McGuireWoods recently held its
16th Annual Healthcare and Life Sciences Private Equity and Finance
at the Four Seasons Hotel in Chicago. The premier two-day conference, held
Feb. 20-21, provided content-rich programming that explored new ways to
successfully close transactions and achieve growth with healthcare
companies, lending institutions and private equity firms.
This year, keynote speakers James Carville and Ari Fleischer discussed
governmental policies and administration affecting the healthcare industry.
Monica Mehta, Managing Principal of Seventh Capital, joined attendees on
day two as speaker for the Women in Private Equity and Finance Networking
Breakfast as well as presenting the lunch keynote and serving as a key
panelist in a discussion spotlighting the growth of women in private equity
The conference drew registration of more than 850
professionals from private equity funds, senior and mezzanine lenders and
investment banks, alongside the vast array of C-level executives,
consultants and principals in the healthcare and life sciences industries.
The event continues to deliver as one of the best networking conferences of
its kind. The deep-dive discussions into various sectors,
and on the industry and deal-making generally, were extensive and produced
interesting discussions across the board.
Following are some key takeaways from the conference:
- Senior and junior lenders noted that debt capital continues to be
readily available, with predictions that the bullish approach would
continue for at least the next two to three years.
Lenders noted that they were often going outside their comfort zone into
higher leveraged structures, with fewer covenants, to deploy capital. Many
discussed changing their “strike zone,” looking at companies with lower
EBITDA and beyond traditional healthcare providers to health IT, pharma and
medical device. Several noted that, while the amount of capital available
was at some of its highest levels, appropriate target companies/borrowers
were harder to find. But consensus remains that 2019 should yield some of
the highest returns for healthcare/life sciences debt investment.
- Over the past several years, there has been a renewed discussion about
the dearth of women in private equity firms and a new energy for making
The conference continued and elevated this discussion through a keynote
event, “The Growth of Female Founders, Company Executives & Private
Equity Leadership in Healthcare Private Equity Investments,” as well as at
the lively Women in Private Equity and Finance Networking Breakfast.
Private equity firms recognize that in the shifting landscape of new
limited partner players, evolving target company leadership and focus, and
a shifting role of women generally in the U.S. economy, long-term success
hinges on the recruitment, advancement and retention of women in private
- Physician alignment continues to be an area of focus for private
During various panels, experts discussed a range of equity strategies,
cultural improvements and governance strategies to align physician and
platform successes. They noted that market compensation for various
specialties typically falls within a narrow band, such that platforms need
these other alignment strategies to succeed. An alignment focus may be a
key differentiator in this investment push, as compared to the 1990s
failure of some physician practice management companies, where the trend
was more focused on reducing compensation to grow EBITDA. This focus may
provide more long-term successes for these platforms.
- Panelists at various sessions noted issues with recruiting the next generation of providers.
Such concerns permeated diverse specialties from orthopedics,
ophthalmology, dermatology and oncology. In various conversations,
panelists discussed the utilization of significant signing bonuses, long
guarantees and student loan repayments. Some platforms noted expansion of
programs like clinical research to attract new providers. Others have
allowed younger physicians to work part-time and spend the balance of their
time with another group to show the value of their organization and
culture. Finally, platforms continue to review ways to use non-physician
providers in an optimal manner to ensure professionals are operating at the
“top of their license.”
- Conference attendees openly predicted a growth in platform exits over
the next couple of years.
Such exits make sense after the record run-up of private equity deals in
the healthcare space over the last five years. Funds exiting their initial
platform investments will likely accelerate. Panelists heard about recent
successful exits, like
Pouschine Cook Capital Management’s exit from Golden State Dermatology
and Sheridan Capital's partial exit and recapitalization of Smile
Doctors, as examples to follow.
Over the next few weeks, McGuireWoods will publish a series of posts with
key takeaways from various conference panels.
Thanks to everyone who attended the event — we look forward to continuing