Return to search

Healthcare strategies from Vistria, BPOC, Oak HC/FT; talkin’ about the car wash

PE firms tackle the car wash market.

Good morning and happy Fri-yay, hubsters!

This is Aaron Weitzman, making my debut here on the Wire! From now on, I will be taking over Fridays.

Earlier this year, we launched a new series on private equity firms investing in healthcare. So far, I’ve written more than a dozen profiles. Some of the trends that stand out are behavioral and mental health.

I spoke with The Vistria Group’s healthcare team back in April and here is what they had to say about this theme.

“We’re seeing continued need for mental and behavioral health services which has been a theme that we focused on in the past and will continue to focus on in the future,” said Amy Christensen, partner and co-head of healthcare at Vistria. “The convergence of decreased stigma increased public awareness, more favorable reimbursement and coming out of the pandemic, especially, an increased need for mental and behavioral healthcare, creates opportunities to invest in companies that are providing high-quality, evidence-based treatment that are looking to grow so that more people can get access to the care that they really need.”

The firm is especially focused on companies that are working with kids and teens, who were disproportionately impacted by the pandemic.

“As well as people who are suffering from substance use disorder and co-occurring mental and behavioral health conditions, who want to stay in their homes and communities but also get access to high-quality treatment.”
Another one I have been seeing a lot of is healthcare staffing and companies and software that are trying to fix the supply/demand imbalance.

I spoke with Oak HC/FT about this very trend in March.

Andrew Adams, co-founder and managing partner of healthcare, said that one major opportunity is to invest in software that enables good clinical care, as it will help relieve a lot of pressure from a labor standpoint.

“Burnout, physician and administration and clinical burnout is a big deal for hospital systems, and anything you can automate, or use technology to leverage human capital, is going to remain a big focus area.”
Lastly, value-based care. This is one is certainly not going away anytime soon.

“Value-based care is the new buzzword, but it captures several different concepts and is not new,” said Greg Moerschel, managing partner at BPOC. “To us, it means shifting financial risk in some form to those who have the ability to control costs and influence outcomes. To really move the dial and aggregate healthcare expenditures, value-based care needs to spread geographically across the country and beyond populations (like Medicare Advantage) where it is often applied today. This will be a generational transition, full of fits and starts.”

If you’re a PE firm building a portfolio in healthcare companies, I’d love to hear about it. Email me at aaron.w@peimedia.com. Also, don’t be a stranger – any healthcare exits or investments, we would love to get the exclusive! You can email me about that as well.

More healthcare investing. Martis is among a handful of young firms seeking capital from limited partners who are generally sticking with their established relationships in the uncertain markets.

Martis focuses on various aspects of the healthcare industry, including services and outsourcing, IT, consumer and wellness and products and diagnostics. Past investments include care-management-software company Altruista Health, Atlantic Diagnostic Laboratories, CareHospice, veterinary business WellHaven PetHealth and medtech company HeartFlow.

Chris Witkowsky reported that back in November, the firm completed a majority investment in Lighthouse Lab Services alongside existing investor NaviMed Capital and company management. The company provides laboratory build-out and management services to clinical labs in the US.

For more, see the story.

Workin’ at the car wash. PE firms are racing to consolidate the sector. The latest story by Obey Martin Manayiti, details how investors have discovered the appealing attributes of the car wash business, including the basic service, strong margins, low working capital, labor efficiency and recurring revenue base.

Obey wrote that the US car wash service market size was valued at $14.21 billion in 2020 and is expected to expand at a compound annual growth rate of 4.8 percent from 2021 to 2028, according to market research firm Grand View Research.

“Over the last few years, the professional investor class has discovered the appealing attributes of the car wash business: the basic service, strong margins, low working capital, labor efficient, recurring revenue base, and that the industry is highly fragmented and ripe for consolidation,” said Gary Dennis, founding partner and vice chairman of Mammoth Holdings.
For more, see the story.

Gallant, formed by ex-Gores execs, sets out to raise Fund II in stingy market. This latest piece by Chris Witkowsky talks about how Gallant is among a slew of emerging managers trying to attract capital from LPs who are more inclined to stick with their established relationships. As larger managers are coming back quicker and with larger funds, early managers are having a harder time finding their way into LPs’ quickly dwindling allocations.

Gallant focuses on investing in lower mid-market complex situations and carve-outs in technology, industrials and business services sectors. The firm in February announced it acquired Pro-Vac, which provides subsurface infrastructure services including stormwater and sewer maintenance, pipeline jetting, repair and grouting and CCTV pipe inspections, wrote Chris.
For more, see the story.

PEI’s OpEx Awards. Call for nominations opened up earlier this week. Do you know a best-in-class operator? If so, submit your nominees to enter Private Equity International’s Operational Excellence Awards 2022.

Submit your entries to OpEx@peimedia.com by the Tuesday, June 21 June 2022.

I don’t know about you, but I can’t wait to grill up some good grub this Memorial Day weekend. Wishing you a safe and happy long weekend! Until next Friday…

Cheers,
Aaron