Mid-Year Healthcare Private Equity Trends with Amber Walsh 7-9-25

Summary

Becker Private Equity & Business Podcast: Mid-Year Healthcare Private Equity Trends with Amber Walsh

Release Date: July 9, 2025

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Introduction to Healthcare Private Equity Trends

In the mid-year episode of the Becker Private Equity & Business Podcast, host Scott Becker engages in an insightful discussion with Amber Walsh, a member of the executive committee at McGuire Woods. Amber, who operates at the crossroads of private equity and healthcare, provides a comprehensive analysis of the first half of 2025's private equity activities within the healthcare sector, drawing on data from PitchBook reports and her extensive legal experience in deal-making.

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Ongoing Resilience in Healthcare Deal-Making

Amber Walsh underscores the resilience of the healthcare private equity market, emphasizing that despite economic uncertainties, the sector continues to exhibit strong deal-making activities.

“The theme continues to be ongoing resilience of the health care deal making market.”
[00:31]

She highlights that private equity-backed healthcare deals have remained robust, with data from PitchBook confirming an uptick in deal activity compared to the previous year. Amber attributes this resilience to a combination of consistent institutional capital and strategic acquisitions.

“We are tracking to be up in the first two quarters of 2025 across the board... not industry specific, but private equity backed deals.”
[02:10]

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Deal Activity and Market Dynamics

Scott Becker raises an important observation from market reports: while the total dollar volume of deals has increased year-over-year, the number of deals has decreased by approximately 15-16%. This suggests a shift towards larger transactions that offset the decline in smaller and midsize deals.

“The overall dollar volume of deals is up year after year, but the number of deals is not up. That was down about 15%, 16%.”
[03:34]

Amber confirms this trend within the healthcare sector, noting that large-scale deals, often exceeding one billion dollars, dominate the market. She points out that these significant transactions largely occur in tech-driven areas such as pharmaceuticals, biotech, and medical devices.

“Every single one of those 20 was in tech, pharma, biotech or device.”
[05:00]

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Sector-Specific Activity within Healthcare

The conversation delves into the varying levels of activity across different healthcare segments. Amber observes that physician specialty deals and facility-heavy transactions have seen a slight decline in activity, though they remain active.

“Those physician specialty deals, even the facility heavy deals, a little bit less activity... you do still see deals being done.”
[04:22]

In contrast, tech-driven healthcare sectors such as revenue cycle management and health IT are experiencing heightened activity. These areas benefit from the integration of technology with healthcare services, attracting substantial private equity interest.

“It is heavier in tech driven health care... those, the lower middle market deals, it's still being more tech driven than physician specialty driven.”
[05:49]

Scott adds that certain specialties like orthopedics and esthetics plastic continue to perform well, maintaining healthy margins and driving deal momentum, whereas others with slimmer margins face more challenges.

“Orthopedics... it seems like things continue to sort of move forward in a good deal. That's just a very quick sense of it.”
[06:25]

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Private Equity Strategies and Future Outlook

Amber discusses the strategies employed by private equity firms, noting that many are diversifying their investments across various healthcare sub-sectors to create a complementary portfolio. This approach aims to integrate technology with service-oriented investments, enhancing overall value and operational efficiencies.

“Some of those PE buyers also have separate investments in physician services and ASC companies... they have a cross section of different types of healthcare investments that complement each other.”
[06:25]

Looking ahead, Amber anticipates a potential reduction in exit hold periods for private equity firms, which had previously seen an increase to nearly five years. She suggests that this peak in hold periods might be waning, paving the way for more exits in the latter half of 2025.

“Exit hold periods for private equity firms... do look like coming into the middle of 2025 those are expected to go back down a little bit.”
[03:00]

Scott hints at future discussions, mentioning an upcoming episode featuring the CEO of DaVita, highlighting ongoing interest and developments in the dialysis industry—a sector with deep roots in the healthcare economy.

“It's one of the oldest healthcare industries... continues to be a vital part of healthcare economy.”
[07:21]

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Conclusion

The episode concludes with Scott Becker expressing his appreciation for Amber Walsh's clear and concise insights into the healthcare private equity landscape. Their discussion paints a picture of a sector that, while not experiencing explosive growth, maintains steady and resilient activity, particularly in technology-driven areas.

“You are always concise, to the point, understand things better than almost anybody I know in the world.”
[07:41]

Amber reciprocates the gratitude, underscoring the collaborative nature of their discourse.

“Thank you, Scott.”
[07:55]

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Key Takeaways:

• Resilience in Healthcare PE Deals: Despite broader economic fluctuations, private equity-backed healthcare deals remain robust.

• Shift Towards Larger Deals: An increase in total deal volume is driven by larger transactions, even as the number of deals declines.

• Tech-Driven Growth: Sectors such as health IT, revenue cycle management, and biotech are experiencing heightened private equity interest.

• Diverse PE Strategies: Private equity firms are diversifying their healthcare investments to create complementary portfolios.

• Future Outlook: Anticipated reduction in exit hold periods may lead to increased deal exits in the latter half of 2025.

This episode serves as a valuable resource for investors, healthcare professionals, and stakeholders interested in navigating the evolving landscape of healthcare private equity.

