Largest Private Equity Health Care Deals of 2018: Kindred, Curo Make the List

Private equity (PE) interest in health care spiked last year — with in-home care and hospice deals among the 10 largest in terms of dollars.

Overall, there were at least 715 PE deals that closed by the middle of December, according to PitchBook, which provides data and other insights on the private market through a variety of software applications. Those deals had a combined value of nearly $104 billion, largely thanks to several individual ones that topped the $1 billion mark.

In comparison, private equity firms only completed 672 health care deals in 2017 and a meager 200 in 2009, statistics from PricewaterhouseCoopers’ Health Research Institute show. Health care companies looking to sell non-core business units or looking to strengthen their resource pool to compete in a highly competitive market are among the many drivers of PE’s expanded role.

There will be at least 747 health care deals involving private equity buyers or sellers in 2019, the Health Research Institute projects.

“Private equity investment in health care isn’t going to single-handedly improve care quality, enhance the patient experience or reduce health care costs to consumers,” Health Research Institute analysts maintain. “But it likely is fueling the efforts already in place. Private equity firms bring capital and experience from other industries that can contribute to the health care industry’s efforts to rein in costs and achieve better outcomes.”

Private-equity powerhouse KKR’s $9.9 billion deal for Nashville-based Envision Healthcare Corporation, one of the largest doctor-staffing companies in the country that also operates a handful of in-home care entities, was the largest PE health care deal. Announced in June, KKR officially completed the deal in October.

The $4.1 billion acquisition of Kindred Healthcare by Louisville, Kentucky-based insurance giant Humana Inc. (NYSE: HUM) and PE groups Welsh, Carson, Anderson & Stowe and TPG Capital was the fourth-largest private equity health care deal last year. Under terms of the deal, finalized in July, Humana acquired 40% of Kindred at Home’s business, with the two PE groups acquiring the remaining 60%.

Humana, TPG Capital and Welsh, Carson, Anderson & Stowe also teamed up for the eighth-largest PE health care deal — their $1.4 billion acquisition of Mooresville, North Carolina-based hospice provider Curo Health Services. The deal closed in July, also with Humana gaining a 40% stake in the business under terms of the deal.

Here is the full top-10 list of PE health care deals from 2018, originally published by Forbes using PitchBook data:

1. Envision Healthcare ($9.9 billion) | KKR
2. Athenahealth ($5.7 billion) | Veritas Capital, Evergreen Coast Capital
3. LifePoint Health ($5.6 billion) | Apollo Global Management, ATP Private Equity Partners, RCCH HealthCare Partners
4. Kindred Healthcare ($4.1 billion) | Humana; TPG Capital; Welsh, Carson, Anderson & Stowe
5. American Medical Response ($2.4 billion) | Air Medical Group Holdings
6. Sound Physicians ($2.15 billion) | Revelstoke Capital Partners, Athyrium Capital Management, Summit Partners, Silversmith Capital Partners
7. Lifescan ($2.1 billion) | Platinum Equity
8. Curo Health Services ($1.4 billion) | Humana, TPG Capital; Welsh, Carson, Anderson & Stowe
9. Juice Plus ($1.235 billion) | Altamont Capital Partners
10. Analogic ($1.1 billion) | Altaris Capital Partners

While the above list only highlights Kindred Healthcare and Curo Health Services, there were dozens of notable home-based care deals throughout 2018 by PE firms.

SYNERGY HomeCare, a franchisor with about 300 locations nationwide, was sold to private equity firm NexPhase Capital for an undisclosed sum in April.

In November, Pharos Capital Group made a majority investment in Charter Health Care Group, a California-based provider of post-acute care services, including hospice and home health care.

In October, Bain Capital Double Impact announced it had acquired and planned to combine Arosa and LivHome to create a new national in-home care provider.

As private equity becomes increasingly involved in health care, some have raised questions regarding the motives of firms and their willingness to realistically balance profits with high-quality, affordable care. Those skeptics include James Carey, the executive director of Association of Independent Doctors.