Throwback Thursday: remembering 2019’s healthcare tech boom as Parthenon, Bain step in to lead Zelis

Waxing nostalgic for last year's health tech boom amid pandemic

Hi, everybody!

Are you scrolling through your photos and reminiscing about getting on crowded subways to meet your friends for live music or jumping on a packed flight for a quick weekend getaway?

If you’re a healthcare banker, you might also be a bit nostalgic.

TBT: healthcare IT and payments

It wasn’t long ago that I was writing about hotly contested auctions across the healthcare industry. A couple of the sexiest areas of investment fell at either the nexus of healthcare and technology or healthcare and payments, where it wasn’t unusual for the best assets to command EBITDA multiples north of 20x if not the high teens. You could argue these transactions defined the top of the market.

Here’s a quick recap:

Bain Capital joined as an investor in Parthenon Capital’s marriage of a pair of healthcare fintech companies: Zelis Healthcare and RedCard. The deal commanded a $5.7 billion valuation, I wrote. UnitedHealth prevailed in the auction for New Mountain Capital’s Equian in an about $3.2 billion deal — representing Buyouts’ “Deal of the Year”. InstaMed, a healthcare payments company, went to JP Morgan in a transaction valued north of $550 million, PE Hub wrote.

Elsewhere, Bain sold a majority stake in revenue-cycle-management giant Waystar to EQT and CPPIB in a $2.7 billion deal. Advent International invested in Spectrum Equity-backed Definitive Healthcare, a healthcare-data company, in a transaction valued at $1.7 billion.

Leonard Green & Partners and Ares Management snapped up Press Ganey, an analytics and patient satisfaction survey provider, from EQT in a more than $4.2 billion deal.

2020 has looked starkly different. As one industry source commented in a recent conversation: “For the first time, we’ll see if healthcare IT is as resilient as we think it is in a downturn.”

This week a pretty interesting situation surfaced at one of 2019’s most high-profile PE-backed deals in this universe.

The founding CEO of Zelis, Doug Klinger, stepped down in the midst of the downturn, I learned. A newly formed operating committee – comprising two members of Parthenon and Bain – will lead the company alongside the executive team while the company runs a search for a new chief, a Zelis spokesperson confirmed with PE Hub. Check out my story for more info.

What surprised me most was seeing senior members of the PE funds step up in this manner. I’ve only seen this happen at much smaller healthcare businesses. On the surface, it seems to indicate the importance of the company to Parthenon.

Regardless of how things unfolded at Zelis, it got me thinking about how healthcare payments and tech companies are faring through the crisis. So much of the focus has been on provider-facing businesses suffering amid the government-mandated closing of their doors.
According to sources, business models such as payment integrity and revenue-cycle-management are a function of claims, which is a function of how many procedures are occurring. As we all know, there’s been a big decline in non-essential patient visits during the pandemic. For example, hospital giant HCA said in late April that outpatient surgeries were down 70 percent year-over-year for the month due to a cancellation of elective procedures.

Volume declines are certain to cause some damage at any transactional business, though another source said initially payment integrity is doing fine because of a lag on their business. Elsewhere, RCM is hurting, this person said.

Besides the obvious strength of telemedicine in the lock down, sources have pointed to other pockets of healthcare tech performing well: workforce management, resource optimization, as well as communication and collaboration.

For example, there’s a host of tech companies trying to address scheduling and broader workforce management needs of healthcare providers to improve productivity. As one source noted, this area becomes more valued by hospitals seeking to manage more complex operations and keep costs down post-pandemic.

Are any deals brewing in healthcare IT or payment services amid the downturn? Hit me up at

Top Scoops

Vet stuff: Deal news was scant this week, but there was another vet care deal across the pond. Carlyle Group agreed to acquire a majority stake in SeQuent, an animal healthcare company in India. Read our brief.

Earnouts: Last week I looked behind the scenes of American Securities’ unusual deal structure for the anesthesia business of Mednax. The transaction, among other things, included an earnout contingent on the American Securities’ future multiple of invested capital on the platform through which it bought the Mednax unit. For more info on the resurgence of earnouts in transactions, check out my Q&A with Eva Davis of Winston & Strawn.

“Literally every deal on my desk right now has an earnout component to it and did not have an earnout component two or three months ago,” the co-chair of Winston’s private equity practice told me. Read more.

That’s it for me today. As always, reach me at with your comments, tips, or just to stay hello.