Josie Doan/PitchBook News
As poor health eats into the European workforce, employee health is moving up the corporate agenda. For PE investors, it’s a chance to back an emerging occupational health segment that’s also ripe for consolidation.
In September, the UK’s Chartered Institute of Personnel and Development reported that the average number of sick days taken by British workers in the previous 12 months was 9.4 days—two days more than in 2023 and a significant increase from the pre-pandemic average of 5.8 days.
The UK labor market is not alone. Across the region, poor health is leaving fewer people available to work.
In 2023, workers in Germany, Europe’s largest economy by GDP, called in sick for an average of 15.1 working days, a four-day increase from two years ago, according to the country’s Federal Statistical Office.
But while Germany’s is among the biggest increases, the country doesn’t rank highest for the most sick days. The World Health Organization reported that in 2024, Norway saw 18.9 days of sick leave per employee, rising from 15.8 days in 2016.
Furthermore, governments are also struggling with shrinking workforces. This week, the UK announced it has launched a review into mental health diagnoses, as 4.4 million working-age people are receiving sickness or incapacity benefits, up by 1.2 million since 2019.
It is against this backdrop that occupational health—a health segment focused on physical and mental well-being of employees in the workplace—is attracting record PE investment.
According to PitchBook data, this year saw a record number of PE deals investing in the occupational health sector in Europe, with €1.8 billion (around $2.1 billion) invested across 32 deals, a significant increase from 2024’s 18.
Notable deals that from the past few months include Warburg Pincus’ acquisition of UK-based occupational health business Health Partners Group, which valued the business between £300 million (around $456 million) and £400 million.
In August, HIG agreed to take a majority stake in Spain-based Avanta Salud Integral, which offers employee well-being, prevention and productivity support for businesses, with MCH Private Equity reinvesting as a minority investor.
Investors are not only tapping into a sector aimed at keeping people working for longer and remaining healthy in the workplace, but also arguably trying to fill a growing gap as public health services become increasingly strained.
"[Private capital] is quite well set up to deal with things like underinvestment in mental healthcare by the state, underinvestment in drug and alcohol treatment or addiction treatment by the state,” said David Jolly, investment director at Weight Partners Capital, a specialist PE investor focused on growth investments in small healthcare companies.
Fabio Riva, vice president at investment bank Houlihan Lokey‘s healthcare group, also notes that the occupational health segment has been relatively overlooked.
“It has been one of those sectors which people have neglected for many years, despite it being more attractive than many traditional healthcare service spaces,” he said
One reason for this attractiveness is the relative stability the segment can provide. As occupational health is B2B, where the service provider works with corporate clients, they can enter into longer-term contracts and have higher visibility over other metrics such as reimbursement rates.
It is also easier to negotiate a price increase with a few corporate clients rather than the mass retail base.
Latest Research
Healthtech Report: Healthy Deal Environment About to Run Into Difficult Comps
At the same time, the industry also offers potential for technological disruption.
When Warburg Pincus invested in Health Partners Group, the tech-focused investor said it will accelerate the company’s investment in innovation, particularly in areas such as proprietary IT systems, digital health services and data-enabled service delivery.
Many of the technologies needed for improving efficiency in the occupational health sector are already on the market, making it easier for companies to adopt. These include systems for patient appointment management, AI-assisted medical report writing and data interpretation for forecasting demands. The industry’s possession of a large amount of proprietary patient data also enables it to leapfrog with AI deployment.
“Occupational health has been historically a very old-fashioned industry with lots of mom-and-pop shops, smaller providers and freelancers who didn’t use any technology, so there was a level of manual work,” said Houlihan Lokey’s Riva. “You are starting from a very low point, so the efficiency gains on the back end and user engagement on the front end, unlike many industries, will be tremendous because they have not been doing this.”
The fragmented market has also created opportunities for add-ons at more reasonable valuations as part of buy-and-build strategies.
NorthEdge Capital invested in UK-based Latus Group in July last year to support the company’s organic growth and deliver strategic M&A. Since then, Latus has already acquired OH Services and Peritus Health Management in a year.
Another playbook is to go niche.
“PE can invest into those big players, or they can invest into smaller operators that are building in a niche that’s been missed,” Jolly said.
Recent News
With Huang gone, Nvidia’s European spree meets its first test
AI-driven data centre demand fuels record quarter for climate tech VC
Mental health is one such area that is already gaining more attention and public money.
Like the UK, the European Parliament identified mental health as a major public health issue in 2023. It is providing €1.23 billion in EU support for mental health initiatives, including initiatives to promote good mental health at work.
Growth opportunities for service providers are also available in countries where occupational health has not been strictly regulated. While the demand grows steadily for some countries where occupational health services are mandatory, the ones where it is more discretionary have seen demand skyrocket in recent years.
Learn about our editorial standards.
