Healthcare private equity investments were up in 2017, despite Obamacare uncertainty

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Healthcare was the only sector in the U.S. to receive more private equity dollars in 2017 than 2016, despite the U.S. PE industry’s record-breaking year for fundraising.

Private equity investments in U.S. healthcare totaled $83 billion, up from $72 billion in 2016, according to the American Investment Council’s 2017 Q4 Industry Investment Report. Overall, private equity invested $542 billion in the U.S. in 2017, down from $646 billion in 2016.

"Healthcare recorded the highest increase in investment year over year despite some uncertainty in the industry," said Bronwyn Bailey, AIC’s vice president of research and investor relations.

Private equity investment for the year in the seven sectors tracked by AIC was concentrated in business products and services, with $148 billion; consumer products and services, $99 billion; and information technology, $94 billion. The other three sectors, energy, financial services, and materials and resources, totaled $118 billion in investments.

While the overall level of PE investment was down in 2017, the number of deals remained roughly in line with deals and investment volumes seen in previous years, AIC reported. The largest decline in PE investment was in information technology, with investment in the sector down $71 billion from 2016. PE investment in financial services was $45 billion in 2017, down $17 billion from the year before. The investment declines were modest for the other sectors.

For the fourth quarter of 2017, the top three healthcare PE investments were in the middle-market range, according to AIC: PharMerica, a pharmacy provider to institutions, at $910 million, backed by Kohlberg Kravis Roberts & Co. and the Walgreens Boots Alliance; Young Innovations, a dental supply and equipment company, at $770 million, sponsored by Linden Capital Partners and the Jordan Co.; and ZirMed, a healthcare technology company, at $750 million, sponsored by Bain Capital, and Navicure, which received an investment from Bain.

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