Matt Brohm and Jeff Friedman Quoted in PitchBook’s Q2 2023 Healthcare Services Report

AGG partners and co-chairs of the Healthcare Private Equity team, Matt Brohm and Jeff Friedman, were quoted in PitchBook’s Q2 2023 Healthcare Services Report, which breaks down PE trends and investment strategies in healthcare services, with spotlights on mental health services and medical spas, two of the sector’s most active investment categories.

Matt and Jeff explain to PitchBook that many platforms this year have focused on small tuck-ins that they can finance entirely with free cash flow, which minimizes execution risk.

Medical spas in most states are subject to the Corporate Practice of Medicine doctrine and anti-kickback laws, but are not properly structured to account for these regulations. As such, sellers must often convert the business to a management services organization during a transaction. Matt and Jeff describe this process as typically painless because there are no payer contracts to be moved to the new professional corporation. They also share that successful medical spas see high rates of return patients, with loyal customers receiving treatments as often as every month. Subscription plans are common and provide owners with predictable, upfront cash flows. However, in a transaction, the resulting unearned revenue liability can be a sticking point for buyers.

To read the full report, please click here.