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Very little has changed in regard to private equity investors’ long-term outlook on the healthcare industry. If anything, the pandemic reaffirmed that health care is an industry that is critical and should remain an active focus for future investment.


3333 Piedmont Road
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Private Equity Interest in Health Care Remains Strong Despite COVID-19

July 2020

About Hammond Hanlon Camp LLC


Hammond Hanlon Camp LLC (“H2C”) is an independent strategic advisory and investment banking firm with a singular focus on health care. Our commitment to exceed our clients’ expectations begins with senior leadership on every engagement and continues with independent and objective strategic advice. Our belief in the markets and in the power of competition has resulted in loyal clients and long-term relationships.


The experienced professionals at H2C are well positioned to serve as your trusted advisors. We have the expertise to understand the unique complexities of the healthcare industry and an in-depth knowledge of the range of potential alternatives essential to designing and implementing highly successful business and financial strategies. We bring in-depth knowledge and experience across the full continuum of care and across a wide range of healthcare-related businesses.


H2C offers services in the following areas:


  • Strategy design, development, and execution

  • Mergers, acquisitions, and divestitures

  • Capital planning and management

  • Capital markets financial advisory and private placements

  • Real estate advisory and transaction execution services

  • Bankruptcy and restructuring


About H2C's Healthcare M&A Team


Our healthcare M&A team has represented clients in the acquisition and divestiture of a wide variety of healthcare services companies, from hospitals, labs, and dialysis centers to home health care agencies, medical practices, and more.


Mergers and acquisitions can revitalize an organization, but approaching any prospective transaction with objective analysis is key to its success. As trusted advisors at H2C, we strive to add value to our clients’ M&A transactions in many ways, from assessing fair market value,  identifying and prioritizing objectives, helping to keep your organization from falling victim to external pressures to approaching the market broadly, and using competition to drive the optimal results. Our commitment to exceed our clients’ expectations begins with senior leadership on every engagement and continues with independent and objective strategic advice. The best possible result? A win-win for everyone.



Kelly T. Duong

Hammond Hanlon Camp LLC



623 Fifth Avenue
29th Floor
New York, NY 10022



311 South Wacker Drive
Suite 5425
Chicago, IL 60606


William B. Hanlon III


858 242 4801                          


4655 Executive Drive

Suite 280
San Diego, CA 92121

Despite the COVID-19 pandemic’s unprecedented disruption to healthcare delivery, private equity firms are actively looking to continue deploying capital.


Hammond Hanlon Camp LLC (“H2C”) conducted nearly 75 discussions with healthcare-focused private equity investors across the country this spring. While new deal flow among private equity investors decreased significantly between March and May, most private equity firms indicated that they have recently experienced a dramatic uptick in new deal activity. However, deal volume still falls below historical averages.


Based on a confluence of factors, H2C expects a drastic uptick in M&A deal activity during the second half of 2020 and in 2021, and private equity sponsors will be active participants. Our conversations indicate sponsors are eager to look at new deals and are open to working collaboratively with hospitals and health systems around potential partnerships or carve-outs of non-core assets.


3 Verticals Draw Strong Post-COVID Interest from Investors


According to Bain & Company, the private equity community is sitting on a record high of $2.5 trillion in dry powder, with more than half of it in North America. With states, businesses, and the capital markets increasingly reopening, many private equity investors can refocus their attention from the operations of their portfolio companies to identifying and making new investments.


The consensus gained from calls conducted with private equity sponsors by H2C is that very little has changed in regard to private equity investors’ long-term outlook on the healthcare industry. If anything, the pandemic reaffirmed that health care is an industry that is critical and should remain an active focus for future investment. Most sponsors contacted by H2C agreed that COVID-19 acted to accelerate many of the healthcare trends that have been unfolding for years, with three areas of investment drawing strong interest from investors: physician practices, post-acute assets, and telehealth.  


Physician practices. In the wake of COVID-19, physicians that previously valued their independence are likely to have a renewed willingness to consider acquisition or partnership—and private equity sponsors stand ready to respond. Physician practices across all specialties felt the financial hit of states halting elective procedures: 97 percent of physician practices surveyed by MGMA say COVID-19 negatively impacted their margins, with 55 percent reporting a drop in revenue and 60 percent reporting a decrease in volumes. Even in orthopedics—one of the fastest-growing healthcare segments and a market described as “white hot” a few years ago—the coronavirus hit practices hard, prompting some practices to examine what it will take to protect their long-term future. Many groups also experienced challenges in receiving a financial lifeline through the Small Business Administration, and smaller groups with fewer resources struggled to adapt to the changing landscape.


Post-acute care. While no subvertical has been left unscathed by COVID-19, assets in the post-acute space proved fairly resilient, given the continued push for higher-acuity care to be delivered outside the four walls of the hospital and in the home. As a result, approximately 75 percent of the sponsors with whom H2C has spoken would be open to post-acute partnerships with health systems, as local knowledge and referral patterns are viewed favorably. Following the initial two- to three-week shutdown period in March, demand for services in the home returned. Post-acute assets were able to stabilize, and some even saw an increase in revenues versus expected budget. In fact, some experts project a surge in demand for post-acute services among patients who have battled COVID-19.


Telehealth. Telehealth also is attracting strong interest from private equity investors in a post-COVID environment. There is a significant correlation between a provider’s ability to pivot to a telehealth model and how its assets have performed since the COVID-19 outbreak. Organizations with a robust telehealth component performed better than their peers as they were able to serve patients without physical contact—helping to contain the spread of the virus while appealing to consumers’ desires to obtain care from their home. Based on decreasing regulations and improvements to reimbursement, private equity investors have investigated deploying telehealth solutions across a range of specialties to help bend the cost curve.


To Move Deals Forward, Creativity May Be Key


The prevailing sentiment is that investors are willing to be creative and are looking at deal terms beyond valuation to complete transactions.


Two barriers remain as deal activity among private equity firms returns to normal. The leverage markets have proven challenging, making it more difficult for sponsors to obtain the necessary leverage at attractive rates. Pre-COVID, sponsors were seeing leverage upwards of 6.0x, with rates in the range of L+475 to L+600. Now, sponsors are having a hard time getting more than 4.0x leverage, and rates are higher. 


The second barrier to deals closing is the preference for in-person meetings, which are still viewed as important prior to closing; some firms are even making in-person meetings a condition to close. As such, strong management by healthcare leaders will continue to be prioritized among private equity sponsors when evaluating opportunities.


If your institution is considering evaluating options and opportunities for merger, acquisition, or partnership, H2C is uniquely positioned to offer guidance. Let us put our market knowledge and expertise to work for your institution. Contact an H2C professional directly.

Nicholas R. Beale


858 434 1162


Stewart Jamieson

Vice President 

212 257 4504


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