Sector Update: Exploring the Evolving Competitive Landscape and Emerging Opportunities for Investment in Orthopedics

Livingstone is pleased to share a comprehensive report on the U.S. orthopedics sector, which ranks among the most active sub-sectors in healthcare services in terms of the number of M&A transactions and represents a priority sector for investment among private equity investors.

Key Themes and Observations:

  • Large, high-growth sector with $250+ billion of direct spend on musculoskeletal (“MSK”) care each year.
  • Demand for care is resilient and non-cyclical, with visits and spending increasing each year historically, even during past economic downturns.
  • The confluence of demographic trends and macro tailwinds is fueling an increase in the demand for care and contributing to a forecasted supply-demand imbalance that is driving a true need for more efficient platform models.
  • Multiple levers to drive platform growth both organically (e.g., investing in ancillary services, de novo ASCs, provider recruitment, hospital partnerships, etc.) and through add-on acquisitions.
  • While there are nearly 20 private equity-backed platforms today, the orthopedics sector remains highly fragmented, with platforms accounting for less than 5% of the ~30,000 board-certified orthopedic surgeons, which suggests there is a significant runway for additional platform investments and add-on acquisitions.
  • Overall, M&A activity in U.S. healthcare services has remained robust and less impacted by the broader macroeconomic and debt capital market conditions, especially in the lower middle market.
    • Rolling LTM M&A transaction activity within orthopedics and across physician practice management (“PPM”) more broadly has increased each quarter. It has set new high-water marks in each of the past two years.
  • The early vintage platform investments in orthopedics have all experienced strong growth. They are expected to pursue exit transactions within the next 12 months, which is a good barometer of successful partnerships between physicians and investors.
  • Private equity, as an asset class, has a near-record amount of “dry powder” and continues to seek both new platform investments and add-on acquisitions for existing portfolio companies.
    • High-quality assets that are performing financially are garnering strong interest from both financial sponsors and strategic acquirers in today’s market.
  • Livingstone is one of the most active and experienced advisors in the MSK sector and physician-owned companies. It remains an opportune time for independent physician practices to explore potential M&A transaction alternatives.

If you are interested in learning more or starting a strategic dialogue with Livingstone about opportunities in orthopedics, please contact Eric Weldzius or another senior member of the healthcare coverage team.


Dela sidan


Håll dig uppdaterad Missa inga affärer eller analyser