With health care reform creating more covered beneficiaries (many of whom do not have a primary care physician), a shortage of physicians and advance practice providers, and an emerging financial incentive to keep patients out of the ER, urgent care is fast becoming a key component in the health care delivery system. What makes the sector unique is the breadth of acquisition strategies – and buyers – in play. While there are many private equity sponsors pursuing traditional roll-up strategies, we also are seeing hospitals, physician groups, and insurers get in the action – not just for the revenues urgent care can generate, but also for the role it can play as an entry-point into the system that can be leveraged to direct patients to the most effective venues of care.
While on an annualized basis, the downward trend in deal flow since the peak of 2015 continues, however the size of deals has risen (see Median Locations slide).
The number of unduplicated buyers per year closely mirrors the number of urgent care deals per year, giving rise to a steady trend of deals per unduplicated buyer (next section).
While basically steady over the past eight years, we see a slight downward trend in deals per unduplicated buyer which indicates there are a substantial number of “one-off” transactions.
Median locations per urgent care transactions are up over the past 18 months as we are seeing an uptick in PE to PE secondary transactions.
Over the past 18 months, hospitals and private equity accounted for 76% of urgent care deal activity, leaving a small fraction for strategics (mostly Concentra) and others.
Perhaps most notable here is the decline of follow-on deals as sponsors increasingly turn to startups to fill out gaps in service.