Healthcare Growth Equity

Sector Definition and Market Structure

Scope of the Sector

Healthcare private equity, as the market uses the term, covers buyout and growth investments in care providers, biopharma, medical technology, healthcare information technology and the services that support them. Bain & Company's Global Healthcare Private Equity Report 2026 states that provider and biopharma remain the largest market segments, driven by healthcare IT activity, while medtech has shown outsized growth since 2020. Growth equity is the part of that market that finances expansion without taking control. Cambridge Associates, in its 2013 study "Growth Equity Is All Grown Up," places the strategy between late-stage venture and leveraged buyouts and describes growth investments as typically minority stakes using little if any leverage at investment.

Spending Base

The Centers for Medicare & Medicaid Services (CMS) reports in its National Health Expenditure Fact Sheet that national health expenditure grew 7.2 percent to $5.3 trillion in 2024, or $15,474 per person, and accounted for 18.0 percent of gross domestic product. The same fact sheet reports that physician and clinical services expenditures grew 8.1 percent to $1,109.7 billion in 2024. CMS projects average health spending growth of 5.4 percent a year over 2025 to 2034 against 4.1 percent for gross domestic product, which would lift the health share of the economy from 18.0 percent in 2024 to 20.6 percent in 2034.

Transaction Market

Bain & Company's 2026 report estimates that disclosed healthcare private equity deal value exceeded $191 billion in 2025, surpassing the previous high in 2021, and that investors announced an estimated 445 buyouts, the second-highest annual total on record. Bain attributes the record value to a rise in deals exceeding $1 billion, and it reports that volume for deals below $1 billion rose 56 percent for the year while remaining well below the 2021 high-water mark. Bain's 2025 figures annualize actual data through November 30, 2025.

The Mid-Market as a Chosen Constraint

The National Center for the Middle Market defines the middle market as U.S. companies with annual revenues between $10 million and $1 billion. LeverVenture limits its work to companies in that band by choice. It is the range in which an operator can change a company's trajectory, and the firm treats the limit as a discipline on where it looks, never as a statement about its own scale.

Many transactions in that band fall beneath federal premerger review. KFF's Kaiser Health News reported in 2022 that more than 90 percent of private equity takeovers or investments in health care fell below the $100 million threshold that triggers antitrust review by the Federal Trade Commission and the Justice Department. For 2026, the Federal Trade Commission's published thresholds set the adjusted size-of-transaction test at $133.9 million, effective February 17, 2026.

Investment Criteria and Underwriting

Stage and Ownership Posture

We invest at the commercial inflection, the passage between venture capital and buyout in which a proven technology becomes a company. Venture capital underwrites whether the science works, and private equity underwrites whether a working business can be optimized. LeverVenture underwrites execution, because the remaining risk at that stage is commercial. Positions are minority, sized to matter to the company, and carry a board or observer seat where the position warrants one. We do not underwrite unproven science, and we do not take passive positions.

Seven Conditions

Every healthcare company is screened against the seven conditions published in the thesis: market, position, evidence, unit economics, management, exit logic and impact. A company must meet all seven, and a company that misses one is declined with the reason written down. Under the evidence condition, technical and, where it applies, clinical risk must be substantially retired.

The LeverRating

A company that passes the screen is scored on the LeverRating, a single house scale with six dimensions: Team, Market, Product, Traction, Financial and Thesis fit. For a device, a diagnostic or a therapeutic, Product expands into regulatory position, clinical evidence, reimbursement and freedom to operate, so the rating runs on ten dimensions, and both scales are run. A rating that holds under only one of them is reported as unresolved. The weights are fixed before a company is scored.

ROI² and the Impact Measure

ROI², the name of the thesis, adds a second test to the commercial one. Each company names one impact measure at entry, in access to care, healthy life extended or system cost removed, with a baseline, an owner and a reporting cadence, and the measure is reported alongside revenue, gross margin and cash.

State Transaction Review

State law now sets the timetable for many healthcare transactions that federal review does not reach. In California, Health and Safety Code section 127507(c)(2) requires a health care entity that is a party to a material change transaction to notify the Office of Health Care Affordability at least 90 days before closing. The Office's guidance states that Assembly Bill 1415, effective January 1, 2026, extends the notice duty to private equity groups, hedge funds and management services organizations. That guidance, read on October 10, 2026, states that the Office intends to set the same 90-day timeline for the new filers by regulation.

