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PE to pour billions into pair of US healthcare deals

With takeovers of Curo Health Services and Sound Inpatient Physicians, the US healthcare industry continues to be a popular investment for PE firms.

Health insurance giant Humana has teamed with private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe on an agreement to purchase hospice operator Curo Health Services for some $1.4 billion, with Humana taking a 40% stake. The announced deal is the consortium’s second in the home-health space in the past six months, following an agreement to take Kindred Healthcare private for a reported $810 million in December. If both deals close, the group plans to merge the businesses to create what it claims will be the largest hospice company in the US.

It won’t be the first time the North Carolina-based Curo has teamed with private equity. Current backer Thomas H. Lee Partners has owned Curo since 2015, when it acquired the business from GTCR. The Chicago-based GTCR had formed Curo five years ago, in 2010, and used the company as a platform for a handful of hospice add-ons.

In a separate healthcare transaction, an investor group led by Summit Partners has agreed to pay €1.76 billion (about $2.15 billion) to acquire Sound Inpatient Physicians from German healthcare company Fresenius Medical Care. Based in Tacoma, WA, Sound Physicians provides emergency medicine, critical care and other acute healthcare services; the company posted some €1.25 billion in revenue and €90 million in EBIT last year.

PE investor activity has increased in the US healthcare sector each of the past four years, peaking with 615 deals in 2017, according to the PitchBook Platform. Overall, the number of completed transactions in the space rose by nearly 61% between 2013 and 2017.

But 2018 has slowed in terms of deal activity: Investors are on pace to complete fewer than 500 deals by year’s end for the first time since 2014.

Learn more about why PE firms are backing the booming US healthcare sector.

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    Written by Adam Lewis
    Adam Lewis was a financial writer covering private equity for PitchBook. He covered dealmaking, company and investor news for the PitchBook newsletter and blogs about the intersection of private equity and politics. A graduate of the WSU’s Edward R. Murrow College of Communication, Adam was previously a sportswriter covering the Mariners and Seahawks.
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