
  • Startups
  • M&A
  • Value-based Care
    • Accountable Care (ACOs)
    • Medicare Advantage
  • Life Sciences
  • Research

Report: State of Health IT Private Equity in the Era of COVID-19

by Healthcare Growth Partners (HGP) 06/05/2020 Leave a Comment

  • LinkedIn
  • Twitter
  • Facebook
  • Email
  • Print

In May, as the U.S. cautiously started to reopen amid intense controversy, HGP polled hundreds of private equity funds across all stages of investment to find out how COVID-19 has impacted deal flow.  Eighty respondents provided their perspective on topics ranging from an appetite for new investments to access to debt to the impact on portfolio companies.

Respondent Demographics

Effect of COVID-19 on Valuations

When asked how they expect overall and Health IT valuations to behave in both the short-term and the long-term, investors were largely neutral on average, with only a very slightly bearish perspective in the short-term.  Over the long-term, investors indicated a much more neutral impact of COVID-19 on valuations, with a slightly more bullish perspective on health IT as a sector compared to the overall market.

Health IT Interests by Subsector and Customer Segment

Our survey included a series of questions designed to identify how COVID-19 may have altered investor appetite across the subsectors and end-markets of Health IT.  As hypothesized, we saw a rise in interest in telemedicine and remote care delivery, as well as direct-to-patient healthcare solutions.  At the other end of the spectrum, solutions such as EMR/clinical documentation and revenue cycle management saw a drop in interest, and 12.5% fewer of our respondents were interested in investing in companies serving the hospital and health system end-market after COVID-19 compared to before.  These results lead us to conclude that investors are tracking the decline in hospital revenue due to COVID-19 and accordingly expect that sales of new technologies to hospitals will be challenged.

Change in PE Activity and Focus

Overall, investors are seeing reduced deal flow, but continuing to seek out opportunities to invest despite the challenging environment.  While some indicated they are looking at more distressed and discounted opportunities, that does not seem to be an overarching focus for our respondents.  Given the rapidly evolving situation, approximately 25% of respondents were either still evaluating how to respond to the COVID-19 shutdown or had decided to pause on new deals for the time being until the market stabilizes.

Access to Debt

One of the clearest impacts of COVID-19 is a tightening of the debt markets as investors flee to safer assets.  Despite Fed actions to lower interest rates and encourage lending, our respondents from the PE community are seeing challenges in accessing debt.  Based on the survey responses, accessing debt for existing platforms for either working capital or add-on acquisitions appears to be less challenging compared to that for new platforms.

Portfolio Company Strategies

We asked our respondents to estimate the percentage of their portfolio companies employing each of the following strategies.  From these responses, we estimated the average percentage of portfolio companies employing each strategy.  Fewer than 10% of portfolio companies were estimated to have had no change to operations due to COVID-19, exhibiting the widespread impact COVID has had on businesses.  Many companies are applying for federal relief, seeking additional capital to cover costs, reducing payroll, or delaying payables in order to manage until the economy recovers.

Expectations for the Recovery

Overwhelmingly, our respondents expect the economic recovery to be either W-shaped or U-shaped, essentially meaning that an economic recovery will be delayed, but that it will be relatively quick once it occurs.  Now over 2 months into the downturn, there appears to be a consensus that a V-shaped recovery is unlikely as consumers will continue to social distance until there is an effective vaccine or treatment for COVID-19.  A few respondents expect a drawn-out L-shaped recovery, reflecting a general sentiment that the recovery probably won’t begin in earnest until late 2020 and beyond.

Will Private Equity Close Deals?

To conclude our survey, we asked the question on everyone’s mind – will private equity investors close deals over the next few months before the Fall / Winter?  Overwhelmingly, our respondents indicated that they intend to continue to operate, with no respondents choosing “not likely.”  Nearly 50% of respondents expect to continue with new deals as usual, with the remaining 50% indicating that they intend to continue with new deals, but that there may be restrictions on valuation or need to be highly strategic.


