The Physician Medical Groups (PMG) sector is one of the most frequently discussed in healthcare M&A and one of the most active markets covered by LevinPro HC.
Since the start of 2022 through November 18, 2022, 541 PMG deals have been announced, according to the LevinPro HC database, representing 25% of the 2,172 healthcare deals announced during that period.
With the prominence of the PMG sector in the healthcare M&A market, we often talk about the dental, dermatology, eye care and gastroenterology specialties as they are the most active. But specialties such as podiatry, cardiology, fertility, women’s health and OB/GYN are on the rise and increasingly attracting more and more investors.
Women’s Health includes any physician group that provides health care regarding OB/GYN, women’s health or fertility services. Since the start of 2022, 34 women’s health deals have been announced, a 127% increase from the same period in 2021 with 15 announced deals.
“Buyers have seen significant multiple expansion in women’s health, with several of the large women’s health platforms having traded at over 20x over the past 18 months,” said Steven Carmen, managing principal of Bayshore Growth Partners.
Private equity represented 70% of the 34 women’s health transactions this year with 24 deals, making up the largest acquirer type in the women’s health market.
Pinnacle Fertility, a portfolio company of the private equity firm Webster Equity Partners, is the most active women’s health buyer of 2022 with the acquisition of seven practices. The practices span Illinois, Virginia, California, Arizona and Washington state. These transactions increased Pinnacle’s network by more than 40 physicians. None of the prices were disclosed.
Another large player in women’s health has been InTandem Capital Partners’ portfolio company, Ivy Fertility, which completed three acquisitions in 2022. The transactions added five practices to Ivy’s network and bolstered its presence in California, Utah, Nevada, and Washington. Ivy Fertility is nationally and internationally recognized in advanced reproductive technologies, in vitro fertilization, third-party reproduction, andrology and research.
The increase in women’s health activity can be attributed to cultural and lifestyle changes for women, such as having their first child later in life. In 2022, the average age of first-time mothers will hit 30, up from 26 in 2016, according to the U.S. Census Bureau. An increasing number of women are putting their careers and preference to be financially stable above their desire to have children, raising the number of women who give birth for the first time well into their 30s and 40s.
Along with women having children later in life, a driving force behind the increase in M&A activity in women’s health are requirements forcing health insurance companies to cover fertility treatments. With the increased coverage, more women use these services, meaning a more stable revenue stream.
As shown through Pinnacle’s and Ivy’s activity, women’s health groups combine smaller practices under one larger umbrella to consolidate the fragmented market and diversify revenue streams, thus providing an expanded suite of services. Going forward, we anticipate that women’s health will rise in prominence and gain attention from a widening net of investors.
In addition to women’s health gaining a larger foothold in the PMG M&A market, podiatry has too. Podiatry skyrocketed in 2022, going from seven deals in 2020 and eight in 2021 to 17 reported transactions this year through November 18, 2022. The growth in podiatry M&A activity can be attributed to the burgeoning elderly population and the increase in age-related conditions such as diabetes, arthritis and obesity that demand podiatrists’ attention.
Private equity has dominated the podiatry market, accounting for all of the transactions in 2022.
NMS Capital-backed U.S. Foot & Ankle Specialists LLC has been the most active buyer with 10 transactions, representing 12 practices, since the start of the year. U.S. Foot & Ankle Specialists provides a full range of specialty services for the advanced treatment of foot and lower extremity conditions through board-certified and board-qualified podiatrists. The acquisitions completed in 2022 add more than 50 podiatrists to U.S. Foot & Ankle’s network across Delaware, Pennsylvania, Virginia, Ohio, West Virginia and Kentucky.
In 2021, U.S. Foot & Ankle completed four transactions, and in 2020 the company completed five acquisitions. The 10 deals reported in 2022 point to the company’s efforts to strengthen its portfolio in the growing market as many companies compete to gain prominence.
Pacesetter Health, formally known as Podiatry Growth Partners, which is backed by Compass Group Equity, Veronis Suhler Stevenson, Siguler Guff and SunGate Capital, LLC, has been another active player. Since the start of the year, Pacesetter Health has completed four transactions, growing its portfolio by four practices and 11 podiatrists. The clinics are in Kentucky, Texas and Arizona. With these acquisitions, Pacesetter Health owns and operates 13 podiatry practices across eight states.
Following in line with women’s health and podiatry, the cardiology speciality has experienced a surge in deal volume this year, with 10 announced transactions through November 18, 2022. This is a significant increase from the same period in 2021, which saw three reported deals.
In contrast to other PMG specialities, private equity has not played a significant role in buying cardiology practices. Historically, cardiology is practiced primarily in hospital settings and has only recently begun to expand outside of hospitals, making it a relatively new sector for PE groups to consider. With this expansion, the industry has grown and had more opportunities for consolidation by investors.
Ares Management’s portfolio company, US Heart & Vascular, purchased Willowbrook Cardiovascular Associates in July for an undisclosed price. US Heart & Vascular is a national provider of support services to cardiovascular physician practices. It has partnerships with anchor affiliates in Arizona and Texas with approximately 60 physicians. The acquisition of Willowbrook added six cardiologists to US Heart & Vascular’s network.
Another PE-backed cardiology deal to look at is St. Peter’s Health Partners Medical Associates (SPHPMA), a partner of Trinity Health, acquiring Albany Cardiothoracic Surgeons in Albany, New York. Run by three cardiologists, Albany’s services include arrhythmia surgery, minimally invasive surgery, cardiac surgery, vascular surgery, pacemakers and laser lead extraction. The practice is the exclusive provider of cardiac surgery at St. Peter’s Hospital in Albany, New York. St. Peter’s Health Partners Medical Associates, P.C. is a multi-specialty physician group with more than 350 physicians and advanced practitioners in more than 80 locations. SPHPMA is a full affiliate corporation of St. Peter’s Health Partners.
The most active cardiology acquirer of 2022 is Cardiovascular Associates of America (CVAUSA), with four deals. Cardiovascular Associates of America is a physician management services organization (MSO) headquartered in Orlando. Through the acquisition of the four clinics, CVAUSA added 23 locations and 71 cardiologists across Rhode Island, New Jersey, Illinois and South Carolina to its network.
With these specialities gaining traction, we’re interested to see how the overall slowdown influencing M&A activity will impact the less active specialities.
