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Dealmakers predicted a deal deluge for 2023, but the market had other ideas in the first six months.

Driving the news: Of the 47 health care auctions Axios reported coming to market in 2022, one-third still have yet to result in a deal.

What's happening: After tight debt markets throttled the LBO market in the first half of 2023, private equity partners say they're now seeing lenders offering more generous financing terms.

Yes, but: The bid-ask spread still needs to narrow, says HarbourVest Partners managing director Amanda Outerbridge.

Buyers are "maintaining a high bar despite having a lot of dry powder," says Rajat Duggal, partner at FFL Partners.

"There has been a wide range in the quality of companies out in the market," he adds.

Plus, macro pressures including labor cost inflation and interest rates continue to stress the industry, Duggal says.

Zoom in: Entering the third quarter of the year, Outerbridge and Duggal see green shoots in life sciences optimization and pharma services technology.

Myriad drugmakers are approaching patent cliffs, strengthening their need for drug discovery tools, Outerbridge says.

"Life sciences is one of the biggest profit pools in healthcare, making it a ripe market to sell into," she adds.

This month saw one successful exit of a sponsor-held pharma services platform, with Audax selling business CorEvitas to Thermo Fisher for $913 million.

What we're watching: Thomas H. Lee Partners recently took second-round bids for its physician practice software provider, Nextech, Axios reported.

A deal could value the business at around $1.5 billion.

Plus, Option Care may be on the lookout for a takeout candidate after losing Amedisys to UnitedHealth.

If the company sticks to its infusion knitting, Peak Rock Capital-backed Paragon Health or privately held Senderra could make optimal targets.

The bottom line: "As it relates to a broader resurgence in LBO activity and platform trades, this most likely will return when credit market conditions stabilize," says Outerbridge.

Catch up fast: Below, we have broken out the deals that have sold and those still in market. Hear any chatter? Write to us.

Pamplona exited pharma services company Calyx to CapVest-backed GLO Healthcare in December (we missed this in January! Our bad).

Founder-led dental services organization Dentive was acquired by HGGC in a traditional leveraged buyout in January.

Pharos Capital exited physical therapy provider MotionPT to Partners Group and Chrysalis Ventures-backed Confluent Health in January.

Avista Capital exited pain management provider National Spine & Pain Centers via out-of-court restructuring in February. Avista lists National Spine & Pain as a historic investment on its website.

Founder-led life sciences communications business Spectrum Science received an investment from Knox Lane in February.

Tyree & D'Angelo Partners (TDP) veterinary platform Western Veterinary Partners received a minority investment from existing and new TDP investors, led by LGT Capital Partners (accounts managed by Hamilton Lane) and Apogem Capital in March.

Martin Ventures-backed value-based care enabler Wellvana Health raised $84 million from Heritage Group and Valtruis, a Welsh, Carson, Anderson & Stowe portfolio company, in March.

Trivest Partners-backed ScanSTAT Technologies, merged with NewSpring Healthcare-backed Verisma in April.

Diversified home care services company Team Select Home Care was acquired by Court Square Capital Partners in May from Tenex.

United Medical Systems, a provider of mobile medical equipment for urologic conditions, was acquired in June by MGG Investment Group-backed Access & Integrated Practice Holdings from New State Capital.

Warburg Pincus-backed specialty electronic health records company Modernizing Medicine, launched in October 2022 but hit the pause button late last year, Axios reported. Warburg declined to comment.

Blackstone's HealthEdge, a health insurance SaaS platform was exploring a sale through BAML and Barclays, but went pencils-down over discord on valuation, Axios reported. Blackstone declined to comment.

Partners Group-backed vet care platform Blue River launched an auction last fall after hiring William Blair, but paused, Axios reported in December. Partners did not respond to a request for comment.

Founder-owned physician organization Heritage Provider Network was being pursued by Carlyle in November 2022. Heritage did not respond to a request for comment.

Founder-led compounding pharmacy Empower Pharmacy hired Cantor Fitzgerald to run a process last fall, Axios reported. Empower did not respond to a request for comment.

Silver Oak-backed dental services organization Smile Partners USA launched a Piper Sandler-run auction in September 2022. Silver Oak did not respond to a request for comment.

BC Partners-backed dental products company Zest Dental launched an auction after Labor Day 2022, with SVB Securities and UBS leading a sponsor-focused process. BC Partners declined to comment.

Founder-run men's health clinic Wasatch Medical Clinic launched a Macquarie Capital-led process in August 2022. Wasatch did not respond to a request for comment.

Linden Capital Partners-backed addiction treatment provider Pinnacle Treatment Centers, which kicked off a Lincoln International-led process in the summer of 2022. Linden declined to comment.

Lee Equity-backed IVF provider Inception Fertility took first-round bids in a Moelis-run process in July 2022. Lee Equity did not respond to a request for comment.

Morgan Stanley Capital Partners-backed Clarity Software Solutions was reported to be on the block through TripleTree in July 2022. Morgan Stanley declined to comment.

Questa Capital Management-backed clinical trial technology company Medrio was set to launch an auction in May 2022 via William Blair. Questa did not respond to a request for comment.

THL-backed physical therapy franchise ProPT was working with Jefferies on an auction last summer. THL declined to comment.

Summit and DW Healthcare-backed preventive care technology company EHE Health took first-round bids for a Houlihan Lokey-run process in the spring. Summit and DW did not respond to requests for comment.

3M was working with Goldman Sachs to carve out its Health Information Systems, Axios reported in April. 3M did not respond to a request for comment.

The company subsequently announced plans to spin off its Health Care Unit in whole, and in January said that process could be complete by end of 2023 or early 2024.

Madison Dearborn Partners-backed sports rehab product company Performance Health was working with UBS on a process, Axios reported in March. Madison Dearborn declined to comment.

Health care PE auctions stayed stuck

Of the 47 health care auctions Axios covered last year, one-third still have yet to result in a deal.

Illustration of a hand holding an auction paddle with a "no" symbol.

Health tech deals

Dealmakers predicted a deal deluge for 2023, but the market had other ideas in the first six months.Driving the news: Of the 47 health care auctions Axios reported coming to market in 2022, one-third still have yet to result in a deal.

Health care PE auctions stayed stuck

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