McKinsey October 14, 2024
Refocusing on creating long-term capabilities is critical for lasting growth.
The past two years have been challenging for investors in the healthcare provider sector. Tight credit markets led to increased uncertainty among investors. In parallel, the lapse of COVID-19-era revenue protections and ongoing input cost inflation compressed margins at most target provider organizations. As a result, buyout deal activity declined by 19 percent per year from 2021 to 2023, as buyers perceived sellers’ value expectations to be not consonant with market realities.
Despite the bearishness, investors with a long-term mindset have recognized three important themes.
The exuberance has subsided, but the underlying trends that make provider investments attractive persist
Despite recent margin pressures, the fundamental trends driving growth and margin...
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