Some of the leading experts in the healthcare industry convened at the ACG NY 15th Annual Healthcare Conference in New York City, and spirits were high amid the volatile environment surrounding M&A. No one brushed aside the headwinds facing the industry, such as inflation, labor shortages and costs, and rising interest rates during the March 22 event. Investors, analysts, lenders and advisors were confident they could close deals and grow businesses, but it’s going to require a more hands-on approach.
“You need to have a tailored thesis for each business,” said Andrew Colbert, senior managing director at Ziegler, during one of the panel discussions. “You can’t have a one-size-fits-all approach anymore. A tailored thesis is how you sell and grow your business in this market.”
This sentiment was echoed by In Seon Hwang and Dr. Richard Park, co-founders of Ascend Partners.
“If you want to invest in a healthcare business and grow it, you need to be in the trenches with your physicians and providers,” said Hwang. “You can’t just give them a book, tell them to figure it out and expect a return on investment.”
Hwang is the former global head of Healthcare at Warburg Pincus, and Dr. Park was the founder and former CEO of CityMD, a healthcare services company in New York and New Jersey.
The toughest obstacle appears to be the lending environment. It was fitting that the Federal Reserves announced another rate hike (a quarter percentage point) during the opening remarks. A number of panelists shared the same sentiment. Lenders are more willing to work with a new platform or business, but platforms saddled with debt are going to have a much tougher time accessing additional capital.
“It is not easy to finance existing platforms with existing debt loads,” said Colbert. “There are still challenges in the market. But there is a lot of interest in new and upcoming platforms.”
It was a record year for healthcare deal volume in 2022. However, based on the attitudes at the conference and the industry’s headwinds, it seems 2023 might produce a slowdown.