Transcript

[Scott Becker]

This is Scott Becker with the Becker Business and the Becker Private Equity Podcast. We're thrilled today to be joined by Amber Walsh. Amber lives at the intersection of private equity and healthcare. She's on the executive committee at McGuire Woods. She's going to talk to us today about sort of deal activity the first half of the year based a little bit based on a PitchBook report and what they're seeing in terms of the health care private equity deal space. Amber, let me tee it up and ask you to take it away. What are you seeing so far this year and what's being reported?

[Amber Walsh]

Yeah, so I would say the theme continues to be ongoing resilience of the health care deal making market. In particular private equity backed health care deals. And what we're seeing and the numbers are just starting to come out in terms of the companies like Pitchbook that track and report these things. We're but also the experiences that we have as lawyers who are involved in these deals is exactly what was expected to have happened in the first half of 2025. We came into the year expecting with cautious optimism, love that phrase, expecting increased deal activity from this time last year that looks to be playing out. So if you look at what PitchBook reports and they do it, if you've ever looked at their reports, they're publicly available, you can download them, you could sort them in all sorts of different metrics, but they come out really in before they do their analysis. They come out in some pretty simplistic Excel format. And it looks like we are tracking to be up in the first two quarters of 2025 across the board. Not industry specific, but private equity backed deals with a little bit higher percentage in buyouts, a little bit fewer exits. So you're primarily talking about first institutional capital in kind of middle of the road for add on acquisitions and back to that exit point. We're also seeing reports that exit hold periods for private equity firms again across the board, not just in healthcare. While we know they have increased over the past couple of years, reaching almost an average of years from what used to be just under five years. It does look like coming into the middle of 2025 those are expected to go back down a little bit. Maybe we've reached the peak on hold period such that when you look at all of this together, expecting more exits later this year. And all of this is taken obviously in the vein of we've got the big deal that happened in the first half of the year, the 1 billion and north deals in health care, about half of which had private equity buyers or sellers on one side or the other that all kind of comes together to, like I said at the beginning, kind of continued resilience. Not gangbusters, not totally crazy, out of control, but optimistic.

[Scott Becker]

Yes. One of the things I saw in one of the reports is that the overall dollar volume of deals is up year after year, but the number of deals is not up. That that was down about 15%, 16%. And I think the inference was that midsize deals, small deals, midsize deals aren't being done as prevalently, but there are a lot of big deals that are offsetting that. I wonder what you're saying in the health care world, are there segments of the health care world that are busier than other segments? It seems like at least in some of the physician specialties, the bolt on activity has really slowed. But in some other specialties seems pretty active. But then in other parts of health care, digital health technology, all kinds of other areas, there seems to be lots of activity. Any sense of your feel for different sectors in health care and what you're seeing?

[Amber Walsh]

Absolutely, that's exactly what we're seeing, is those physician specialty deals, even the facility heavy deals, a little bit less activity. I don't want to say stagnant because I think that's too extreme of a word. You do still see deals being done. There were plenty of closings in Q2 in physician specialties. But you're absolutely right that it is heavier in tech driven health care. And not surprisingly, and this is obviously we're talking about a different bandwidth of the market. But of those 20 biggest healthcare deals, of which I mentioned, about half had private equity on one side of the table or another. Every single one of them again was one worth of a billion dollars. Every single One of those 20 was in tech, pharma, biotech or device. It's really when you get down into the middle market or the lower middle market that you start to see those physician specialty deals. But even in that sector or that segment, I should say those, the lower middle market deals, it's still being more tech driven than physician specialty driven. I think that will change. But that's what we're seeing right now.

[Scott Becker]

Yes, no. And I think it's fascinating as to whether that will change or not, or whether it'll change in certain specialties or not, because certain specialties that are healthy seem healthier where the margins are still good, especially if the margins are tougher. Obigani, for example, you see less steel activity, but just because if you use a debt model and you got slimming margins, really challenging. Or orthopedics. It seems like things continue to sort of move forward in a good deal. That's just a very quick sense of it. Esthetics plastic seems to be moving as well, but other specialists seem less so. But again, so much of what we're seeing is in the revenue cycle, the health IT area and so many other areas.

[Amber Walsh]

Absolutely. And some of those buyers, some of the PE funds that are buying in the rev cycle, the, you know, the EMRs, the payer services that have that connective interface between the group beneficiary, the employer, the tpa. Some of those PE buyers also have separate investments in physician services and ASC companies, dialysis facilities like, you know, dtcr, Bain, to where they're not just tech focused, they have a cross section of different types of healthcare investments that complement each other. At least that's the theory 100%.

[Scott Becker]

And I just saw, I just recently come across the test that We've got the CEO of DaVita on the podcast coming up shortly and fascinating to see what's going on in that industry as well. The dialysis industry too.

[Amber Walsh]

Absolutely. It's one of the oldest healthcare industries, dates back to the early 70s, but continues to be a vital part of healthcare economy.

[Scott Becker]

It is so old that it's as old as the founder of our healthcare group. It's that old.

[Amber Walsh]

It is. Mr. Bob Preston. That's exactly right.

[Scott Becker]

In any event, Amber, it's great to visit you with you as always, you're always concise, to the point, understand things better than almost anybody I know in the world. Thank you so much for joining us today on the Vector Business and the Vector Private Equity podcast. What a pleasure to visit with you.

[Amber Walsh]

Thank you, Scott.