The healthcare market is extremely robust with growth of about 5.8 percent expected until 2015, says Brian Miller, a managing partner with Linden Capital Partners.
MILLER: Extremely robust. The CMS just recently re-projected growth up to about 5.8% through 2025. For the industry as a whole, you’ve got a multi-trillion dollar business growing, almost 6% for almost a decade. If that were an LBO with a top-line growth like that and you could drop a little, a leverage to the bottom line, you’d have made high single digit EBIT growth with 50% leverage. I think you’d be hitting returns most investors would be happy with just for the industry alone.
What we’re finding in the markets strong, it’s always hard to find excellent companies and excellent talents but we’ve been able to invest at a rapid pace. We’ve put almost half of our fund to work in the last 18 months. In the last quarter alone, we’ve able to execute five token acquisitions. We’ve been expanding our team with the belief that healthcare is going to be a robust area to invest for decades to come.
I know it gets more complicated when you decide where within that area you want to invest because obviously some areas are going to take off and others are going to be a little challenge. We have a benefit of looking all across the healthcare economy because we invest in the entire spectrum. Services, distribution, product and pharma. We’ve been pretty even about investing in that and those splits through the fund.
Most recently for example, in the middle of last year, we invested in behavioral, I’m sorry, pinnacle treatment centers which is an opioid treatment chain. It’s addressing a huge concern and problem in America which is the overuse of opioids and the number of people that are addicted to those pills.
I mean, at a macro level, a lot of people are very focused on it because it’s on the news, but one, Trump doesn’t seem to be having a lot of momentum on actually getting a legislation passed. If something were to occur, ACA and its fundamental form when it was initially passed was insurance reform. It affects the 18 million uninsured coming into the system and now potentially not having a place. If that occurs again, it’s a relatively small percentage of the US population, more likely to impact places like hospitals that had the uncompensated care that was now being covered through that insurance for all. It was not fundamental healthcare reform, it was insurance reform.