Urgent Care And Private Equity – A Winning Combination

Urgent Care And Private Equity – A Winning Combination

As the saying goes, with change comes opportunity, and few industries are changing more rapidly than the U.S. healthcare industry.

The radical transformation of the healthcare industry and the increasing pressure to be more efficient has created new categories of winners and losers.

One of the most apparent winners in this evolving landscape is the healthcare subsegment of urgent care.

The urgent care industry is one of the fastest-growing segments in the U.S. healthcare system, which is evidenced by the growing number of walk-in clinics popping up in grocery stores, main streets and even shopping malls across the country.

There was an almost 20% growth in existing clinics in the past four years, with the total number of urgent care clinics exceeding 9,000.

Given a shortage of primary care physicians, coupled with rising wait times and overcrowding at emergency rooms over the past five years, it’s not surprising that a growing number of patients are turning to urgent care providers for more affordable, convenient treatment for common ailments.

And according to IBISWorld, over the next five years, the urgent care industry is poised to continue its growth trajectory with industry revenue forecasted to grow at an annualized rate of 6.3% to $21.4 billion.

The opportunity that urgent care presents hasn’t gone unnoticed – especially by private equity firms – as the industry has quickly become healthcare’s modern-day gold rush.

Over the past few years, more than a dozen private equity firms have invested millions of dollars into urgent care clinics. And that investment activity is set to continue as private equity executives expect to generate EBITDA margins of 20%.

Urgent care clinics – defined by some as retail health clinics given their business model – offer a number of features that make the industry an attractive investment opportunity.

For example, urgent care clinics have a growth strategy that can benefit from capital infusion, are scalable without the relatively high costs of growing a major facility-based business, and are oriented toward expansion into other geographic markets through both new clinics or acquisitions of existing clinics.

While investing in urgent care can definitely prove to be profitable for private equity firms, urgent care clinics can also benefit from the relationship.

Private equity firms help urgent care clinics to standardize processes, consolidate overhead costs and find new branch locations without saturating the market – relieving physicians from tasks that they are typically too busy to tackle.

However, looking forward, it’s critical that owners of urgent care centers devote the necessary time preparing their company for acquisition if they want to attract potential buyers and maximize their sales price.

Want to know how to make your urgent care centers attractive to potential bidders and maximize the sales price? Stay tuned for our next post or contact us today. 

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