The 20th annual McGuireWoods Healthcare Private Equity and Finance conference (HCPE) recently convened in Chicago. HCPE is known for its focus on the lower and core middle market, attracting numerous private equity (PE) portfolio companies, service providers, and lenders.

Key takeaways from the conference indicate a cautiously optimistic deal environment. While activity has increased compared to last year, many deals are progressing slowly, awaiting the Fed’s potential rate cuts to spur significant movement. The reopening of the broadly syndicated loan market is making financing more buyer-friendly, especially in larger transactions, though lender scrutiny remains intense on EBITDA and interest coverage. The antitrust environment was a hot topic, with discussions centered on PE’s role in healthcare innovation and access. Additionally, market sentiments reflected a severe drop in the popularity of PPMs, with comparisons drawn to the 1990s. Physician compensation challenges and elongated holding times were also highlighted as pressing issues.

Two sessions of note provided valuable insights:

• The medspa segment was described as “painfully fragmented” yet highly profitable, signaling potential for consumer-driven wellness investments.
• The pharma services sector was likened to multisite physician practice deals but with significantly higher margins, hinting at promising valuations in 2024.

As the healthcare investment landscape evolves, critical questions arise: How will anticipated Federal Reserve actions impact deal flow? Will the reopening of the loan market continue to favor buyers? What are the implications of the current antitrust scrutiny for PE in healthcare? As stakeholders navigate these dynamics, the insights from HCPE 2024 offer a strategic foundation for future investments.