About Healthcare Growth Partners (HGP)

Healthcare Growth Partners (HGP) is a Houston, TX-based Investment Banking & Strategic Advisory firm exclusively focused on the transformational Health IT market. The firm provides  Sell-Side Advisory, Buy-Side Advisory, Capital Advisory, and Pre-Transaction Growth Strategy services, functioning as the exclusive investment banking advisor to over 100 health IT transactions representing over $2 billion in value since 2007.

  • LinkedIn
  • Twitter
  • Facebook
  • Email
  • Print

Tagged With: Clinical Documentation, EMR, Health IT, healthcare growth, Partners, Private Equity, revenue cycle, Revenue Cycle Management, telemedicine

Tap Native

Get in-depth healthcare technology analysis and commentary delivered straight to your email weekly

Reader Interactions

Primary Sidebar

Subscribe to HIT Consultant

Latest insightful articles delivered straight to your inbox weekly.

Submit a Tip or Pitch

Featured Insights

2025 EMR Software Pricing Guide

2025 EMR Software Pricing Guide

Featured Interview

Kinetik CEO Sufian Chowdhury on Fighting NEMT Fraud & Waste

Most-Read

2019 MedTech Breakthrough Award Category Winners Announced

MedTech Breakthrough Announces 2025 MedTech Breakthrough Award Winners

WeightWatchers Files for Bankruptcy to Eliminate $1.15B in Debt

WeightWatchers Files for Bankruptcy to Eliminate $1.15B in Debt

KLAS: Epic Dominates 2024 EHR Market Share Amid Focus on Vendor Partnership; Oracle Health Sees Losses Despite Tech Advances

KLAS: Epic Dominates 2024 EHR Market Share Amid Focus on Vendor Partnership; Oracle Health Sees Losses Despite Tech Advances

'Cranky Index' Reveals EHR Alert Frustration Peaks Midweek, Highest Among Admin Staff

‘Cranky Index’ Reveals EHR Alert Frustration Peaks Midweek, Highest Among Admin Staff

Madison Dearborn Partners to Acquire Significant Stake in NextGen Healthcare

Madison Dearborn Partners to Acquire Significant Stake in NextGen Healthcare

Wandercraft Begins Clinical Trials for Physical AI-Powered Personal Exoskeleton

Wandercraft Begins Clinical Trials for Physical AI-Powered Personal Exoskeleton

Chipiron Secures $17M to Transform MRI Access with Portable Scanner

Chipiron Secures $17M to Transform MRI Access with Portable Scanner

Abbott to Integrate FreeStyle Libre Glucose Data with Epic EHR

Abbott to Integrate FreeStyle Libre Glucose Data with Epic EHR

5 Ways New Trump Administration Tariffs Are Impacting U.S. Healthcare Now

5 Ways Trump Administration Tariffs Are Impacting U.S. Healthcare Now

iCAD, GE HealthCare Integrate to Advance Breast Cancer Detection with AI

RadNet to Acquire iCAD for $103M in All-Stock Transaction

Secondary Sidebar

Footer

Company

  • About Us
  • Advertise with Us
  • Reprints and Permissions
  • Submit An Op-Ed
  • Contact
  • Subscribe

Editorial Coverage

  • Opinion
  • Health IT
    • Care Coordination
    • EMR/EHR
    • Interoperability
    • Population Health Management
    • Revenue Cycle Management
  • Digital Health
    • Artificial Intelligence
    • Blockchain Tech
    • Precision Medicine
    • Telehealth
    • Wearables
  • Startups
  • Value-Based Care
    • Accountable Care
    • Medicare Advantage

Connect

Subscribe to HIT Consultant Media

Latest insightful articles delivered straight to your inbox weekly

Copyright © 2025. HIT Consultant Media. All Rights Reserved. Privacy Policy |