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Provident Healthcare Partners Provident Healthcare Partners

2024 Year in Review

Provident Healthcare Partners
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Published January 2024

While 2023 saw a decline in healthcare services M&A activity compared to previous years, 2024 presented a resilient M&A landscape due to easing macroeconomic conditions and falling interest rates. Year over year, deal flow remained constrained but consistent, with 1,190 deals completed in 2024 compared to 1,220 completed in 2023. Deal sizes on the other hand surged, largely driven by Clayton, Dubilier & Rice and TowerBrook Capital Partners’ recent buy-out of R1 RCM for $8.9B, along with Cardinal Health’s pursuit of a vertical integration strategy, which saw them invest $6.2B across three transactions.​

Similar to 2023, interest rate uncertainty and regulatory scrutiny played a part in the subdued levels of healthcare services M&A activity in 2024. Additionally, concerns around the presidential election and its potential effects on future legislation and the broader economy influenced a more cautious approach by many investors.​

Many private equity funds have pivoted away from provider-focused organizations and towards outsourced services and other B2B models, allowing them to benefit from broader healthcare tailwinds while limiting exposure to provider and reimbursement risk. ​

Despite these challenges, investors shifted away from 2023’s preference for smaller, less cost-intensive add-on acquisitions, and were willing to contribute greater amounts of capital in pursuit of platform creation opportunities for premium assets.​

Due to uncertainty regarding the presidential election and further healthcare M&A regulation limiting PE investment in the space in 2024, many firms were hesitant to take active investments out to market. As a result, we are seeing extended hold periods for active investments well over the average for the industry, signaling an increased opportunity for secondary transactions in 2025. Additionally, the Federal Reserve announced another quarter-point interest rate cut on December 18th, their third consecutive cut of the year, further fueling investor optimism going into 2025 as the cost of capital returns to more comfortable levels. ​

While a somewhat quieter year for overall M&A activity, Provident ended with one of the firm’s strongest years, closing 20 transactions and driving significant transaction value on behalf of our clients.

Whitepaper Summary:​

  • Consistent M&A Activity in the Middle Market
  • 2024 Healthcare M&A Trends: Sector Highlight
  • Provident 2024 Closed Transactions
  • Provident 2024 Content
  • Provident Case Studies
  • Conclusion
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