Oregon Revised Statutes section 415.501 requires notice to the Oregon Health Authority no less than 180 days before a material change transaction, which section 415.500 defines to include a transaction in which one party had average revenue of $25 million or more over the preceding three fiscal years and another had at least $10 million. A comprehensive review can end in approval, approval with conditions or disapproval. Oregon Senate Bill 951 (2025) bars a management services organization and its shareholders, directors and officers from owning a majority of a professional medical entity it manages or exercising de facto control that affects clinical decision making, and section 9 applies the bar from January 1, 2026 to entities organized on or after the Act's effective date and from January 1, 2029 to those that existed before it.

Massachusetts Chapter 343 of the Acts of 2024, approved January 8, 2025, requires a provider or provider organization to notify the Health Policy Commission and the Attorney General, among others, not fewer than 60 days before a material change, including a transaction involving a significant equity investor that results in a change of ownership or control. The act defines a significant equity investor to include any investor holding more than 10 percent of a provider, provider organization or management services organization, and it excludes venture capital firms that exclusively back startups and other early-stage businesses, so a growth-stage minority position can fall inside the definition.

Federal fraud and abuse law applies to every target that bills a federal health care program. The Anti-Kickback Statute, 42 U.S.C. section 1320a-7b(b), makes it a felony to knowingly and willfully offer or pay remuneration to induce the referral of items or services payable by a federal health care program, punishable by a fine of up to $100,000, imprisonment of up to 10 years, or both. In short, a healthcare transaction below the federal premerger threshold can still carry a state review period of 60 to 180 days, and we set the closing timeline against that period at entry.

Artificial Intelligence as the Accelerant

Artificial intelligence is the accelerant across all five sectors of the mandate, and we never treat it as a sector of its own. We underwrite it where it shortens a specific timeline in a specific company, such as the coding, documentation or prior authorization step that sets how quickly a provider is paid. Bain & Company's 2026 report lists deploying AI-enabled technologies to optimize front- and back-office operations and improve revenue cycle management among the strategies successful investors in physician groups are using.

Crossing sectors is the thesis. A diagnostics company that is also deep tech, a care platform built on digital infrastructure, or a device maker whose production draws on clean tech, each with an AI layer, is the company we look for, and we underwrite it as one business.

Reference Entries

• The Mid-Market in Private Equityhow published definitions set the boundaries of the middle market by revenue, EBITDA or transaction value, and why no single source fixes them.
• Growth Equitythe strategy between late-stage venture capital and leveraged buyouts, defined by minority stakes and little or no leverage.
• Operating Partnerthe executive role a sponsor uses to improve portfolio company operations, and how its pay and disclosure are treated.
• Management Services Organizationthe structure through which investors serve physician-owned practices, and the state laws that now limit its ownership and control.
• Family Offices in Private Equitythe Investment Advisers Act exclusion for family offices and how family offices take part in private markets.

Related Analysis

• Growth EquityGrowth Equity in Life Sciences: 2026 Market Studywhere growth capital flows in life sciences and healthcare, and where the mid-market financing gap sits.
• Growth EquityOperator-Led vs. Financial-Sponsor Growth Equity: What an Operating Partner Changes for LPshow an operator-led model differs from a financial sponsor, and how to tell which one fits a company's stage.
• Growth EquityPrivate Equity Meets the Mid-Market: Borrowing PE's Discipline Without the Buyoutwhat a growth company should take from private equity practice, and the control and leverage terms it should refuse.

Governing Authority and Sources

• Centers for Medicare & Medicaid Services, National Health Expenditure Fact Sheet: NHE 2024 and Projections 2025 to 2034
• Bain & Company, Global Healthcare Private Equity Report 2026
• Cambridge Associates, Growth Equity Is All Grown Up (2013)
• National Center for the Middle Market, Middle Market 101 (2026)
• KFF, Kaiser Health News Investigation of Private Equity in Health Care (2022)
• Federal Trade Commission, Revised Jurisdictional Thresholds for Section 7A of the Clayton Act, 91 FR 2133 (January 16, 2026)
• California Office of Health Care Affordability, AB 1415 Frequently Asked Questions, citing Cal. Health & Safety Code §127507 (2026)
• Oregon Revised Statutes Chapter 415, §§415.500 and 415.501 (2025 Edition)
• Oregon Senate Bill 951, Enrolled (2025)
• Massachusetts Acts of 2024, Chapter 343 (approved January 8, 2025)
• Anti-Kickback Statute, 42 U.S.C. §1320a-7b