What is good in HC PE these days
Work at a MM healthcare (Charlesbank/Linden/Kinderhook) type fund and can’t understand why there are so many firms that do this. There are so many bad businesses and healthcare is typically so challenging to invest in. You see blown up investments all the time and you see ambition and risk-taking seldom pay off imo. Thinking about where to go next but don’t even know how I should start to think about firms.
Who really are the best names in the space now? CD&R? H&F? TPG? GTCR?
What about smaller firms like Webster, or Patient Square?
Just need some help contextualizing who can actually invest with expertise in the space and where an associate’s time is actually worth it.
Have heard Archimed is doing well, other than that Frazier has a long, successful track record?
Webster is even divesting out of their huge addiction treatment platform. That used to be a hot sector of healthcare but has cooled off in recent years.
ArchiMed did super well on a couple of things and earlier funds - but not sure how more recent ones are.
ARCHIMED did well earlier in their history when they were pure LMM. Performance since has been dogshit and there are multiple likely zeros since 2021 (see: Plasmid Factory, which was a $100M+ check). Lots of other portcos are also heavily stressed due to poor management (both within the portcos and ARCHIMED).
They basically got lucky on PolyPlus and leveraged that to raise huge multi billion dollar funds and are now completely in over their heads.
Seconding this, have heard from friends-of-friends they have a really strange almost VC-like perspective where they focus a lot on the scientific/technical diligence at the expense of financial diligence. You can see that a lot of the partners are from science/industry backgrounds instead of traditional finance. This has led to multiple shitshows from either (a) good science, bad business or (b) the scientific diligence ended up being completely wrong.
Peter????
HIG has had a number of double digit MOIC exits across HC services over the past few years. At the same time they did get zeroed out on Wellpath…
Like any industry group, there are subsectors that move in and out of favor, and pockets that do extremely well even in challenging macro environments. You could be getting smoked if you work for a fund that does primarily multi site PPMs and/or contract manufacturing, which, from my experience, are where less sophisticated healthcare investors tend to spend most of their time. Kinderhook and Linden are two completely different animals when it come to healthcare PE.
Maybe this is a aumb question/comment, but I didn't know contract manufacturing was getting smoked as well. I've seen the issues spread across the PPM model but was surprised to hear your take. Any examples that come top of mind?
Many of the major OEMs have been going through significant inventory reductions to improve their own margins. That, combined with tariff uncertainty and poor performance in the public markets has led to a reduction in outsourcing, which has significantly impacted CDMOs. My problem with CDMOs has always been that they are largely undifferentiated and always get squeezed on price unless you own some sort of IP. More generalist PE firms with healthcare teams love them (or at least did) because the business model is easy to understand.
Worked at a PE backed healthcare company, I think our special sauce was the strong operators that were involved with the firm. The head of the HC PE practice who invested in our company was childhood friends with the CEO.
A lot of our senior management went to become either PE investors, PE operating partners, senior management at healthcare portcos, and some simply stayed the exit and some became a LP in the PE firms that their peers ended up working at (one of which does a lot of work in the PPM space).
No idea how the PE investors are performing but I can think of at least a dozen of senior management folks who ended up in the PE space to some extent after the PE firmed exited from our company.
For traditional Large cap, feel like the set of leaders (or at least most active) in HC is something like TPG, BX (though idk if the HC franchise is all that strong), CD&R, KKR (also shaky deals done), EQT. like they probably get the same calls on deals and all that
you got other places like H&F (honestly they just did a few mega deals, don’t think particularly active / known for HC), Veritas, NMC doing more heavily HCIT.
The hottest space rn is HCIT and pharma services. Under HCIT, RCM and EHR/EMR are most popular.
EQT, H&F, Warburg, Veritas, TPG, Clearlake are some names that come to mind for large cap
I’m surprised nobody has mentioned it yet but I would add WCAS as a really solid HC focused PE firm
Any thoughts on how Revelstoke is trending lately? Know they’re LMM/MM
EQT extremely good, Eric Liu is a legend
Shore capitals bread and butter is HC
del
Agreed they do have very nice culture
Hey if you are a good private equity investor - you should have conviction and differentiation vs just being I need something safe. You named Kinderhook and Linden - two very opposite strategies of investing valuation wise (or even who wants to swing for the fences in Medicare / Medicaid vs less reimbursement exposure). Or take even infusion - Linden does extremely well on Vital Care and doubles down on IVX while Windrose pays very high on Soleo (which languished under HIG for 10 years). And all it takes is RFK to tweet something funny on drug pricing for all the margin to get wiped cleaned. Exciting stuff.
WCAS has a huge HC legacy and by all accounts does fine. They keep increasing fund size, but also have seemingly longer fundraising cycles. Vistria has done a very good job fundraising and growing their fund exponentially, but some earlier posts indicate they are struggling. From that post onwards, they raised $3b in '25 and doubling their AUM in 3 years. Either people on this forum were / are wrong or they pulled a complete scam to their LP's; leaning more towards this forum being wrong. Linden's also doing fine given they just raised an oversubscribed $5.4bn. Will note all invest in different subsectors and have different focuses; but all 3 seem to be well-received by LP's.
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