Brighton Park’s Calen Angert: ‘There’s a ton of innovation occurring in healthcare’

'We’re seeing a lot of interesting value-based care models expanding beyond just primary care on the provider side and tools for self-insurance on the employer front.'

To gain insights on the current climate for private equity deals, PE Hub and PE Hub Europe reporters have been asking a wide range of sources to share their outlooks for 2023. Our series continues now with this healthcare focused edition, featuring Calen Angert, partner and head of Brighton Park Capital’s healthcare practice. He recently joined the firm and previously was a senior vice president at TA Associates, where he was for nine years.

What were the highlights of your dealmaking in 2022?

Having joined Brighton Park Capital in October of 2022, a highlight has been supporting some of the firm’s existing healthcare investments and evaluating new opportunities across the healthcare continuum.

Looking back, I’m proud that we avoided market over-exuberance. As a deal team, we consistently revisit first principles around economic models and value propositions to the healthcare ecosystem. Having seen many businesses with upside-down unit economics and or questionable durability, I’m proud that we stuck to our underwriting standards given we’re now entering a tough economic backdrop.

What was the biggest challenge to completing deals in 2022?

Though not at 2021 levels, healthcare still saw strong deal activity in 2022.

Economic uncertainty and rising cost of capital were the biggest challenges to the pace of transactions, especially in the back half of the year.

While many less durable businesses were not able to transact, quality opportunities still commanded quality prices.

We expect this “haves and have-nots” dynamic to continue into 2023. A rough economic backdrop will weigh heavier on top lines and the “growth at all cost” mentality will continue to abate.

How do you expect the first six months of PE dealmaking in 2023 to compare with the last six months of 2022?

Overall, we expect an increase in opportunities and deals in the back half of 2023. For healthcare in particular, we expect deal volume to prove strong throughout the year.

Given healthcare is non-cyclical and has strong underlying tailwinds, it tends to become more attractive in markets like these.

What will be the most important trends affecting your dealmaking in 2023?

I’m excited about 2023 – there’s a ton of innovation occurring in healthcare, especially around cost containment. For instance, we’re seeing a lot of interesting value-based care models expanding beyond just primary care on the provider side and tools for self-insurance on the employer front. I think it will shape up to be a good year for us.

It’s also worth noting that our bend towards growth and low reliance on leverage allows us a lot of flexibility. I think the debt capital markets will prove a difficult hurdle for most buyout investors.

What’s keeping you up at night?

Though many industries face issues around labor shortages and inflation, healthcare is really being pinched in this area. A general national focus on bending the cost curve down while input costs are rising creates a challenging environment. In light of these dynamics, and especially given our growth orientation, we must carefully assess companies’ abilities to hit forward projections.

However, as mentioned earlier, these challenges also create opportunities, and companies helping increase efficiency/decrease cost will prove valuable.

What are you looking forward to most in 2023?

I am excited about continued evolution. I think we’re in a very exciting time for healthcare, where many innovations across the continuum are hitting an inflection point. From new provider models to the rise of cell and gene therapies to technological adoption, 2023 is shaping up to be an interesting year for the space. I can’t wait to partner with some great companies driving these trends!

Most importantly, I am thrilled to be kicking off this year working alongside my talented colleagues at Brighton Park. We’re excited and ready for a productive 2023.