It’s a moment of opportunity for healthcare deals, said TPG’s Jeff Rhodes; LLR urges shippers to embrace tech

TPG's Rhodes discusses healthcare investing.

Happy Fri-yay, Hubsters! Aaron here with the Wire, your favorite way to end the work week.

Healthcare heartbeat. This week, I reached out to Jeff Rhodes, co-managing partner of TPG Capital for his insights on dealmaking in today’s market. He co-leads the San Francisco firm’s healthcare group and its activities in the healthcare services, pharmaceutical, and medical device sectors.

TPG invests behind strong secular trends, such as the shift towards more accessible, personalized care that has accelerated over the last two years.

“The consumer is feeling stretched coming out of covid, especially given the current inflationary environment, and that has acted as a catalyst towards lower-cost, higher-quality care,” said Rhodes said in an email exchange. “The shift to a value-based care delivery model, and the need for services and technology to make that model possible, had started to occur prior to covid and has only accelerated due to the pandemic.”

He noted that covid also created a new normal for patients and care providers who have become accustomed to a more flexible and tech-driven set of options for how care is delivered.

“Patients expect the same consumer experience they get in other areas of their lives,” he said. “As a result, we’re seeing innovation from companies that are creating new products and services to adjust to this demand, as well as greater integration of care models.”

Rhodes notes that one of the trends he is hearing about most from TPG’s portfolio companies right now is how they are adapting to tighter labor market dynamics.

“Leaders are focused on making sure their companies are places that can attract, retain, and motivate world-class talent,” he said. “And finally, supply chain constraints have led to companies looking for efficiencies that will allow them to have core products on hand for care delivery, and innovations for new products and technologies to help manage potential supply chain issues.”

As far as opportunities go, Rhodes told me that the firm continues to invest in products and services that are expanding access and enabling greater efficiency for the benefit of both patients and providers.

“We have a focus on backing tech-enabled solutions that are integrated and offer end-to-end solutions for care delivery models,” he said. “Covid underscored the need for true innovation and created an opportunity for capital investment to help the companies with better models grow and expand. When we invest with a growth orientation, choosing the right ‘neighborhood’ in healthcare is more important than the last turn of debt.”

“Even in challenging markets, we see strategics looking to partner around portfolio companies that open new capabilities and markets, and that is a significant investment opportunity for us,” he said.

Rhodes also shared his outlook on dealmaking.

“Right after you have a period of market turbulence like we are seeing now, you tend to see a slowdown in dealmaking activity,” he said. “We may see a shift in mix of deal types, perhaps an increase in take-privates, but there is still a fair amount of activity in the space. We’re viewing this time as an opportunity to invest behind great, secularly growing parts of the healthcare sector, especially in companies that are in need of growth capital to achieve strategic transformations or goals around growth acceleration. These markets often generate some of the best investment opportunities when you look in retrospect.”

For more on TPG’s investment strategy in healthcare, see my profile on the firm.

It’s fascinating to hear from healthcare investors about what they are seeing and how they are handling the choppy waters.

In last Friday’s Wire, I featured insights from Bain Capital’s Devin O’Reilly.
If you want to share your thoughts, feel free to email me at aaron.w@peimedia.com.

Transportation management. My colleague Obey Martin Manayiti penned a piece about how carriers and shippers need to embrace new technological tools that smooth out their operations in this era of supply chain complexity.

Obey spoke with Michael Pantilione, a partner at LLR Partners, on the heels of the Philadelphia firm’s making a growth investment in PCS Software, a Houston-based provider of transportation management systems for shippers, carriers and brokerages in North America.

Traditional approaches to supply chain management are littered with manual processes.

“In PCS, we see a company well positioned to fill a technology gap that allows supply chain participants to modernize their business operations, gain visibility and deliver a better experience for increasingly demanding customers,” Pantilione said.

Software from PCS facilitates both better operational efficiency for businesses and a more connected ecosystem, he added.

Read the whole story here.

Dear reader. PE Hub has launched a new reader survey, and we’d love to hear from you. We always benefit from hearing feedback from our readers. What do you want to see more of, what do you think we are doing well, and what we could improve on?

Let us know how we’re doing at the survey here.

As always, you can reach out to PE Hub editor-in-chief Mary Kathleen Flynn at mk.flynn@peimedia.com.

And, if you haven’t already, now’s a good time to register for PE Hub Europe and editor Craig McGlashan’s daily Dealflow newsletter – the European version of the Wire. Click here.

That’s it for me. I am in store for a nice relaxing weekend, something I have not had in a long time. Of course, I am looking forward to watching football on Sunday, too! Wishing everyone a wonderful weekend!

Cheers,

Aaron