Health Care Focus
We intend to focus on the health care industry including:
Medical device, supplies and diagnostics
Health care providers
Digital health, consumer health
We have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.
- serve a critical role in the health care ecosystem;
- are family or founder-owned, venture or investor-backed, or corporate divestitures;
- are growth-oriented companies led by outstanding teams within their sectors;
- have durable revenue or the potential to develop a durable revenue base;
- drive innovation in their product or service offering;
- would benefit from the Management Team’s and Directors’ network and expertise including acquisition strategy, capital structure optimization, and/or operational enhancements to drive growth;
- would benefit from being a public company by utilizing the broader access to capital;
- can deliver attractive risk-adjusted returns for our shareholders across business cycles
These criteria and guidelines are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general criteria and guidelines as well as other considerations, factors, criteria and guidelines that our management may deem relevant. See prospectus for additional detail.
Health Care Market Opportunity
We believe the health care sector represents an attractive target market given the industry’s size, breadth and prospects for growth, and allows us to capitalize on the broad and unique investing experience of our management team.
In addition, the COVID-19 global pandemic has significantly altered the health care services paradigm, and given this dislocation, we believe further opportunities are likely to be created. We believe the health care industry is attractive for a number of reasons:
Large & Growing Market Opportunity
The health care industry represents a large target market. According to the Center for Medicare and Medicaid Services, total U.S. national health expenditure is projected to exceed $3.5 trillion in 2019, and total health care spending is projected to grow at a 5.5% CAGR through 2027, approaching approximately 20% of total U.S. Gross Domestic Product. This pace of growth is projected to continue over the years to come, driven by favorable trends including an aging population, increased prevalence of chronic disease and improved access to health care.
Favorable Macroeconomic Trends
Despite global economic pressure as a result of COVID-19, total health care expenditure has continued to grow at a pace substantially above the rate of inflation. Growth is projected to continue, spurred by an aging population, increased prevalence of chronic disease, and improved access to health care. Although, near-term market impacts of COVID-19 remain volatile and continue to evolve, pent-up demand for U.S. health care services including both elective and non-elective visits are widely expected to drive increased volumes. This insulated and evolving market has offered well-positioned health care companies the opportunity to find success in the short and long term.
Expansive Universe of Targets
We intend to focus our investment effort broadly across the health care industry. We believe that our investment and operating expertise in health care across multiple industry verticals will give us a large, addressable universe of potential acquisition and consolidation opportunities. The number of private companies in the health care industry is significant, with over 55,000 firms focused on various sub-sectors of the health care value chain in the U.S. alone. We believe that the diversity of the target universe and the number of largely uncorrelated sub-sectors increases the likelihood that the management team will be able to identify and execute an attractive transaction.
Unique Expertise Required to Invest in Health Care
Our management team believes that the complexity of the health care industry acts as a barrier to entry, requiring investors to have significant sector-specific knowledge and expertise to identify and appropriately analyze investment opportunities. Technical operational knowledge, an understanding of the reimbursement environment and regulatory landscape, complex valuation methodologies, specialized accounting treatments and regulatory and political considerations may deter competition. We seek to leverage past experience to bifurcate value generating opportunities from over-inflated assets during times of volatility and uncertainty. Our management team has made numerous investments across the health care landscape, and we have established ourselves as keen market participants.