- Tech innovation is driving growth in healthcare, General Atlantic’s Robbert Vorhoff told Insider.
- In-person dealmaking is making a comeback, but in a nuanced way, Vorhoff said.
- The first quarter was one of the busiest ever for healthcare dealmaking, according to Refinitiv.
- See more stories on Insider’s business page.
Robbert Vorhoff is ecstatic to be back on the road.
For “weeks now,” General Atlantic’s head of healthcare investments, has resumed travel to meet with portfolio companies as well as prospective investments.
And it’s been a busy year so far, with more than 1,860 deals being announced in healthcare. The first quarter saw 1,304 announcements, marking the second-highest quarter on record for healthcare, according to Refinitiv data.
The sector is undergoing a quantum shift. Private-equity is sizing up companies pivoting to digital solutions and personalized health that’s become critical for consumers who are demanding efficient health services amid a once-in-a-lifetime pandemic.
“People have increasing healthcare needs and that demand is ever-growing,” Vorhoff told Insider. “It’s fair to say that healthcare [services] has not traditionally been on the cutting edge of technology, but now the most exciting things happening are on the elevation front.”
That excitement is evident in General Atlantic’s latest investment decisions. The private equity firm has invested almost $1.4 billion in healthcare companies globally since the first quarter of 2020.
Last month, Vorhoff’s team led a $110 million series D financing for Vida Health, which manages a virtual care platform for payors and employers.
General Atlantic-backed Doctor on Demand, a virtual platform that locates medical physicians, also merged in May with Grand Rounds, a data source for patients seeking second opinions or help to navigate the cumbersome nature of medical billing.
Not only are pure virtual care providers assessing consumers’ interest in digital healthcare, but traditional brick-and-mortar providers are eyeing such capabilities.
Providers have seen less in-person visits since the pandemic hit, according to Vorhoff, and going forward profitable healthcare options will hinge on companies’ abilities to cater to a population hell-bent on convenience.
” Telehealth is now ‘multi-modal,’ through text, telephone call, or virtual. Consumers want that longitudinal relationship with the same provider that knows their benefits and medical history,” Vorhoff said.
“We’ve been starved of engagement”
Last year, despite volatility brought on by the pandemic, private equity’s assets under management, globally, grew 6% year-on-year, to $4.5 trillion, according to data from McKinsey. General Atlantic’s AUM surpassed $53 billion at the end of March, up from about $35 billion at the end of 2019, data from the firm showed.
Healthcare-linked venture capital fundraising also had a record year in 2020, growing 70% to $26 billion from $15 billion a year earlier, McKinsey’s data revealed.
And Vorhoff expects M&A to gather pace during the second half of 2021, as funds of various sizes put their money to work. While he was tight-lipped about how many deals General Atlantic had in its pipeline, Vorhoff said the healthcare team is expected to expand its investments in due course.
And he’s buoyed by the prospects of in-person meetings and work-related travel, but convinced that how private equity conducts its deals has changed forever.
“It’s great to be out there as we’ve been starved of engagement,” Vorhoff said. “But some things, like roadshows for IPOs [initial public offerings] are done virtually, and I’d be surprised if this doesn’t become the norm.”
In May, Centessa Pharmaceuticals, a General Atlantic-backed biopharma company, snared $330 million through an IPO on the Nasdaq.
And last August, General Atlantic’s primary care startup Oak Street Health, went public with a $328 million IPO on the New York Stock Exchange.
With deals coming thick and fast, Vorhoff has also been fielding questions from peers across Wall Street, on worthy staffers capable of tackling new business opportunities.
Indeed, Citi, JP Morgan, Deutsche Bank, and Barclays, among others, have snapped up senior bankers to bolster their respective healthcare coverage, Insider reported earlier this week.
“With an enormous amount of deal activity, the banks are busy,” Vorhoff said. “Many are reaching out about hiring and asking who is good, and I’m hearing this from a lot of places.”
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