END USERS AND CONSOLIDATORS: THE NEXT POSSIBLE WAVE OF TRANSACTIONS IN URGENT CARE

Published by The Journal of Urgent Care Medicine

Urgent message: The idea of a “typical” urgent care operation buyer is evolving along with the industry. While private equity has been an essential player in market growth, healthcare organizations with longer-term vision are now more commonly involved in acquisitions.

It’s no secret private equity (PE) has a played a paramount role in the design, development, and growth of the urgent care industry. Collectively, these firms have invested billions of dollars to create the level of awareness, acceptance, and reliability that is enjoyed by patients across the country.

In the industry’s pioneer period, urgent care chain transactions among private equity companies were commonplace. Since PE firms typically operate under 3- to 6-year investment time horizons, it is inevitable that many of these urgent care chains have and will continue to be sold. Today, we find evidence that urgent care chains are increasingly acquired by health systems, managed care organizations, and existing PE-backed portfolio companies (ie, market consolidators). These new buyers are expected to have possibly longer investment horizons and varying transaction motivations.

Table 1 illustrates the prevalence of transactions among PE firms earlier in the decade. These firms have generally held their investments for 3-6 years and sought 20%–30% annual investment returns that were largely achieved by expanding the size, scale, and penetration of their urgent care chain. While not all-inclusive, there are currently seven urgent care chains held by a PE firm that could be for sale in the short-term based on this average historical hold period.

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