Healthcare carries Q2 global buyout activity: Preqin

  • Healthcare: 24% of total buyout value in Q2 vs 4% in Q1
  • Quarter’s largest deal was KKR’s $9.9B deal for Envision
  • Announced PE-backed transactions in healthcare totaled $28B in Q2

A frothy market didn’t stop sponsors from putting huge sums to work in healthcare in Q2. In fact, dealmaking in the sector resurged in the period, producing nearly a quarter of total PE-backed deal value globally, Preqin reported this week.

One megadeal in particular propped up total deal value: KKR’s $9.9 billion take-private for physician-staffing giant Envision Healthcare.

KKR was also one of the quarter’s most active dealmakers, with 11 transactions closed, Buyouts data shows.

Envision was not only the quarter’s largest deal but also “the largest healthcare buyout deal since the global financial crisis,” Preqin’s head of PE products, Christopher Elvin, said.

For the third time in the past five years, PE-backed healthcare M&A accounted for more than $20 billion of quarterly deal value globally, Preqin said. More specifically, announced transactions in the sector totaled 141 for a combined $28 billion.

Deal count in the U.S., meanwhile, was led by technology and industrials with 88 and 74 transactions respectively, Buyouts data shows.

At the same time, the data underscores sponsors’ continued willingness to pay up for healthcare assets.

The sector accounted for only about 12 percent of announced deals but nearly a quarter of total deal value globally, Preqin said.

Both the healthcare and IT industries claimed 24 percent of total deal value, representing the highest proportions across all industries, the data service said.

For healthcare, that’s a huge uptick over the previous quarter. The industry accounted for just 4 percent of total deal value in Q1 2018.

Also worth noting: The third-largest buyout of the second quarter — involving healthcare-technology company Cotiviti — qualified under Preqin’s metrics as a software deal, as opposed to healthcare.

In other words, the whopping $4.9 billion commanded by the payment-integrity company was not included in the industry’s total contribution figure of $28 billion.

Veritas Capital through Verscend, its existing portfolio company, emerged as the winning bidder for the highly sought after provider of payment-accuracy services for healthcare payers.

Elvin said in the report that healthcare ought to remain a key M&A sector, buoyed by the growing global aging population, fast-paced regulatory change and technological innovation.