The value and volume of private equity deals in the global healthcare technology sector are on track for a second consecutive annual decline in 2023 and could fall to their lowest levels since at least 2019.
Private equity and venture capital firms invested $9.18 billion across 370 deals in the sector during the year through Nov. 23, data from S&P Global Market Intelligence shows.
The transactions analyzed include whole company and minority stake acquisitions as well as funding rounds for companies providing IT services primarily to healthcare providers.
Quarterly deal count decline
In the fourth quarter to Nov. 23, private equity investments in the sector totaled $1.79 billion, not far from the $2.34 billion recorded during the full fourth quarter of 2022.
However, deal count has been on a quarterly decline in 2023. It looks set to continue in the fourth quarter with only 51 deals announced as of Nov. 23, far from the 160 recorded for the full fourth quarter of 2022.
The sector carries the second-highest risk score across all industries. Publicly listed healthcare technology companies in the US had a one-year median probability of default of 9.5% at the end of the third quarter, according to Market Intelligence data. The score is mainly based on the volatility of share prices for public companies, considering country and industry risks, and indicates the likelihood of default within a year.
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Largest deals
The largest deal in the year through Nov. 23 was the acquisition of Nextech Systems LLC by TPG Inc. from Thomas H. Lee Partners LP for $1.40 billion, followed by Claritas Capital's proposal to acquire an approximately 89.6% stake in Sharecare Inc. for $595.6 million.
